Читать книгу New South African Review 4 - Devan Pillay - Страница 32

Formal food retailing through supermarkets implies a distribution system which demands larger volumes and, typically, better standards of quality for food. The system also demands coordination between suppliers and retailers. As Durand and Wrigley (2009) note, the ability of retailers to make use of upstream relations with suppliers within host economies, as well as within their global networks, is a critical factor explaining the success of transnational retail capital in different contexts. Indeed, the concentration and expansion of corporate food retailing in South Africa has relied on efficient logistics systems, which have benefited from trade liberalisation and the deregulation of South Africa’s agro-food economy.

Wal-Mart’s legendary centralised distribution and information technology systems, which record ‘real time’ data from branches, allows the store to cut costs through responding quickly to consumer demand and to reduce stock shortages or over-estimations. Stock is controlled through category managers who are responsible for an entire group of merchandise and who work closely with suppliers, not only to specify products but also to promote the efficiency of distribution (Lichtenstein 2009; Fishman 2006). Logistics technology and inventory management have reduced costs to retailers and outsourced risk to suppliers. This ‘retail revolution’ is what Wal-Mart is known for (Lichtenstein 2009; see also Lichtenstein 2006). It has proved to be an important strategy of operation and comparative advantage to Wal-Mart in its overseas operations (Durand and Wrigley 2009:18). Maintaining contracts or relations becomes competitive business for suppliers, where increasing pressure is brought to bear on them to reduce their costs to the point where some supply for below cost to maintain their market with this retailer (Fishman 2006; Hong 2011). Centralisation gives retailers flexibility, then, through economies of scale and the ability to hedge market fluctuations, in part through global sourcing. Additional costs of transportation and storage are channelled back to suppliers with just-in-time sourcing.

In South Africa, a shift from wholesale distribution to the greater use of centralised warehousing and the use of information technology (IT) systems to coordinate supply has been underway since the 1990s (Weatherspoon and Reardon 2003). The corporate chains tend to use distribution centres and direct contracts with producers for fresh produce, while smaller chains rely on wholesale markets and fresh produce markets (Weatherspoon and Reardon 2003:10).

With Wal-Mart’s entry, South African firms are working to compete with anticipated improvements in Massmart’s supply chain systems. Massmart has recently upgraded its distribution network and benefits from Wal-Mart’s technical knowledge and ‘large purse’ available to assist with logistics (BMI 2013). Thus, between 2011 and 2013 Shoprite upgraded its distribution centres and is building new ones in Cape Town, Durban and Port Elizabeth, all with the ‘latest technological developments’.¹⁰ Industry experts acknowledge that Shoprite has the best developed centralised distribution system of South African food retailers, ‘a first-class centralised distribution network’ (BMI 2013).¹¹

The first preferred supplier programmes by retailers appear to have been focused mainly on larger farmers, many of whom were also exporters to European supermarkets, and already meeting food safety standards, volume and consistency expectations and quality measures (Weatherspoon and Reardon 2003:11). Most producers supplying to Freshmark, Shoprite’s wholly-owned distributor, had to ensure that washing, packing, labelling and bar-coding were done before the produce reached the distribution centre (Weatherspoon and Reardon 2003:11). The producers were required to make deliveries daily in refrigerated trucks, which they provided. A preferred suppliers list ensured that producers who remained on the list had to meet all requirements. Pick n Pay ran a similar preferred supplier arrangement with larger and better-capitalised farmers, who could meet the requirements and standards (Weatherspoon and Reardon 2003:12). Retailers squeezed suppliers through regularly negotiated discounts and rebates, charging suppliers extra for promotions, returning unsold products, delaying payment and using own-label branding to undercut processors (Mather 2005; Mather and Kenny 2005). Yet suppliers continued to try to absorb these costs. Being on the list meant supplying these market channels, increasingly dominating access to consumers, as we have just seen.

