short, the state sees supermarkets as an efficient means of coordination and distribution which can bring cheaper food to rural areas and townships and can provide small-scale producers with market channels. Within the long history of dominance by large-scale, capital-intensive agricultural production in South Africa reinforcing high barriers to entry, the state now looks to retailers to provide markets to small-scale farmers rather than transforming the embedded power of capitalist agriculture in South Africa.
Yet if we examine the food value chain, corporate concentration increases (along with deregulation) in the 1970s around the world (McMichael 1994) as well as in South Africa. Private coordination relies on power in the chain. As Greenberg (2010:3) writes: ‘It does not merely replace the state, but alters the terms of governance and regulation to serve specific interests.’ In South Africa, the deregulation and privatisation of single-channel marketing and pricing systems, starting in the 1970s and clinched with the 1996 Marketing of Agricultural Products Act, shifted power to corporate retailers over producers, who had previously had a guaranteed price for their product.15 The corporatisation of former commodity cooperatives occurred at the same time that trade liberalisation in South Africa increased imports of foodstuffs – also accentuating the power of retailers, as they could now source food products globally (Greenberg 2010; Kenny 2012a). We enter the terrain of buyer-driven commodity chains, where retailers exact increasing control over product development and specification by controlling marketing channels (Gereffi 1994). While the state may set regulatory limits on, for instance, quality and health standards for food, it is private standards that have worked to enforce compliance and also to help shift power towards retailers who list preferred suppliers by their ability to meet volume, consistency, presentation and quality measures, increasingly defined and agreed at a global corporate level (Greenberg 2010).16 The corporate retail control of food chains has introduced ever stricter entrance barriers to producers.
Smallholders are encouraged to participate in programmes which can facilitate their access to retailers’ chains yet many of these programmes have low rates of success of sustainability (Nkomo 2013). TechnoServe SA, an international nonprofit organisation that ‘empowers entrepreneurs’ (Mashala 2013:48) manages the contract for Massmart’s Direct Farm programme within its Supplier Development Fund. It has also run similar projects to bring small, medium and micro-sized enterprises (SMMEs) into other retailers’ chains. Working with projects in Limpopo, Mpumalanga and KwaZulu-Natal, it provides training and assistance in finding markets and finance. TechnoServe reports that forty smallholder farmers currently supply Massmart with fresh produce (Mashala 2013:48). Given the skewed resource and skills sets that mean that large scale agriculture dominates South Africa, their interventions assist smallholders to build sustainability within this highly concentrated environment. A key way in which they ensure that a farmer may reach this goal is ‘stringent’ selection (Mashala 2013:49) – TechnoServe works with farmers who are better resourced, with their own access to land, equipment, labour, and those who have an ‘already demonstrable access’ to markets (Nkomo 2013:40). TechnoServe also argues that it focuses on value chains where commercial farmers are not already dominant because the competition would be too high. Beyond choosing feasible commodities, the farmer has to show some ability ‘to access correct seed variables’; to know the crop requirements; to access and use fertilisers; to ‘meet minimum quality requirements and understand these requirements from a market perspective’; and to have access to infrastructure, including irrigation and tillage equipment, storage facilities and pack-houses, and logistics in the form of cold-chain friendly trucks to deliver produce (Nkomo 2013:40).We have little research that details the relationship and nature of contract of suppliers to retailers – highly sensitive information frequently governed by nondisclosure clauses (but see Mather 2005; Mather and Kenny 2005). Recent research by the Institute for Poverty, Land and Agrarian Studies (PLAAS) begins to detail the requirements of smallholders who participate in these programmes. Survey results from smallholder tomato farmers in Limpopo show that net incomes are higher for farmers supplying traditional market channels than through supermarkets or agro-processors (Chikazunga 2013), participation in which, as has consistently been found, requires ‘production infrastructure such as greenhouses and irrigation technology’ and enough land. ‘Given poor yields, inferior quality and production risks, traditional channels are more relevant to the majority of the smallholder farmers’ in the area (Chikazunga 2013:22).
Another study of a development programme aimed at getting smallholder farmers in the Vhembe district into the avocado value chain to supermarkets found that growers felt they benefited from the secured market of retailers, but nevertheless found that most farmers had turnovers below production costs because their farming units were too small to produce volumes high enough to spread costs. In this project, high costs included pesticide spraying to counter a fungus that damaged the aesthetic appeal of the fruit (necessary if the fruit is to be sold to a supermarket). Lower market prices, caused by unusually high volumes entering the market, were difficult for farmers to absorb. Farmers were poorly skilled in reading financial statements. The project also suggested that higher entry barriers, including viable minimum land size and tree numbers, existed for these farmers (Khumalo 2013:32).
In their dissenting report Stiglitz and Hodge noted concern that the Massmart Supplier Development Fund would have little influence on local sourcing precisely because it is limited to SMMEs and to local producers of fresh produce, a commodity category already more likely to be sourced locally. We can see that the debate over local sourcing in both state policy and retailer programmes has focused on the small-scale production of fresh produce. Where smallholders are able successfully to maintain the relationship, they have been selected for having already demonstrated capacities of infrastructure, land access, business skills, and safety standard measures that presume a prior capital base. Most of the already well-capitalised farmers will benefit from Wal-Mart’s entry. Thus, smallholder procurement programmes are a high profile political intervention, but whether they can effect substantial changes to the structure of the economy or the food system is unlikely. The state has basically bought into a development path which has effectively accepted a large-scale, corporate agro-food system as the means of producing and distributing food. Retail capital is a core driver of this process.
LABOUR CONDITIONS WITHIN STORES
In their comparison of Wal-Mart and Carrefour international entries, Durand and Wrigley suggest that Wal-Mart subsidiaries have lasted longer and grown in host countries where there is weaker labour organisation and trade union independence, where labour regulatory enforcement is weaker, where wage bargaining tends to be more individualised and where job security is weaker (Durand and Wrigley 2009:16). We know that Wal-Mart agrees to recognise unions outside the US (see Tilly
