Spar deal takes local maize producers out of red zone

Spar Group in the Eastern Cape has provided the one vital aspect to ensure the success of rural maize farmer members of Mqanduli Rural Enterprise Development (RED) Hub: a consistent market for their maize meal, with the knock-on effect of up- and downstream jobs.

The Spar-RED deal is an eight-year trade support package, with potential sales revenue anticipated to exceed R30m per annum by 2024, then grow exponentially for the remaining four years.

The RED model, spearheaded by the Eastern Cape Rural Development Agency (ECRDA), aims to catalyse, develop and sustain as much of the production value-chain as is feasible within the village and local economy.

ECRDA CEO Nhlanganiso Dladla,said the trade negotiations with Spar Eastern Cape (SEC), facilitated by the FMCG (fast moving consumer goods) Supplier Development Initiative, in association with the provincial department of co-operative governance & traditional affairs, would support rural farmers, producers and manufacturers with access to the large volume consumer demand markets.

Dladla said the arrangement was a first for the province, with SEC demonstrating its commitment to support the local supply chain partnership.

SEC divisional executive Siyolo Dick said the retailer would provide the qualifying emerging sector with assistance.

“The maize meal, by agreement, is priced comparative to the Spar private label brand. In terms of the agreement, RED would enjoy a substantial reprieve in the ‘cost of trade’ that includes rebates, marketing, warehousing and other fees.”

Dick said the package also  includes specific financial concessions, product uptake benefits, and logistics support as a ramp-up model towards local economic empowerment.

“In this way Spar is demonstrating its commitment to the development of emerging farmers and manufacturers of consumer products. The development of emerging farmers in the Eastern Cape coincides very well with our Choose Local campaign.

“Spar Eastern Cape is continuously engaging with the public sector in the province  in this regard.”

Dladla said that the ECRDA-supported RED HUB mill is embarking on a provincewide brand marketing campaign in seven Spar stores.

He said discussions were also under way with Boxer stores to extend the supply to their stores in the Eastern Cape and KwaZulu-Natal. This should commence in the new year.

“This access to market model will expand to include all retailers and wholesalers who value socially responsible consumption, with a special emphasis on good business practices and protection of the domestic industry. The expansion will also include a growing product range over time.”