Private fresh produce market -management company opens 5th facility

Private fresh produce market -management company opens 5th facility

By Benjamin Brits | All images be Cold Link Africa 

The latest addition to the growing list of Freshlinq private markets is the Freshlinq Midrand Market which was added on the heels of the Freshlinq Vaal Market which opened at the end of 2019.

The Midrand Market in Gauteng, South Africa, was officially opened at the end of June 2020, and has a current floorspace of 4 200m² with additional expansion potential of over 7 000m²  when the available floor space is utilsed in future. The Vaal Market, which was the fourth Freshlinq market to open its doors, trades on a floor space of 4 000m².

The decision to fast track the opening of the new Midrand market came about when the Tshwane Market closed down temporarilty, amidst the country’s hard-lockdown, due to Covid cases being recorded. The planning around Freshlinq opening another market in Gauteng had in fact already started at the beginning stages of the lockdown and Midrand was pinpointed as a potential location by the management team. The circumstance thus created the opportune time to get the ball rolling sooner rather than later.

Subsequently, the Midrand Market was brought into operation with core functionality within only two days of the Tshwane Market being closed – through firstly pulling out all the stops for a task that would under normal circumstances have been impossible, and secondly having the support of RSA market agents.

VaalVariety 2The Vaal Market trades a very wide variety of produce from mushrooms to pumpkins.

Although as a ‘trading facility’ the market wasn’t initially able to offer cash-handling facilities or cold rooms, as this was literally impossible to deliver within the timeframe, the agents were still able to trade a significant amount of produce on the opening day.

Over the next two weeks, the facility was set up with all of the infrastructure required for full operations, which was again a tall order for suppliers that normally need at least a month to supply and install. This included critical infrastructure such as the network and internet connectivity required to access Freshlinq’s cloud-based trading platform which runs off a cloud-based server, without which no trading is possible. It also included networking and the cabling for point of sale terminals on the market floor, the highly secure ‘cash house’ and the initial cold rooms.

“As the market management company, we provide all necessary infrastructure needed to facilitate fresh produce trades. Two of the focus areas for the infrastructure after the Midrand market was opened were the cash handling facility and the cold rooms. Both of which are essential and had to be erected urgently. Within a month both had been set up, this was a huge achievement as the set-up time for both are usually much longer. We set up a secure cash house with all necessary measures taken to ensure that any risks were mitigated as far as possible. We also had the cold rooms installed to ensure that we could facilitate the trade of produce such as apples and blueberries which require cold rooms,” says Theo Botha, managing director of Freshlinq.

Another necessary element in the establishment of the various Freshlinq markets around the country is the availability of parking and the practicality around trucks getting in and out of the facilities to load and unload with ease, and so as you would see at the Midrand and Vaal markets, there is more than sufficient space for manoeuvring trucks of any size.

Cold rooms and ripening rooms

Lutz Refrigeration was the appointed contractor for both the Vaal and Midrand Markets. The design brief was simply the supply and installation of cold rooms and ripening rooms, as with the other Freshlinq markets located around the country. The client’s requirement here was the ability to keep certain fresh produce cool and ripening rooms to correctly ripen bananas with more control and emphasis on redundancy over efficiency as this would be a relatively small portion of the operational costs in relation to possible product losses.

FreshlinqMDTheo Botha, Freshlinq’s managing director.

The design on the rooms are the same for the various facilities. The cold rooms can run all the way down to 0 degrees if needed because certain products, like apples, need to be stored very close to 0 degrees, to do this evaporators have electric heaters for defrosting. Each room size varies according to the facility needs and are approximately 60 – 400m² each. They are also built tall enough to install racking when required at a later stage.

“Each market has two cold rooms and the reason for this need is that certain products must be held at different temperatures and also because you don’t want to mix certain products, so for example carrots and apples can’t be stored together because the carrots become bitter as a result of gases emitted from the apples. Apples are actually a particularly difficult product to keep because they give off ethylene gas which encourages ripening (and over ripening) of other fruits like bananas, peaches and tomatoes; hence apples are kept in separate chambers with fruit and veg that store well together,” says Kevin Walter of Lutz Refrigeration.

The Vaal market was also fitted with two ripening rooms for bananas. The Midrand market will receive these ripening rooms in the future as the facility is expanded.

Their banana ripening rooms were built on what is commonly known as the ‘banana board design’, which is the method these rooms have been constructed with for the last 40 years.

“With these traditional ripening rooms you would have a cooling coil behind a plenum wall on the far side of the room (opposite to the door) which would suck the air from the bottom of the plenum and blow it out over the top of the pallettes holding unripened mature green bananas. The air is channelled through each pallet in tight circuit with a series of baffle beams and railway sleepers to prevent air leakeakge underneath the pallets. What we did on this installation that was slightly different to what we have done in the past, was to install dedicated tube axial circulation fans on the plenum with a separate cooling coil in the middle of the room.The reason we did this was to maximise the airflow so as not to expect the blower coils to provide the full airflow, and this method produces a better airflow,” adds Walter.

