View Document - Parliament of South Africa

1499 THURSDAY, 20 NOVEMBER 2008
1500
Irregular price increases in processed
agricultural products
1452. Dr S M VAN DYK (DA) asked the
Minister for Agriculture and Land Affairs:
(1) Whether she will request the Competition
Commission to investigate
irregular competition and price
(2)
increases in processed agricultural
products; if not, why not; if so, what
are the relevant details;
whether the uncertainty regarding
finalisation of land restitution and
dealing with land reform is having a
negative effect on the production and
supply of livestock, crop harvesting,
market gardening and forestry produce;
if so, what are the relevant
details? NW2196E
The MINISTER FOR AGRICULTURE
AND LAND AFFAIRS:
(1) The Minister for Agriculture and Land
Affairs appointed the Food Pricing
Monitoring Committee in January 2003
in terms of section 7 of the Marketing
of Agricultural Products Act, Act 47 of
1997, to investigate price formation in
food value chains, particularly basic
foodstuffs. The Committee was tasked
to engage, during its investigations,
with food industries value chains and
regulators like the Competition Commission
in conducting its investigations
and to further make its findings public.
The first task of the Committee was to
conduct an investigation to determine
the competitiveness of production and
food processing operations and price
formation mechanisms within the food
value chains. The view was that the
conclusion of the investigation will
provide recommendations on required
productivity improvements in identified
areas of market inefficiencies and
distortions; identify incidents of predatory
pricing and monopolistic tendencies,
as well as collusive, discrim-
inatory or otherwise unfair practices.
Following were the Terms of Reference
for the Food Pricing Monitoring Committee:
✓ Monitor the pricing of basic foodstuffs;
✓ Investigate any sharp or unjustified
food price increases;
✓ Determine the competitiveness of
production operations; and
✓ Investigate price formation mechanisms
within the value chains of
basic foodstuffs by analysing each
supply chain in terms of the following
aspects:
● Number of producers, processors
and traders and the level of concentration
at each node
● Extent of vertical/horizontal integration
and competition/concentration
in the supply chain
● Do a gross margin analysis at each
node of the supply chain
● Establish the magnitude of differences
between urban and rural
pricing structures and the causal
factors thereof;
● Identify major cost drivers in each
food product’s supply chain;
● Make recommendations on an appropriate
environment for optimal
food pricing.
✓ Recommend required productivity
improvements
✓ Review the effectiveness of government
systems of research, monitoring
and information dissemination
on food prices and policy
✓ Establish and maintain a national
food price monitoring database
✓ Monitor by using the existing sys-