Weatherspoon and Reardon (2003) suggest that standards for domestic food retailing were driven by retailer procurement from exporting farmers: retailers linked in to existing networks developed through deregulation of agricultural production, which encouraged export to global markets to benefit from private standards. They note that this exacted ‘hefty entry requirements and even barriers to many farmers’ (Weatherspoon and Reardon 2003:13) at the time, including investments in coordination, farming practices, packing-shed facilities, and fleet and cold chain infrastructure. They suggested that retailers would expand to lower market consumer segments and increase price pressure on suppliers to remain competitive while meeting standards (Weatherspoon and Reardon 2003:13). They concluded their seminal article by noting three trends: the use of large, well-resourced farmers; where these were not available, the use of importing; and an ‘eagerness’ to develop programmes to ‘upgrade’ the small farmers to meet the needs of supermarkets’ (Weatherspoon and Reardon 2003: 14). They suggested that this would produce a bifurcation of producers when smaller farmers, unable to cope, faced ‘rapid exclusion’ (Weatherspoon and Reardon 2003: 14).

At the crux of the debate about Wal-Mart’s entry was its ability to source from its global suppliers, understood as far more competitive than South African manufacturers and producers in their ability to meet cost and quality standards (for instance, see Chan 2011). The ultimate resolution was the creation of the Supplier Development Fund to assist small-scale producers to enter Massmart’s supply chain. This model emerged out of Massmart’s own voluntary fund, set up during the Tribunal process, with R100 million over three years to assist small-scale black farmers to meet the requirements to source to them. The focus of the fund, which targeted 1 500 small farmers, was on loans and providing equipment (Visser 2011). Massmart saw its significance in cutting out intermediaries, much as Wal-Mart does, to source directly from the producers, who then must pack their produce on the farms, ready for distribution through Massmart’s controlled cold chain.

The R200 million fund that ultimately was mandated by the Appeal judgment was thus limited to developing the capacities of small-scale producers. As Morris puts it in his contribution to the expert committee report, the task is ‘how to institutionally build the competitive capabilities of small and medium size enterprises within these supply chains’ (Morris 2012:9, italics in original). As he notes, retailers ‘do not do so as acts of beneficence to suppliers, but because it is in direct corporate interest’ (Morris 2012:14, italics in original).

There is a longer history of supplier programmes that focus on bringing small-scale producers into the market. The current fixation is on integrating smallholders in the production and distribution of fresh fruit and vegetables into supermarket supply chains. Thus, the extended discussion into Massmart/Wal-Mart’s supplier fund becomes a condensation of the logics of the development agenda, in which retailers are well aware of the political imperatives of smallholder ‘inclusion’.

In 2009, the ANC positioned agricultural production at the centre of its focus on rural development which, in turn, highlighted smallholder production as an arena of intervention.¹² Because of the concentration within the agro-food system in South Africa, any development of smallholders is seen to rest on access to local supermarket shelves rather than through production for export (Greenberg 2013; Aliber 2013).¹³ Furthermore, job creation in agriculture is understood by DAFF as being best facilitated through smallholder schemes and agro-processing through inclusion into value chains (Aliber 2013).¹⁴

This policy shift toward smallholder development corresponds to a growing consensus within the state that food security rests primarily on access by consumers to cheaper food (rather than, for instance, through subsistence farming), with a new-found enthusiasm for the expansion of supermarkets to rural areas and townships (for example, the Comprehensive Rural Development Programme, DRDLR 2009, as cited in Greenberg and Paradza 2013: 55). In general, the state’s approach to food security has been through providing social grants to underpin food purchases.

In short, the state sees supermarkets as an efficient means of coordination and distribution which can bring cheaper food to rural areas and townships and can provide small-scale producers with market channels. Within the long history of dominance by large-scale, capital-intensive agricultural production in South Africa reinforcing high barriers to entry, the state now looks to retailers to provide markets to small-scale farmers rather than transforming the embedded power of capitalist agriculture in South Africa.

Yet if we examine the food value chain, corporate concentration increases (along with deregulation) in the 1970s around the world (McMichael 1994) as well as in South Africa. Private coordination relies on power in the chain. As Greenberg (2010:3) writes: ‘It does not merely replace the state, but alters the terms of governance and regulation to serve specific interests.’ In South Africa, the deregulation and privatisation of single-channel marketing and pricing systems, starting in the 1970s and clinched with the 1996 Marketing of Agricultural Products Act, shifted power to corporate retailers over producers, who had previously had a guaranteed price for their product.¹⁵ The corporatisation of former commodity cooperatives occurred at the same time that trade liberalisation in South Africa increased imports of foodstuffs – also accentuating the power of retailers, as they could now source food products globally (Greenberg 2010; Kenny 2012a). We enter the terrain of buyer-driven commodity chains, where retailers exact increasing control over product development and specification by controlling marketing channels (Gereffi 1994). While the state may set regulatory limits on, for instance, quality and health standards for food, it is private standards that have worked to enforce compliance and also to help shift power towards retailers who list preferred suppliers by their ability to meet volume, consistency, presentation and quality measures, increasingly defined and agreed at a global corporate level (Greenberg 2010).¹⁶ The corporate retail control of food chains has introduced ever stricter entrance barriers to producers.