MidEntranceThe entrance at the Midrand Market is modern, inviting and clean.

The two ripening rooms’ temperatures can be varied depending on how the facility manager wants to ripen the fruit because this is not a standard process and there are many different methods and techniques in ripening. Some clients will ripen at about 20 degrees, while others will ripen at 16 degrees and this all impacts the speeding up, or slowing down of the process. The ripening also depends on the state at which the produce is delivered to the market.

Ripening also requires that ethylene be put into the room to aid in the process and this is done through an ethylene generator which is essentially a little machine that you plug into a power outlet, you put an ethylene solution into it and it boils the fluid off as a vapour. This is an old-fashioned method but is also tried and tested, and has widely been used for many decades. This method is based on X amount of ethelyene to create X amount of particles per million (PPM) in the chamber. Any particular ‘recipe’ for ripening comes from years of experience, trial and error to achieve the required outcome. The ripening process manager will know that for his rooms with the particular volume of air he will need a specific amount of ethylene solution to achieve the perfect ethylene concentration in the rooms.

Ripening rooms must also be smoke-tested before running because you cannot afford to have the ethylene leaking out of a chamber and contaminating other products that were already ripe as this will over-ripen the produce and cause premature losses. The testing objective is to ensure a fully gas-tight environment. There are heaters installed in the ripening rooms as well so they offer a heating and cooling system if you need to ripen on a particularly cold day you can warm the rooms up to reach the required temperature.

“We also installed full alarms on every room to monitor everything, and every moving part, so if a fan trips, and the gas level has dropped too low, if the condensers are blocked or you have a high gas pressure pressure trip, an alarm is activated with sound, so the agents are notified straight away so that they can deal with the fault quickly to ensure that suppliers don’t lose any of their products. There are also remote boards for every room, visible from the entrance to the room indicating exactly what is going on, what the temperature is, alarm states and so on,” notes Walter.

MidPlantThe condensing unit and switchboard at the Midrand Market.

Ripening rooms each have MTZ100 condensing units which under those conditions can produce 20kW of cooling per room. Cold Rooms each have MTZ160 condensing units which under those colder conditions can produce 25kW of cooling per room. Ripening and cold rooms have heaters in the evaporators s for defrosting and heating if required. Air circulation fans in the ripening rooms are Luft 500mm 1.5kW tube axial fans.

A tall order on the Midrand market cold rooms delivered

Walter further commented that the requirement on delivering the cold rooms with such as short turnaround at the Midrand facility was stressful and initially no promises were even possible to the client – “During the peak of the lockdown we received a call to the Midrand site where the situation around the Tshwane market closure was discussed and Freshlinq, seeing this as as an opportunity, wanted to quickly get a facility up and running to try and service some of the clientele that typically go to that market. We were given a brief that we had to get the cold rooms installed and running in a very short period and from placing the order the rooms must be built and everything must be in within that period. We hit the deadline which was essentially a miracle because this type of work normally takes about a month to order the products from suppliers alone. We really only achieved this by driving to go and see what each of our suppliers had in stock on the floor, we built the switch boards and everyone just pulled together to get it done. We didn’t install what we would have typically used under a normal timeframe of this project – the products at the Midrand Market are better spec’d units than what the client actually needed, but in order to meet the deadline we did what we needed to do.”

Establishment of new fresh produce markets in South Africa

Since 2014, Freshlinq has been opening their privately managed markets in strategic locations to meet the need for fresh produce markets as concerns grow over the ageing and sometimes collapsing infrastructure at municipal markets – where it is clear that facilities are not well cared for or maintained.

Freshlinq, as a privately run company, is able to re-invest in their operations, IT infrastructure and general running of their fresh produce markets as having properly functioning infrastructure is essential in the management and trading of fresh fruits and vegetables, but at the current municipal-run facilities it is increasingly evident that little or no investment is finding its way back to that infrastructure.

“We are also invested in the health and stability of the fresh produce value chain and the farmers and consumers which it supports. We want to make sure that above all the fresh produce value chain remains healthy and stable in South Africa. Produce needs to be continually traded because people need to eat and farmers need adequate facilities to be able to trade their produce. The contrast in experiencing a Freshlinq market compared to other markets speaks for itself. The fact is that we manage our facilities professionally and ensure that they are clean, safe and well-maintained,” says Botha.

Establishing more produce markets across the country also reduces transport costs which results in better-priced produce that is closer to the end consumer.

VaalParkingEach of the Freshlinq Markets have ample parking and facilities to accommodate various sized trucks to offload and collect.

The Freshlinq origin and business rationale

The aim of the Freshlinq business model is to facilitate the trade of fresh produce through its online trading platform and fresh produce markets. It supplies the infrastructure for trade to occur, which includes the market facility, cash handling, security, utilities, cold rooms/ripening rooms and trade clearing.

