Can Grain SA make a difference?

March 2011

Dr Kobus Laubscher, CEO

In July 2008 and under circumstances radically different from the prevailing circumstances these past few seasons, which could still guide the decisions this year, consideration was given to what Grain SA as organisation should do.

Guided by a vision supported by a good set of core values, the ground was laid on how core business should be operated. The industry was under fire as a result of high farm prices and the challenges were fundamentally different.

The shared dream was described as follows: “Grain SA’s primary goal as an interest group is to develop and promote an industry environment within which participating producers could deliver affordable food to the people of the country at a profit.”

In the meantime the market place has changed and prices at the farm gate have reached levels that threaten sustainability and thus food security. Out of necessity there had to be a change in terms of the core business area. It is now literally about survival.

Initially success could be measured in the manner in which the following was achieved, namely the number of paid up members and the trend; the degree to which Grain SA is the economic voice of grain; functional complementarity that make a difference at farm level, financial sustainability and how fit the organisation was to adapt to changing circumstances.

External compliance was concluded from the manner in which Grain SA is a coparticipant in determining the course of events, influences the external environment and is a preferred partner-in-mission. Balance between what the organisation should be and what it could not afford to become, provided strategic direction. Very little of this, however, was quantifiable.

The more the exchange rate came under pressure, the more the members and the industry expected. Calls for action were diverse, but there was a growing expectation that the organisation should enter the market to make a difference and/or benefit from the alleged non competitive practices – someone allegedly was making money on the back of the producer.

This was given intensive consideration and it was clear that the current mandate and the empowerment for the execution thereof did not make provision for such actions. There is a clear expectation that Grain SA should become commercially involved in the value chain. For the sake of this debate accept the collective.

The proposed operation of a voluntary export pool could serve as an introductory exposure to commercial activities. The question, however, is whether and how Grain SA can in any manner develop a commercial arm without becoming competition for existing entities in the value chain that provide very clear services and products to producers and as such contribute to the sustainability of such producers.

It is not clear whether such competition is necessary and if it could be affordable. Success with these actions is dependant on cooperation between producers; and various organisational formats were proposed, including a co-operative. The lack of consensus amongst producers about the feasibility of the proposed export pool due to an alleged lack of co-operation is however, indicative of the enormous possibility that such a structure could not work.

In short, can any structure that has to depend on co-operation amongst producers who are strongly individualistic, work effectively enough to counter the alleged lack of performance in the market by way of higher farm prices?

Alternatively must the working of the market and how Grain SA can improve the efficiency thereof through influencing, also be put under the spotlight?

All things considered, the question of what Grain SA’s core business should be remains important but unanswered. The fact of the matter is that to date, insufficient evidence has been presented in favour of commercialisation of activities and how such a change to the core task could make a difference in the form of higher farm prices.

Competent inputs by way of quality information regarding cause and effect should be presented more aggressively and the truth pursued fearlessly.

The loose association of especially policy makers with the realities that drive sustainability at farm level should not be tolerated. Congress 2011 is suited to thresh out these issues.

Publication: March 2011

Section: Editorial