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THE
GRAIN AND OILSEED INDUSTRY
OF SOUTH AFRICA – A JOURNEY THROUGH TIME
ႆႆ
flour in South Africa also baked most of the bread. In spite of the fact that literally
thousands of small bakeries were opened, by 1990 more than 80% of the bread
production was still in the hands of only six groups.
Although the abolition of price control on bread flour and the restrictions on
registration in 1991 paved the way for new entrants to the wheat milling indus-
try, it did not have a significant impact during the 1990s. Despite the fact that
90 new wheat mills were constructed in South Africa between 1991 and 1999,
about 97% of South Africa’s wheat meal was produced by only 33 of the large
mills at that stage.
Levies
Import tariff
The South African wheat industry is subject to the payment of tariffs on wheat
that is imported. This was introduced mainly to protect local producers against
low subsidised global prices, which could lead to the domestic prices dropping to
levels that could place the sustainability of the wheat industry in South Africa at
risk. The tariff is based on the fixed global price in USA dollars. If the global prices
of wheat drop below the set level that is calculated according to a fixed formula,
the tariff comes into effect.
During 2005 the International Trade Administration Commission (ITAC) of South
Africa undertook a study to determine whether the prevailing tariff dispensation
on imports was effective. The wheat industry believed the system to be ineffective
because the basis for calculating the tariffs took only the USA dollar price of wheat
into account, without factoring in the exchange rate fluctuations between the USA
dollar and the SA rand. It also did not take the differences between the various
countries of origin of the wheat into account.
Consequently, the grain industry proposed an alternative dispensation for deter-
mining the tariff that would take those aspects, among other things, into account.
However, the ITAC found that there was no justification for a tariff hike, as the milling
industry in particular did not experience significant competition from imports.
Statutory levy
The objectives and aims of the statutory levy that is applied to wheat, barley and
oats in terms of the Marketing of Agricultural Products Act, 1996, are to provide
financial support to winter cereal research, information and development func-
tions that are regarded as essential to the winter cereal industry and have been
identified as in the interest of the industry. The winter cereal industry and directly
affected parties regard the maintenance of macro industry information as essential
for strategic planning purposes.
The provision of generic market information to all role-players on an ongoing basis is
critical to allow the market to operate effectively. The winter cereal industry supports
the principle that generic market information must be obtained through statutory
BY THE YEAR 2000 FOUR
GROUPS, NAMELY PIONEER
FOODS, TIGER BRANDS,
PREMIER FOOD AND
FOODCORP, MILLED 80%
OF THE COUNTRY’S WHEAT
AND BAKED MORE THAN
65% OF THE BREAD IN
THE COUNTRY.