The company originated as FGX – Farm Gate Exchange, and was founded because its shareholders, many being large-scale farmers, identified the need for additional produce marketing channels to support the fresh produce value-chain. A large amount of produce which is produced in South Africa is also sold locally and thus requires a resilient and expanding supply chain.

Being dependent then on the existing markets to trade, FGX was created to mitigate this risk and the idea primarily was as an e-commerce solution – direct trading from the producer to the buyers. A lot of capital was invested initially on the trading platform and the concept was not for the product to physically go through a market, but to go directly from the farmer to customer via the cheapest supply chain. September 2011 was when the first direct trades were concluded and that portion of the business model still continues today.

“In 2014, ZZ2 owned and operated farm stalls near their pack houses where their tomatoes were sold. This is when our first venture into running these ‘stalls’ as a proper fresh produce market started. FGX was the market authority, RSA came in as the agents, and ZZ2, apart from being the anchor supplier, also provided us with the facility as the landlord. The first market – in Mooketsi, Limpopo – we took over as a pilot programme and the results were astounding as sales took off. The explosion in growth motivated us to open up a replica operation that also grew significantly and was moved to what is now the Polokwane Market, which started out at 380m² under roof, and grew to 5 500m². Based on the success of the pilot programmes – in May 2019 we took over the Nelspruit Market from an agency that was running this facility, in November 2019 we opened the Vaal market, and then Midrand market at the end of June 2020,” Botha comments.

One of the main factors that has been identified when searching for potential Freshlinq market locations is to consider the population density. Statistics show that regardless of individual buyer demographics in most cases, fresh produce that is supplied to a particular market gets consumed by people in the vicinity around the market. It is therefore essential to have a large enough population density to justify the opening of a new market in any particular area.

Botha continues to explain the three primary functions of the company as being, price forming, efficiency and transparency. “Although trading fresh produce is all about supply and demand economics at the end of the day, we aim to make the transaction transparent so that no one involved in the transaction makes money disproportionately to the value that they add to the chain and the only way this is done is through transparency – if the farmer can see who makes what in the value chain, he/she can use his own discretion to question rates or fairness. Efficiency is about making sure the transactions are efficient both in the supply chain as well as the cost of the transaction. Finally, price forming by ensuring that the day’s price is determined by the supply and demand of produce on the day – if there is oversupply of a product, for example, the only way to move it is to reduce the price and make it more affordable for more buyers and this also allows you to clear your floor, while the reverse is of course true – where the market has limited supply of a product, this results in that price going up. This element is critically important to manage the consignment-model that our business is based on. You have to move stock at the right price for everyone, because once you receive produce on the market floor, the clock on its freshness is ticking with each passing day, which in turn affects the price that the buyers are willing to pay for this produce, which is also the price that the producer will get for this produce.”

Supporting job creation and small farmers

With participants in the various produce markets, there is a very large portion of the buyers who are hawkers or informal traders. They go in and buy various produce and then go out into the local community and sell it on to the end-customer directly or utilise networks of people around the community to break down the bulk into smaller affordable parcels which are sold to the end consumer.

This model is empowering people to make a living by coming to the market and buying quality produce at market prices and re-selling – creating much-needed opportunity to make a living. This supports the livelihood of many people in the chain and sub networks involved. This sector includes, amongst others, the informal traders like hawkers, small community spaza shops and local take-away stalls. This aids in supporting job creation within the informal sector by enabling individuals to start to generate income for themselves with a very small initial cost for their business and instant opportunity to make a profit.

“Our business model also supports smaller scale and upcoming producers. One thing to keep in mind is that producing crops is not what creates a living – the producers need to sell their produce to generate an income and hopefully have enough money to plant the next crop and make some profit, so another very important part of our business model is that our markets supply a platform that allows any producer to participate in selling their produce all year round. The trading process is also much quicker, which helps the farmer’s cashflow. This is a major advantage in the success of our business model, as the producers are paid within 5 days of their produce being sold on the market, while retail outlets usually only offer extended payment terms,” adds Botha.

VaalProduceVarious produce in one of the cold rooms at the Vaal Market.

Future plans and more markets

Having grown substantially over the past 18 months in opening three markets and progress exceeding expectations, the current focus is the development of the Midrand Market and the projection over the next four years is to grow the number of Freshlinq markets to 10, which will be positioned strategically around the country, as well as continuing to build on the customer base that is expected to reach triple digit growth.

Suppliers list for both sites

Compressors

Maneurope (Danfoss)

Fan Coil Units

Recam at Midrand / Colcoil at Vanderbijl

Controls

Carel

Expansion valves/Solenoids

Danfoss

Fans

Luft Fans

Insulated Panels

Precool

Switchboards and control systems

Lutz Refrigeration

Condensing units

Lutz Refrigeration

 

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