The results season for JSE-listed food producers is under way. Picture: THINKSTOCK
The results season for JSE-listed food producers is under way. Picture: THINKSTOCK

While large corporate food producers and retailers have largely managed to weather Covid-19, recording huge profits in the process, small-scale players were pushed to the brink of collapse due to the pandemic restrictions, according to a new research report by the Institute for Poverty, Land and Agrarian Studies (Plaas) at the University of the Western Cape.

The study highlights that official regulations introduced in response to the Covid-19 outbreak under the state of disaster declared in March 2020 facilitated a system of licensing which enabled large-scale and formal sector producers, traders and retailers to carry on doing business, but stopped street and “bakkie” traders from selling food.

The regulations also prevented fishers from setting out to sea and selling their catches at fair prices and blocked access to markets for small-scale farmers. This deprived poor consumers of a crucial source of cheap, nutritious food. 

Millions of rural households rely on small-scale farming for their food and to supplement their incomes. Conservative estimates suggest there are about 3-million such farmers in SA playing a key role in improving household food security. However, they hardly receive any formal support or recognition from the government.

The Plaas research report, released on Thursday, looked into how the pandemic and the various government responses to curb the spread of the virus have affected SA’s food system. It focused on in-depth interviews with more than 200 producers in Gauteng and KwaZulu-Natal, and fishers in the Western Cape.

It highlights that while the agricultural sector grew 13% in the first year of Covid-19 — the only sector growing amid a 7% contraction of the broader economy — many small-scale producers faced collapse.

Small-scale black farmers, many hampered by a lack of capital and fair access to markets, faced increased input costs including transport and labour.  Some stopped production, many retrenched workers, and others were forced deeply into debt. They generally failed to benefit from the increased food prices or exports from which a number of the larger agribusiness players profited.

The research found that the Covid-19 regulations affected different parts of the food system unevenly. For example, although the supply and sale of food were declared “essential services” and exempted from certain lockdown regulations, the reality was that vast sections of the informal sector were closed down.

This resulted in unintended consequences in the form of unsellable surpluses, food wastage and lost incomes among the country’s small-scale farmers, 80,000 small-scale fishers and fish processors, and 750,000 street traders selling food.

While supermarkets, food processors and commercial farms were largely able to sustain their businesses, small-scale farmers and fishers lost access to markets as a result of a prohibition on street trade, curfews and a lack of storage and refrigeration — and also because of the collapse of the hospitality and tourism sector to which they had previously provided food, the authors of the report said.

Added to this, the sale of cooked food on the streets continued to be prohibited even after restaurants were reopened. Thus small-scale players in the food system were hit by the loss of both low-income and middle- and high-income customers as these patrons shifted towards buying food, including cooked food, through formal retail outlets.

The report points out that the pandemic response presupposed that salaried workers would stay at home while business owners would obtain business relief — a presumption that ignored the actual experiences of those making a living in the informal sector, including food producers and traders. This led to vast unintended but foreseeable consequences in the form of unsellable surpluses, food wastage and lost incomes.

Artisanal fishers, already facing stiff competition for a threatened natural resource base from large firms, were also ill equipped to cope with the new pressures brought by Covid-19. Restrictions on travel and accommodation prevented them from travelling to fishing grounds in good time to set out to sea; and an export ban meant that fishers on the West Coast lost out on the market for their most valuable species.

At the same time, large companies with extensive refrigeration and packing facilities were able to buy up fish at low prices and store it until the markets improved and they could sell to consumers at a higher price, according to the research report.

The authors said that this pattern of the large corporate stakeholders protecting their profit margins at the expense of primary producers and consumers during the state of disaster was repeated across the food system, indicating the crucial importance of supporting small-scale food producers and traders, who underpin the informal economy in SA.

The authors call for an improved understanding of the informal food system, including its contribution to resilience and economic development. Such an appreciation should inform the adoption of new policy measures to restructure the system and enable a more effective response to future crises and shocks. They propose that after the November 1 local government elections, all municipal authorities should seek to promote small farmer and street trader spaces in the cities.

“Under Covid-19, it has become quite evident that increased production and profits in the food system can be accompanied by greater food insecurity and hunger,” said Ruth Hall, one of the authors of the report. “The state of disaster was clearly more disastrous for some than others.”

phakathib@businesslive.co.za

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