Structure, Conduct and Performance in the South African Potato Processing Industry

The South African Potato industry was deregulated in the early 1990’s, leading to changes in marketstructure. The adjustment in market structure leads to changes in production and marketing practices,including contracting and pricing strategies for processing firms within the industry. The purpose of thispaper is to investigate the current status in the potato processing industry, based on market structure,conduct and performance. The objective is to qualitatively measure the driving forces within the industry,and how these factors influence performance of the industry as a whole. The research method was based onthe structure-conduct-performance paradigm, giving a better understanding of the potato processingindustry and the driving forces, relating to future growth. A short case study of the Australian potatoprocessing industry, which finds itself in a similar position as South Africa, reveals that increasing globalcompetition in the form of low cost importers, are hampering competitiveness and profitability, along withrising production costs. It was found that the South African potato processing industry has a relatively highconcentration, which means efficiency is lacking as market shares is not distributed effectively. It wasfurther evident that a lack of trust between processors and producers is a source of concern for processors.