South Africa: New trends in supermarket procurement systems - local procurement schemes from SSGs by rural chain stores

In contrast to the centralized fresh produce procurement systems of South African ‘retailers relying on preferred commercial suppliers, this paper draws on an in-depth analysis of the innovative procurement schemes of two rural-based supermarket chain stores in the Limpopo Province to source fresh vegetables locally from small-scale farmers. The objective is to derive lessons to guide public and private sector actors in promoting greater participation of small-scale producers in dynamic supply chains, through the exposure of the key drivers and success factors affecting the inclusion of small-scale vegetable farmers.

The critical factors affecting the up-scaling and/or replication of this type of procurement relates to operation in a remote, emerging market, franchise stores with flexible procurement options, small-scale farmers with potential and land in close proximity to the supermarket, good communication and coordination, long-term commitment, technical support, interest-free farm loans and diversity in product supply among farmers.

Key indicators of mutually beneficial engagement include consolidated farming systems, improved farming income, low-cost procurement of fresh vegetables (short supply chain), as well as fostering of the stores' broader community involvement strategy. Up-scaling/replicating the scheme would probably require the involvement of external actors and the definition and establishment of public private partnerships. These should be tailored to the specific local conditions and capacities of the different stakeholders. Specific emphasis should be put on support towards the development of critical skills at a local community level to empower small-scale farmers to sustain beneficial participation in the market.

This publication forms part of the Regoverning Markets project.