by Jared Jeffery

Food security

Supermarkets can assist smallholder farmers

Food security is a global issue
Supermarkets could assist farmers

Big foreign companies entering our market cause us to fear the worst. It is odd, then, that we seldom shift the focus and ask what effect our retail giants have in the less developed countries where they operate. 

The supermarket revolution in Africa, driven by rapid urbanisation, a population boom and ­economic growth, is set to change the way people on the continent shop, eat, work and live. 

Food security is when people have access to enough safe and nutritious food to meet their needs and preferences. According to a World Food Programme (WFP) report from July, the household food security situation in Namibia, Zimbabwe, Zambia and Swaziland is worse than the five-year average (which includes the 2008 food crisis). Meanwhile, in Malawi the WFP predicts that 1.4-million people (9.5% of the population) will be food insecure during the next year. 

By selling cheap, safe and diverse foods, the supermarkets improve food security. Furthermore, by investing in these economies, they stimulate job creation, improve infrastructure, bolster commercial agriculture and transfer skills to employees. The benefits of supermarkets to food security should not be overlooked.

However, there are a number of factors that complicate the picture: Are those foods imported? Are they grown locally on large, capital-intensive farms that edge out smallholder farmers and decrease employment in the sector? How do supermarkets affect informal traders? And what are the health implications of the processed foods they sell?

The need to source locally is something the big supermarkets are well aware of. Shoprite Holdings' sustainability report states that the group's policy is to reduce dependence on international suppliers and to source from the host country where possible.

"Ongoing support is provided to local suppliers and farmers in a growing supplier base across all African markets with a strong focus on locally procured fruit, vegetables, meat and other perishable products."

Although perishable goods are procured locally, at least in markets with accommodating climates, processed products are still largely imported. This is significant as this is where greater economic value is added.

A 2011 study showed that 50% of Shoprite's inventory in Namibia and 99% of the fresh fruit and vegetables sold in its Angolan shops were imported from South Africa. Similarly, the study showed Pick n Pay sourced 70% of its produce from home.

The discrepancy between policy and practice, according to Bruce Fraye and Jonathan Crush of the universities of Waterloo and Cape Town, respectively, is due to supermarkets' centralised form of regional procurement. This makes it difficult for local suppliers to gain access to the shops and, when they do, the ­produce is mostly sourced from large-scale farms. In Zambia, for example, 80% of fresh fruit and vegetables is bought locally, but 90% of that is from large-scale farmers.

Even our local supermarkets have acknowledged the importance of supporting small suppliers. In its 2013 sustainability report, Pick n Pay stated that its "policy will seek to drive the development of the small- and medium-enterprise sector in South Africa, which can be leveraged to promote job creation and food security".

Job creation is stimulated because smallholder farming is more labour- intensive than mechanised, large-scale farming, and food security is a product of both direct access to food grown on the land and income derived from selling the produce to the market.

When supermarkets choose suppliers, they look for those offering goods at the right price, quantity, quality and, importantly, ones they can trust to deliver. Smallholder farmers often have trouble meeting these criteria.

The entry of large supermarkets also affects informal traders, who serve the most food-insecure households, according to Jane Battersby of the African Food Security Urban Network. Informal traders offer services such as breaking up bulk purchases, offering credit to loyal customers during lean times, and helping customers to save on transport costs by being nearby. 

Another food security concern raised by the expansion of supermarkets is the exporting of a ­system that promotes unhealthy food choices because of the relative cheapness of calorie-rich and nutritionally poor foods.

Malnutrition can be costly to a developing country, reducing gross domestic product (GDP) by as much as 6% to 12%, according to the World Bank, and the Global Alliance for Improved Nutrition says it reduces GDP by as much as 3% in Africa and kills 3.5-million children annually. 

At home, supermarkets are involved in initiatives to develop smallholder farmers as part of their corporate social responsibility ­programmes and broad-based black economic empowerment strategies. This growing awareness and emphasis on social responsibility is heartening and owes a lot to the King III Report on Corporate Governance and the JSE's social responsibility investment index.

South African corporations now believe they have to make the right noises regarding accountability, not just to shareholders but to stakeholders too. Public displays of ­concern, epitomised by sustainability reports, should not be dismissed as mere lip service.

Perhaps supermarkets should set targets for local procurement in their other African markets, make these targets known and report on their progress. They can also take the lessons learned from smallholder farmer support initiatives at home and apply them in these countries.

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