A JOURNEY THROUGH TIME

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THE GRAIN AND OILSEED INDUSTRY OF SOUTH AFRICA – A JOURNEY THROUGH TIME ႆႂ
4 000
3 000
2 000
1 000
0 Tons (thousand)
1998/19991999/20002000/20012001/20022002/20032003/20042004/20052005/20062006/20072007/20082008/20092009/20102010/20112011/20122012/20132013/20142014/2015
Human consumption
Total output
Graph 16: Human wheat consumption versus total output
back as 1912 in an attempt to pool resources, obtain equipment and use it collectively
and promote sales.
In 1920 the Swartland producers also established a milling company, Bokomo, to
mill the members’ wheat and give them a degree of control over the products and
the price of the wheat after it had left the farm.
At the end of 1930 the producers who were involved with Wesgraan and Bokomo
started a central marketing co-operative, Sasko, which would attempt to sell wheat
throughout South Africa, stabilise its price and consolidate production. Unfortu-
nately, because of fluctuating import prices and unpredictable local production
volumes, Sasko was unable to really stabilise the price of wheat.
Wheat producers continued to exert pressure for more government support,
particularly in the light of the severe drought and declining prices of the early
1930s. This eventually led to the establishment of the Wheat Board and the
control mechanisms for the wheat industry, described in Chapter 2.
Regulation
The legislation promulgated in 1930 and 1931 to restrict the import of wheat and
wheat meal contributed to encouraging local wheat cultivation. From 1920 until the
first part of the 1930s wheat production more than doubled from 200 000 tons to
373 996 tons in 1931/1932 and 446 580 tons in 1934/1935.
At the beginning of the 1930s the relatively general view was that the wheat-to-
bread chain was ineffective and wasteful because of poor co-ordination and dam-
aging competition, and that the unstable prices were the result of speculation
by traders in the unregulated market environment. The view was that the Wheat
Board would be able to solve the problem by rationalising the chain and applying
effective price control. The desperate and virtually critical financial position of a
major part of the country’s population at that stage and the accompanying overall
concern about national wealth played a significant role in the sentiment in favour
of government control.
Although control over the import of wheat and high protective import tariffs played
a role in maintaining the domestic wheat price at a reasonable level, the prices at
the beginning of each delivery season were under severe downwards pressure be-
cause of the oversupply on the market. Co-operatives tried to regulate the supply
to the market and transfer surplus stock to subsequent marketing years. However,
the cost and risk associated with this policy was borne only by producers who
were members of the co-operatives and not by all the wheat producers. It was
therefore not a sustainable plan.
The Wheat Industry Control Board (the Wheat Board) that was established in 1935
was authorised to pay storage compensation to co-operatives and producers who
stored wheat. This made it possible for the Wheat Board to control the flow of
wheat to the market.