Improving local supply chain

Lesotho’s agricultural sector urgently requires a structured supply chain. There is need for structural adjustments in order to realize the effectiveness of protectionist policies that the Government of Lesotho put in place regarding import of fruits and vegetables. The question is how and what can be done by the Lesotho Government, the role of the private sector as well as what other countries like South Africa and countries in developing markets are managing supply chains in ensuring that smallholder farmers’ produce gets to the markets, protecting the smallholder farmers market access and creating sustainable jobs?

In Agricultural Economics, supply chain includes the processes of allocating resources starting with production, processing, and marketing. This process involves determining what to produce, how much of it to produce, when to produce it, how to store it, where to sell it and how to transport it to the markets and more. At each level of the supply chain, some value is added to the product, which in turn creates profits for the sector player and hence the common use of words such as value chain.

Looking at what South Africa has put in place. In 2013 the country established and institutionalized a collaborative effort between government and the fresh produce industry stakeholders and revived the operations and service standards of National Fresh Produce Markets across the Republic of South Africa. These markets are the Johannesburg, the Bloemfontein, and the Cape Town Fresh Produce markets and they are privately managed. The main objectives of these markets are to harmonize and standardize the Safety and Security Protocols, Infrastructure Requirements, Information Management, Risk, Financial Management, Transformation and Human Capital Development, Regulatory Environment, Stakeholder Management, Consignment Control, Food Safety, Hygiene and Cleanliness of the fruit and vegetable supply chains across the country. Notwithstanding these existing markets, there is substantial evidence that companies are increasingly utilizing contractual arrangements with private producers instead of using the open markets for the supply of fresh produce. With about 80 percent of the total volume of fruits and vegetables being procured for processing based on some form of contract arrangements between producers and buyers.

The Supply chain can either be long or short, depending on the number of players and models being adopted as well as how organized the farmers groups are. For example, in Zimbabwe, small-scale farmers formed associations, market agents and lead farmers that act as distributors and link with formal and informal markets. In its supply chain, Zimbabwe has actors such as fertilizer and technical services on crop nutrition, agrochemical and technical services on plant protection, packaging companies, off takers who include lead farmers, farmers unions, wholesale markets, retailers and export markets. The farmers associations are the ones that establish and manage most fresh produce markets while some wholesalers buy from agents and resell and distribute to supermarkets and chain stores across the country.

What Lesotho can take from what is happening next door is pretty much easy. There is no need to reinvent the wheel but can easily propagate best practices and develop a functioning supply chain management in the country. It is also evident that private sector is very much involved in establishing markets using farmers associations and unions. There is need for farmers markets in every district whereby farmers organize themselves to have either lead farmers, aggregators and/or forming cooperatives in order to create a private sector driven supply chain with only government assisting with standards development and regulatory frameworks. Forming these groupings benefits smallholder farmers in reducing transaction costs, input availability and access to regulated prices, management of post-harvest activities including storage of farm produce. It is imperative now more than ever that private sector in the Agri-sector organize themselves and takes a lead in development of fresh produce markets. The Government of Lesotho on the other hand needs to speedily establish standards and good agricultural practice and guidelines in order for standardized produce and crop management.

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