Centre on Regulation and Competition WORKING PAPER SERIES Paper No. 107 HOW GLOBALISATION AND COMPETITION POLICY INHIBIT POVERTY REDUCTION: THE CASE OF THE SOUTH AFRICAN WINE INDUSTRY Joachim Ewert* and Jeffrey Henderson** *University of Stellenbosch, South Africa ** University of Manchester, England September 2004 ISBN: 978-1-905381-06-9 Further details: Centre Secretary Published by: Centre on Regulation and Competition, Institute for Development Policy and Management, University of Manchester, Harold Hankins Building, Precinct Centre, Oxford Road, Manchester M13 9QH, UK Tel: +44-161 275 2798 Fax: +44-161 275 0808 Email:
[email protected] Web: www.competition-regulation.org.uk 1 HOW GLOBALISATION AND COMPETITION POLICY INHIBIT POVERTY REDUCTION: THE CASE OF THE SOUTH AFRICAN WINE INDUSTRY Joachim Ewert and Jeffrey Henderson ‘What is the difference between a terrorist and a supermarket buyer? Answer: one can negotiate with a terrorist.’ Joke doing the rounds in the Cape wine lands INTRODUCTION In studying the relation between global markets and agricultural industries and the consequences the processes involved have for inequality and poverty, the South African wine industry highlights many of the key issues in need of analytic and policy attention. Among these issues the questions of racial and class divisions within the industry, the implications of government competition and regulatory policies and the problems (for producer companies and workers) of being absorbed into the global value chains of oligopolistic retailers, are evident. 1 This paper discusses these and cognate matters and briefly indicates some of the policy conclusions that seem relevant not only for this industry and for South Africa, but perhaps also for other export-oriented agricultural and agricultural processing industries elsewhere in the developing world.