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Aug 02, 2012

Massmart to incorporate 1 500 black smallholder farmers into its supply chain

Massmart executive Mncane Mthunzi discusses the benefits of direct farming. Camera work: Nicholas Boyd, Editing: Darlene Creamer.
Agriculture|Engineering|Natal|Africa|Aggregate|Massmart|TechnoServe SA.|Africa|South Africa|United States|Products|Retail|Supply Chain|Mncane Mthunzi|Tina Joemat-Pettersson|Ofcolaco
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South African retailer Massmart on Thursday launched its pilot Ezemvelo Direct Farm programme, in Limpopo, with the first fresh produce being harvested on farms near the Ofcolaco district, in Tzaneen, for Massmart stores.

Butternut, tomatoes and green beans are among the crops harvested.

Massmart executive responsible for the programme Mncane Mthunzi told Engineering News Online during a site visit that about 40 farms in Limpopo had been included in the programme thus far, with the end goal being 50 farms by 2016.

In keeping with Massmart's drive to develop local suppliers and source fresh produce locally, the Ezemvelo programme would be expanded nationally, focusing on areas where there are large concentrations of smallholder farmers that have the potential to grow fresh produce and be integrated into commercial markets.

“The next province where the programme will start is in KwaZulu-Natal,” Mthunzi said.

Through the Ezemvelo programme, Massmart aimed to incorporate more than 1 500 black smallholder farmers into its supply chain over the next five years.

During this period, the company would train, mentor and provide technical assistance to farmers, with the help of successful local commercial farmers, while assisting them to link to finance and retail.

However, the programme was also open to working with mainstream semicommercial farmers who have black economic-empowerment ownership structures or programmes in place.

Massmart would source up to 45% of its fresh produce requirement from mainstream commercial farmers in South Africa, while 30% was targeted to come from small to medium-sized farmers and the rest from the market.

Further, the company also planned to invest in a pack house to aggregate fresh produce from all of the smallholder farms supplying the group.

Mthunzi added that a benefit associated with direct farming was cutting out the middleman to bring down the cost of products. “This way you share the benefits with the consumer and increase farmers' return,” he noted.

The initiative formed part of a R15-million, three-year supplier development deal between Massmart and nongovernmental organisation TechnoServe SA. The deal resulted from the creation of a R100-million supplier development fund aimed at improving the competitiveness of South African manufacturers and producers, which was a key condition of the Walmart acquisition of Massmart last year.

The fund was currently under review by the Competition Appeal Court. “In the meantime we will continue with Ezemvelo, we have to find synergies to move the country forward. But, we are confident that the outcome will be positive,” Mthunzi said.

Agriculture, Forestry and Fisheries Minister Tina Joemat-Pettersson said that volatile food prices necessitated South Africa producing its own food. “We cannot only rely on commercial farmers; small subsistence farmers are also needed.”

The Minister added that her department has entered into a memorandum of agreement with Massmart to assist in the empowerment of small farmers.

The Competition Tribunal approved the merger between Walmart, based in the US, and Massmart at the end of May last year, subject to conditions.

The Competition Commission initially supported the merging parties' argument for unconditional approval of the merger. However, the Departments of Economic Development; Trade and Industry; and Agriculture, Forestry and Fisheries, as well as a number of unions opposed the merger.

A concern raised by the interveners related to the effect of the merger on employment, while the unions stated that the merger would likely lead to a diminution of their collective bargaining rights.

Edited by: Mariaan Webb
Creamer Media Senior Researcher and Deputy Editor Online
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