Vermeulen, HesterKirsten, Johann F.Sartorius, Kurt2008-12-152008-12-152008-06Vermeulen, 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]0303-1853http://hdl.handle.net/2263/8428This 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.enAgricultural Economics Association of South AfricaProcurementContractingAgro-processingAgricultural industries -- South AfricaOpen market operationsRaw materialsArticle