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CHAPTER 1
maize producers to have to absorb the cost-increasing effect of inflation them-
selves to a greater extent. The government also started phasing out the subsidy on
storage costs that was in place from the mid-1950s, which placed a further financial
burden on the maize producers.
During the early to mid-1980s it became clear that the government’s policy grad-
ually started moving in the direction of an economy controlled by market forces
with less interference from the state, in other words a free-market system. The
Prime Minister at the time, Mr PW Botha, did in fact say that the government
would continue to move away from direct economic control, such as price and
wage control, exchange control and bank credit ceilings. For agriculture this
meant less dependence on government support and that the general thought
patterns in agriculture would have to adapt to a more balanced position with less
interference.
Even in the ranks of NAMPO and organised agriculture the movement to greater
participation in the free market emerged. The change in the broader philosophy
of the government in the mid-eighties concerning greater exposure to market
forces coincided with recommendations by NAMPO that producers should be
aware of the negative effect of surplus maize production and the necessity for
investigating alternatives.
Jacobs Committee and the dual market system
After a meeting between a NAMPO delegation and Mr Greyling Wentzel, the
Minister of Agriculture, in May 1983 the minister instructed the Jacobs Committee
to investigate the problems in the maize industry and formulate solutions for it.
The committee ultimately recommended a dual market system in terms of which
producers’ access to the local market would be controlled by a quota system for
deliveries, while any producer would be entitled to deliver indefinite quantities of
maize to an export pool. The prices of the maize for the local market and for the
export pool would be determined separately from each other by the net result of
the respective pools.
The proposed dual market system was accepted in principle by both Minister
Wentzel and NAMPO in September 1983. For the next two years a major attempt
was made to convert the concept into an acceptable system. It was constantly
discussed in appropriate forums and at NAMPO’s annual Congress in 1985 is was
decided to give active attention to the introduction of the system. However, on
13 September 1985 Minister Wentzel rejected the proposed scheme on the recom-
mendation of the Marketing Council before it could be implemented, and thus the
concept disappeared.
At the same time Minister Wentzel announced that he was not satisfied with the
existing single-channel fixed-price scheme and requested the Marketing Council
to submit proposals for an alternative marketing system to him. Shortly afterwards
rumours started circulating that a single-channel pooled system could be intro-
duced, which eventually realised in 1987.
1984/1985 producer price
In the meantime, the Maize Board followed the approach of using the cost of
imported maize as basis for determining the producer price for the 1984/1985
season. The reasoning was that if the South African producer price was set at a
lower price, it would amount to the local producers subsidising the consumer.
Given the straitened financial position of the maize producers due to the pro-
longed drought from 1983 this was not acceptable to the producers. In the end it
was decided to base the producer price on the landed costs of imported maize.
In the Maize Board’s 1985 annual report it was reported that the consumer or-
ganisations with whom the Maize Board had held talks since February 1984 had
agreed with this approach.
During these historical meetings with the consumer organisations it was also agreed
that the selling prices of imported and locally produced maize should be the same.
As the import price at that stage was higher than the local producer price, this
approach would necessarily lead to higher consumer prices for maize products.