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CHAPTER 1
to do this led to an oversupply of sunflower seeds in 1996, for example, because
producers did not heed information that the Oilseeds Board published in January
and February of that year. The Board namely announced that the initial contracts
for the local sunflower crop was nearly fully subscribed, but still nearly 90 000 ha
of sunflower were planted. This eventually led to an oversupply of 75 000 tons of
sunflower seeds in the local market, which had to be sold for unfavourable and
unprofitable prices.
Deregulation inevitably led to differentiated prices for oilseed products, depending
on the distance from the most important markets and the time of the delivery of
the products. This discouraged production in areas far away from the markets. In
the deregulated environment contracting took place directly between producers
and buyers, but with an increased risk for producers. In addition, the availability of
quality market information posed a real risk for producers.
As a result of the Uruguay round of the GATT, quantitative import control with respect
to oilseeds was replaced by tariff control. An inescapable result of this was that any
person could import oilseed products by paying the tariff, subject to phytosanitary
requirements, which meant that South African products were exposed to international
competition to a greater extent. The international prices therefore became a more
important factor in establishing the local producer price.
Since sunflower seeds started to trade on Safex in February 1999 this was the
forum where the price was determined. The price levels of sunflower seeds are
indeed influenced by the local supply and demand, but the supply of and demand
for sunflower oil in domestic as well as international markets also play a role.
It seems that the international price of sunflower oil serves as a guideline for the
South African price of sunflower seeds as well as sunflower oil. The Argentinian
sunflower oil price is especially relevant as the marketing seasons of these two
countries correspond. The fact that South Africa is a net importer of sunflower oil,
which is imported as crude oil, means that the local sunflower price trades at close
to import parity.
In the run-up to greater deregulation of the agricultural industry, and specifically
with the change from the single-channel marketing system for sunflower seeds
to a surplus removal scheme, Minister Hanekom (Agriculture and Land Affairs)
consented in January 1996 that an amount of R34,26 million could be paid to
sunflower producers who sold sunflower seeds to the Oilseeds Board from
1988/1989 to 1994/1995. The amount was paid from funds that had accumulated in
the sunflower reserve and that exceeded the Oilseeds Board’s need for reserves
for the new surplus removal scheme.
Research and information
Research with regard to sunflower, soybeans and groundnuts is funded among other
things from the income of the Oilseeds Trust and Protein Research Foundation (PRF).
In the period before the establishment of Grain SA, NOPO introduced and success-
fully operated an information service by auto fax. The information function about
the sunflower industry is currently run by SAGIS, while Grain SA plays an impor-
tant role in promoting the industry as a whole.
Soybeans
Origin
From the Cedara Memoirs it seems that soybeans were introduced to South Africa
in 1903.
The seed was imported from China, but producers had very little or no knowledge
about soybeans and experienced many problems with the cultivation, especially
because there was very little information available. Soybean production therefore
did not really become established in South Africa immediately.
However, the former Department of Agriculture was determined to reduce the produc-
tion problems by developing progressive production methods. The department also
launched various initiatives to enhance understanding of the opportunities that soy-
bean production offered in South Africa and to promote the production of the crop.