6 / 73
THE
GRAIN AND OILSEED INDUSTRY
OF SOUTH AFRICA – A JOURNEY THROUGH TIME
ႈ
Sorghum is produced mainly in the drier summer rainfall areas of Mpumalanga,
Limpopo, the Free State, North West and Gauteng.
GOVERNMENT INVOLVEMENT
In the years before deregulation the South African government was not only in-
volved in the marketing of agriculture through the control boards and schemes that
were instituted in terms of the Marketing Act, but also intervened in other areas in
order to assist producers in the country in times of crisis and address bottlenecks
in the agricultural industry.
Each such event that concerned agriculture in general is mentioned below. Those
that were more industry specific are included later in the perspective on the indus-
try concerned.
1973 Drought aid
Because of the severe drought fromOctober 1972 to February 1973, many producers
could not plant summer crops, feed or cash crops that season. The crops of many
of the producers who did manage to plant were seriously damaged by the drought.
SAMPI realised the effect of the drought on the producers and held a mass meet-
ing at Wolmaransstad on 9 January 1973, at which the Minister of Agriculture, Mr
Hendrik Schoeman, was also present. The critical position of the producers was
clear from the fact that about 1 300 producers attended the meeting.
At the meeting SAMPI submitted five proposals to the minister to help to alleviate
the financial position of the producers. This included that the funds in the Stabili-
sation Fund (see Chapter 2) be paid out to the producers as a final payment, that
specific actions with respect to the selling price of maize and the export of maize
be made, and that producers receive a reprieve for the repayment of their produc-
tion debt from co-operatives.
Not long afterwards Minister Schoeman announced an aid programme for produc-
ers in the drought-ravaged areas. This contained various components, but prob-
ably the most important one for the grain producers was that co-operatives were
allowed to postpone certain producers’ payment of production debt by spreading
it over a period of four years. Qualifying producers could also apply for production
credit to establish crops in the subsequent season.
Jacobs Committee
In October 1978 the government appointed the so-called Jacobs Committee to
investigate the economic position of grain producers and agricultural financing
in general, and make recommendations in this regard. The committee was tasked
with specifically referring to the ever-increasing production costs, the growing
debt position of grain producers, return on capital, the extent to which existing
sources of financing provided in producers’ short, medium and long-term financ-
ing needs, and the role of agricultural co-operatives in the provision of financing
to producers.
In its report the committee supported the principle that production patterns had
to be determined by actual production costs and ruling producer prices, but was
not in favour of subsidies to producers to counteract rising production costs.
They were of the opinion that the agricultural sector not only had to produce
enough to provide South Africa’s growing population with food, but should also
produce for the export market.
The committee maintained that there were sufficient reasons to rethink measures
that could improve producers’ financial position in order to reinstate agriculture
on a sound and viable footing. They also recommended that the strategic impor-
tance of agriculture to attain the objective of self-sufficiency in particular had to
receive greater priority and that the government’s objectives in this regard had to
be spelled out clearly.
Among other things the committee concluded that the agricultural price policy
had to be reformulated, and that adjustments to the Land Bank’s policy on the