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Title Contracting arrangements in agribusiness procurement practices in South Africa
Full text http://hdl.handle.net/2263/8428
Date 2008
Author(s) Vermeulen, H.; Kirsten, Johann F.; Sartorius, K.
Abstract This paper presents an overview of contracting arrangements in agribusiness procurement practices in South Africa. The objective of this paper is to contribute to a better understanding of the structures and issues of raw commodity procurement in South African agribusiness supply chains. The results suggest that a wide range of institutions are employed to procure raw commodities for the South African agro-processing sector and that companies are increasingly moving away from the open market as a source of supply for raw commodities, and are utilising contractual arrangements instead. According to the main findings, 78.5% of the total volume of fruit and vegetables procured by agribusiness companies for processing is based on some form of contracting arrangement. The balance is procured through a combination of the open market, own estates, agents and imports. It is only in the case of potatoes, onions, beans and peanuts that a stronger reliance on the spot market is evident. South African retailers source 70% to 100% of their fresh produce directly from farmers (usually through growing programmes). The procurement of meat, poultry and eggs appears to favour vertical integration (and in some cases own production), medium- to long-term contracts and long-term ‛informal' supply arrangements with selected groups of farmers.
Subject(s) Procurement; Contracting; Agro-processing; Agricultural industries -- South Africa; Open market operations; Raw materials
Language en
Publisher Agricultural Economics Association of South Africa
Type of publication Article
Rights Agricultural Economics Association of South Africa
Identifier Vermeulen, H, Kirsten, J & Sartorius, K 2008, 'Contracting arrangements in agribusiness procurement practices in South Africa', Agrekon, vol. 47, no. 2, pp. 1-24. [http://www.aeasa.org.za]; 0303-1853
Repository Pretoria - University of Pretoria, UPSpace
Added to C-A: 2009-06-22;10:15:24