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CHAPTER 1
The commission recommended that the Wheat Board should retain the power to
control access to the baking industry and replace the system of registration for
bakers with formal registration.
During the 1980s the pressure on the authorities to make the baking industry
more accessible to new entrants increased and led to the allocation of more li-
cences for the baking of the subsidised standard bread. The number of bakeries
that were licensed by the Wheat Board to bake this bread increased from 338 in
October 1985 to 370 in February 1991.
In 1985 the Davin Commission was appointed to investigate the justification of the
payment of government subsidies on bread and whether to continue them. The
commission recommended that the Wheat Board continue determining producer
prices for wheat, but that price control, the payment of subsidies and restrictive
registration of millers and bakers of standard bread be stopped. Only the recom-
mendation regarding the registration of millers was implemented at that stage.
In 1985 the Competition Board made the following recommendations on the basis
of an investigation into economic competition in the milling and baking industry in
South Africa, carried out at the direction of the Minister of Trade and Industry:
• The restrictive system of registration for millers and bakers had to be abolished
and replaced by a system of formal registration.
• Price control on milling and baking products had to be abolished.
• In order to prevent the concentration of economic power in the wheat industry
from increasing, the Competition Board had to be informed of all future business
acquisitions in the industry.
The Competition Board also maintained that the bread subsidy should not be
continued in its existing format and supported the recommendations of the
Davin Commission in this regard.
In 1986 the National Marketing Council (NMC) investigated the application of the
Winter Cereals Scheme at the request of Minister Wentzel (Agriculture), together
with other schemes that were introduced in terms of the Marketing Act. Among
other things the NMC recommended that certain adjustments to the system of
restrictive registrations with respect to millers and bakers in terms of the Winter
Cereals Scheme be made by replacing the system with one of formal registration.
From 1990 the Wheat Board’s role began to change drastically and the regulatory
measures with respect to the wheat industry were in fact adjusted to allow the
market to function according to free-market principles to a greater extent.
In 1991 the compulsory registration of millers and bakers was abolished by the
Wheat Board and price control on all wheat products was terminated, after which
the price of bread increased rapidly. The price of white bread rose by 26,1% in one
year, and that of brown bread by 27%. Consumers also started to complain about
the low quality of the bread after control was abolished.
The bread subsidy, which had existed since the 1940s, was scaled down over time
and from 1947 differentiated subsidies were paid on white and brown bread, with
a higher subsidy on brown bread. The subsidy on white bread was abolished from
February 1984, and in 1988 the cabinet decided in principle to phase out the bread
subsidy over a period of three years. The Blignaut Committee was appointed to
work out the final strategy in this regard, and on 1 March 1991 the payment of
government subsidies on all standard bread was abolished.
A large-scale concentration of power occurred in the milling industry too. The num-
ber of wheat mills in the country was reduced from 120 in 1951 to only 66 in 1974.
However, the Commission of Enquiry into the Marketing Act that was appointed in
1979 recommended that the Wheat Board retain the power to register millers. By
1985 there were only 50 registered wheat mills in South Africa, of which 31 were
owned by six milling groups with a joint market share of 98%.
In addition to their milling activities, the larger mills also expanded their control
to the baking industry during the 1970s and 1980s. By the time the registration
restrictions were lifted, the few groups that sold the biggest quantity of bread
MR ANDRIES BEYERS
I
t is a fact that you cannot
bake bread with any flour.
At that stage the g¢ading re-
quirements for wheat meal were
9 protein and 70 bushels – oth-
er«ise it was feed g¢ade.
One day a few ladies Šom the
Wester Cape ar¢ived at my of-
fice. They placed these nicely
baked loaves in Šont of me and
said: ‘These loaves were baked
with flour with a bushel of be-
t«een 60 and 70.’ So I asked: ‘For
how long did you knead them?’
(Because if you knead and work
dough for long enough you will
event§ally be able to bake bread.)
‘No, for a long time,’ they said,
‘but we just want to show you
that it can be done. Go and show
this to the millers.’
However, the millers’ and bakers’
process leaves about three min-
utes for proving a loaf of bread
– you cannot take it out, knead
it and take it out and knead it
again. With this exlanation
they left quite satisfied after a
cup of tea or t«o.
‘TANNIES’ WHO CAN KNEAD