Programme director
Captains of Industry in the sector
Senior government officials
Invited guests
Ladies and gentlemen
Members of the media
It is a privilege for me to be invited to this auspicious conference where over 15 000 member companies falling under the retail and consumer goods get together to share best practices while debating issues affecting the industry. This is a perfect platform for government to engage with industry in a meaningful and symbiotic way.
The assurance of safe and quality food to the population of our country remains the mandate of the South African government as envisaged in section 27 of the Constitution of the Republic of South Africa. This obligation places a huge responsibility on the Minister of Agriculture, Forestry and Fisheries to ensure that food that is produced is safe from physical, chemical and microbial hazards.
We concur with the United Nations Food and Agricultural Organisation’s (FAO) approach that when we talk of food security, by implication, the food should be safe and of good quality. It is of no use to have access to food if such food can cause harm or illness. 3
Our legislation on food safety remains disparate in terms of the roles/ and mandates of different government departments. Our coordination has however improved as evidenced in our recent work on topical food safety and quality issues (brining of chicken and legislation on organic produce to name a few), but we can certainly do more.
Food safety also allocates multiple stakeholder responsibility along the food production chain and that food offered meets safety criteria as set by applicable legislation. Each food business operator along the chain should ensure that they employ applicable management systems for food safety supported by adequate records to ensure that they can act and remove the food from the market should the need arise.
We have also in July this year adopted, through the Southern African Development Cooperation (SADC), Regional Guidelines for the Regulation of Food Safety. This was part of giving effect to harmonisation initiatives as per the SADC annex to the trade protocol.
Issues addressed by the harmonisation included matters with respect to:
- Assessment of the competence of testing laboratories involved in import and export control of food or feed safety
- Setting of Maximum Residue Limits (MRLs) for pesticides
- Methods of sampling for the determination of pesticide residues for compliance with Codex Maximum Residue limits for pesticides and
- Registering of pesticides and veterinary drugs.
We continuously strive to ensure that only registered agro-chemicals are used by food producers despite the challenges we’ve had in expediting those approvals and registrations, and that maximum residue limits are respected. South Africa’s fresh fruits that are exported are tested for residues by our laboratories.
These laboratories undertake tests relating to compositional requirements of products, chemical residues, microbiological and mycotoxin contamination. There are grading regulations for almost all the fresh produce, animal and processed products as well as grains and grain products that are sold locally as well as those that are exported.
These regulations serve as an important reference point in assisting trade with price formulation and thus ensuring fair trade which also benefits the consumer as well.
South Africa has over the past three years hosted the European Union’s inspection missions in order to assess food control measures on products intended for export into the European Union.
The EU has found that South Africa indeed has responsive food control measures in place to adequately respond to risks that are associated with food safety and hygiene.
The current status in our country is that an estimated 11.5 million South Africans are food insecure and vulnerable to hunger. This situation is aggravated by the looming high food prices, which is as a result of, amongst others, the fuel price hikes and the weakening of our currency.
The Department of Agriculture, Forestry and Fisheries is considering introducing the Zero Hunger Program which is aimed at eradicating hunger in terms of the Millennium Development Goals (MDGs), in particular MDG 1.
The Zero Hunger Program, which is yet to go to Cabinet for discussion and approval is a concept that South Africa borrowed from the Brazilians through which we will eradicate hunger and food insecurity for all South Africans through production of affordable good quality food.
We will expound on Zero Hunger at a later stage after Cabinet has given the nod, and we hope that business will be on board because we believe that, as the government slogan says, "Together we can do more".
There has been a great deal of debate in the media and in the broader society about the advantages and disadvantages of the Walmart/Massmart merger. Some have argued that it represents major foreign direct investment which benefits the country. And yet both the target company and the acquiring company are majority foreign-owned, so at least initially there is no injection of FDI.
Some felt that the merger will strengthen competition in the retail sector, certainly also a good thing. But price wars could reduce the number of players in the retail sector, as happened when Walmart went into Mexico, which would ultimately diminish effective competition.
Government is concerned about a shift to imports both for food security reasons but also because of the significant potential job losses that are likely to occur in the suppliers to Walmart/Massmart, especially given Walmart’s vast and extensive international procurement capability. The scale of Walmart’s operations is huge.
According to the Economist, Walmart is the third biggest employer in the world. It seems inevitable that the merged entity’s competitors will be forced to emulate them and strengthen their import capabilities, potentially worsening the job losses among local suppliers.
In the current process government is requesting the Competition Appeal Court to order the Competition Tribunal to hear the matter again. We believe that if more evidence is heard and weighed, the Tribunal will impose stronger conditions to project local jobs. And we are not requesting Court to do this for whimsical reasons, but because the law requires that the Tribunal consider public interest matters thoroughly, and we feel strongly that it has not done so adequately.
Public interest matters include the effect of the merger on employment, but also the impact of the merger on SMMEs and firms owned by historically disadvantaged individuals.
Underlying these concerns is the very real spectre of de-industrialisation. Manufacturing and agro-processing are major productive sectors of society, whereas retail feeds consumption and debt. By strengthening local industry we will be able to grow our economy successfully. We can debate investment and low prices, but we may risk destroying the productive sectors of our economy to provide consumption savings that may be short-lived as major players get squeezed out.
Local industry is perilously poised and all of our efforts must be directed to boosting it rather than undermining it. This very real fear underlies government’s review application and participation in SACCAWU’s appeal.
Government’s review application is based on the fact that the Tribunal unreasonably denied the government departments access to information in the possession of the merging parties. This would have assisted in quantifying the public-interest harm that will arise out of the merger.
Similarly, the Tribunal severely curtailed the time set aside in its calendar for the hearing, and therefore denied a number of witnesses the opportunity of testifying about the likely harm. In addition, those witnesses that were heard could not be fully cross-examined.
The appeal in which the government departments are also participating is based on government’s view that the Tribunal has not correctly interpreted the Competition Act. The Act states clearly that its objects are, amongst others: to promote employment and advance the social and economic welfare of South Africans; to ensure that small and medium-sized enterprises have an equitable opportunity to participate in the economy; and to promote a greater spread of ownership, in particular to increase the ownership stakes of historically disadvantaged persons.
Imagine a society even more heavily dependent on imports for consumer products than we already are and significantly dependent on one foreign-owned company for retail services. This is not inconceivable. This is what government is trying to avoid.
This is why we have lodged a review application and joined an appeal in the Competition Appeal Court. We warmly welcome foreign direct investment, enhanced competition and lower prices for consumers. But we must not be short-sighted. We could be worsening our manufacturing malaise, we could be damaging competition in the retail sector. Ultimately the case before the Court is about the interpretation of the Competition Act, which is the law of the country, which we are all bound to obey.
We have noted the comments attributed to the CEO of Massmart, Mr Grant Pattison, in today’s media in which he is quoted as saying that he understands the three government departments’ argument that SA’s supplier base needed to be built. As government, we would welcome any move from Massmart to negotiate terms with the government.