Smallholders are encouraged to participate in programmes which can facilitate their access to retailers’ chains yet many of these programmes have low rates of success of sustainability (Nkomo 2013). TechnoServe SA, an international nonprofit organisation that ‘empowers entrepreneurs’ (Mashala 2013:48) manages the contract for Massmart’s Direct Farm programme within its Supplier Development Fund. It has also run similar projects to bring small, medium and micro-sized enterprises (SMMEs) into other retailers’ chains. Working with projects in Limpopo, Mpumalanga and KwaZulu-Natal, it provides training and assistance in finding markets and finance. TechnoServe reports that forty smallholder farmers currently supply Massmart with fresh produce (Mashala 2013:48). Given the skewed resource and skills sets that mean that large scale agriculture dominates South Africa, their interventions assist smallholders to build sustainability within this highly concentrated environment. A key way in which they ensure that a farmer may reach this goal is ‘stringent’ selection (Mashala 2013:49) – TechnoServe works with farmers who are better resourced, with their own access to land, equipment, labour, and those who have an ‘already demonstrable access’ to markets (Nkomo 2013:40). TechnoServe also argues that it focuses on value chains where commercial farmers are not already dominant because the competition would be too high. Beyond choosing feasible commodities, the farmer has to show some ability ‘to access correct seed variables’; to know the crop requirements; to access and use fertilisers; to ‘meet minimum quality requirements and understand these requirements from a market perspective’; and to have access to infrastructure, including irrigation and tillage equipment, storage facilities and pack-houses, and logistics in the form of cold-chain friendly trucks to deliver produce (Nkomo 2013:40).We have little research that details the relationship and nature of contract of suppliers to retailers – highly sensitive information frequently governed by nondisclosure clauses (but see Mather 2005; Mather and Kenny 2005). Recent research by the Institute for Poverty, Land and Agrarian Studies (PLAAS) begins to detail the requirements of smallholders who participate in these programmes. Survey results from smallholder tomato farmers in Limpopo show that net incomes are higher for farmers supplying traditional market channels than through supermarkets or agro-processors (Chikazunga 2013), participation in which, as has consistently been found, requires ‘production infrastructure such as greenhouses and irrigation technology’ and enough land. ‘Given poor yields, inferior quality and production risks, traditional channels are more relevant to the majority of the smallholder farmers’ in the area (Chikazunga 2013:22).

Another study of a development programme aimed at getting smallholder farmers in the Vhembe district into the avocado value chain to supermarkets found that growers felt they benefited from the secured market of retailers, but nevertheless found that most farmers had turnovers below production costs because their farming units were too small to produce volumes high enough to spread costs. In this project, high costs included pesticide spraying to counter a fungus that damaged the aesthetic appeal of the fruit (necessary if the fruit is to be sold to a supermarket). Lower market prices, caused by unusually high volumes entering the market, were difficult for farmers to absorb. Farmers were poorly skilled in reading financial statements. The project also suggested that higher entry barriers, including viable minimum land size and tree numbers, existed for these farmers (Khumalo 2013:32).

In their dissenting report Stiglitz and Hodge noted concern that the Massmart Supplier Development Fund would have little influence on local sourcing precisely because it is limited to SMMEs and to local producers of fresh produce, a commodity category already more likely to be sourced locally. We can see that the debate over local sourcing in both state policy and retailer programmes has focused on the small-scale production of fresh produce. Where smallholders are able successfully to maintain the relationship, they have been selected for having already demonstrated capacities of infrastructure, land access, business skills, and safety standard measures that presume a prior capital base. Most of the already well-capitalised farmers will benefit from Wal-Mart’s entry. Thus, smallholder procurement programmes are a high profile political intervention, but whether they can effect substantial changes to the structure of the economy or the food system is unlikely. The state has basically bought into a development path which has effectively accepted a large-scale, corporate agro-food system as the means of producing and distributing food. Retail capital is a core driver of this process.