Black market agents:
Here to stay!
By Michael Cordes
The road to utopia for black market agents is paved
with many good intentions and sadly, even more wrecks.
The reality of becoming a successful market agent is far
removed from the dreams of those who failed. Michael
Cordes talks to some of the people who are at the coalface
of the black market agency business and making it work.
A new market agency opening for business on a market
faces challenges which are going to test their mettle.
The first challenge is the commission system which is an
open one where prices are determined by supply and
demand. This results in a daily seesaw of prices caused
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by many factors – some daily, others from time to time.
The other major challenge for a new agency is getting
farmer support. In a system which has evolved over more
than 150 years it’s inevitable that there will be entrenched
methods of doing business. The key here is the relationship
between producer and salesperson. These relationships
don’t happen overnight but take years to build. When a
relationship has matured to such a level, the producer is
reluctant to change and support a new, unknown agent.
It takes patience and deep pockets to sustain the business
in those early days as management and sales staff plug
Transformasie • Transformation
away at getting producer support. It’s all about building
trust relationships which are the ‘oil of the fresh produce
engine,’ and make the agency model special and unique.
Since 1994 the process of transformation on markets has
become an urgent requirement. Fresh produce market
agents are now at the top of the transformation agenda.
Industry organisations such as the Agricultural Produce
Agents Council (APAC), Institute of Market Agents of S A
(IMASA) and Potatoes South Africa (PSA) are all engaged
at different levels with making transformation happen.
There are 21 BEE market agencies (out of 95 registered
with APAC) spread across all 23 markets in the country.
They are fully BEE in terms of ownership, management
and staff. There are a number of other agencies with BEE
scorecards showing the involvement of black directors,
management and staff. Out of the 95 agencies 55 sell
potatoes. The national turnover of all markets for the period
July 2015 to June 2016 was R16 576 296 201.64. The
share for BEE market agents was R1 084 814 889.58.
Around 45% of all vegetable sales on markets are from
potatoes. This makes potatoes crucial to any agency
wanting to be a serious contender. Onions are the next
important crop followed by tomatoes and cabbage.
Agencies which have failed might have done so for any
number of reasons but not having potatoes and onions – or
insufficient volumes – would have been a major contributor.
According to Theresa Fredericks, a director of DW Fresh,
the country’s largest BEE agency, who also heads APACs’
Transformation Committee, “Although fewer farmers are
delivering increased volumes of potatoes, the bigger ones
remain loyal to their agents. This makes it very difficult for a
new agency to survive. It places procuring potatoes by BEE
agencies as a high priority. The status quo is not enough
and ways will need to be found to make it happen,” she
concluded.
One of the possible solutions is for bigger farmers to
allocate a percentage of a load to a BEE agent. So, if a
potato farmer is sending a full interlink to his market agent
he could allocate say, five or ten pallets for a BEE agent.
Jannie van Wyk, Manager of Tshwane Green, a new BEE
agency, says persuading potato farmers to support them
is a major challenge. Despite Jannie’s many years on the
market he finds farmers reluctant to switch. He does have
some large onion farmers supporting him but the potato
farmers remain scarce. Tshwane Green carries a range
of other vegetables but like their colleagues they need
potatoes!
Egoly is an agency which ‘cut its teeth’ on the Joburg
Market and recently opened a branch on the Tshwane
Market. Henri de Korte, the Egoly manager approached
the challenge differently. He brought with him over 16
years of experience – with farmer contacts – and used that
to get the agency going. He’s relied on mixed vegetables,
tomatoes and some bananas to record healthy turnovers
each month. Henri agrees that potatoes and onions are the
next priority but this will also depend on floor space made
available by Tshwane Market.
Freshway Market Agents, the third of the new agencies
echoes the sentiments of the others. “Procuring potatoes is
tough,” says director Ronny Seseni, “but we’ll keep trying
and slowly break through the barriers out there.”
Francois Knowles, Trading Operations Manager for
Tshwane Market explained that establishing new BEE
agencies is a long process which requires, amongst others,
skills transfer, partnerships and mentorships. The Tshwane
Market provides back-up for new agencies through back
office support and mentoring. Some of the established
market agencies help with mentoring of BEE agencies.
Tshwane Market will on occasion accompany the new
agents to visit farmers.
Knowles is upbeat about BEE agencies because he says
they bring new people with new ideas to the market.
Tshwane Market wants BEE agencies to stand on their own
feet as soon as possible. C
Michael Cordes has spent over 40 years
working in agriculture – mostly in fresh produce.
For 15 years he farmed subtropical fruit and
vegetables before moving on to the marketing
of fresh produce both locally and overseas.
As a freelance journalist he specialises in the
horticultural sector and also spends a lot of his
time training farmers and marketing people
in South Africa and neighbouring countries in
the production, marketing and management of
horticultural crops.
CHIPS • September/October 2016
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