Massmart and government — match made in heaven

FMCG SUPPLIER NEWS

Business Day - Aug 3rd 2012, 10:44

What started as a bitter courtroom battle has now turned into a beautiful marriage. 

In fact, more and more of these marriages are needed, Agriculture, Forestry and Fisheries Minister Tina Joemat-Pettersson said yesterday, while singing the praises of her department’s new involvement with Walmart-owned Massmart .

For much of the past year she has tried to stop Walmart investing in SA. But yesterday Ms Joemat-Pettersson called for more public-private partnerships, and asked retailers to work hand in hand with the Department of Agriculture.

Every courtship has its problems, the minister said, sporting a Walmart peak cap at Massmart’s Direct Farm Initiative visit in Limpopo.

Direct Farm is a Walmart programme that was created to include more locally grown food in its supply chain. This week it produced its first harvest for Massmart stores.

Joemat-Pettersson’s remarks are a far cry from how the relationship started — an acrimonious court battle that lasted more than a year between the retailer and the three government departments that opposed the R16bn deal.

The government cited increased imports, which would have led to job losses, as the main reason for its opposition to the transaction.

The Competition Tribunal approved the deal, with conditions, last year — one being the establishment of a R100m supplier development fund.

Both the government and trade unions claimed the fund was not enough to offset the negative effects of the merger.

The court asked for a study to be conducted, and requested reports from Massmart, the government and the unions.

These documents are now before the Competition Appeal Court.

Yesterday, however, Ms Joemat-Pettersson said : "There are still complexities to be resolved….

"Government can only work effectively with partnerships such as this one." The government was also keen to work on other projects with Massmart in the future, including fishing and forestry, Ms Joemat-Pettersson said. "Growing farmers is the first step — getting them market ready. The next step is export readiness, and then mechanisation of agriculture. The court case was necessary, but now let’s just say the prenuptial (agreement) has been worked out."

The initiative forms part of a R15-million, three-year, supplier development deal between Massmart and TechnoServe SA, a nongovernmental organisation involved with entrepreneurship and agricultural development

Massmart hopes to integrate 1,500 smallholder farms into its supply chain over a five-year period ending in 2016.

Its supplier development fund will support the direct farm activities for three years, with a possibility of extension.

The project was started in Limpopo and will be rolled out nationally so that the company can source about 30% of its fresh produce from local smallholders.

Massmart’s head of the supplier development fund, Mncane Mthunzi, said farms in the Ofcolaco district would be the first to deliver fresh produce to Massmart stores

"It is encouraging to know that we are creating a demand pull that is incentivising participating smallholder farmers to place more land under production and to grow high-demand fresh produce," Mr Mthunzi said. The initiative also forms part of government’s Masibambisane rural development programme, which aims to provide local small-scale farmers with access to markets, finance and skills.

While the fund is still under review, the initiative will continue, regardless of the outcome, Massmart said.