A JOURNEY THROUGH TIME

THE

GRAIN AND OILSEED INDUSTRY

OF SOUTH AFRICA – A JOURNEY THROUGH TIME

ႃႈ

Exporting maize per ship.

Resistance

In due course the gap between the producer price and the consumer price of

maize increased because of marketing factors like a weakening currency (ZAR),

a decrease in the global price of maize and an increase in the maize supplies

available that had to be exported at low prices because of surplus production.

These factors, together with the abolition of the government’s subsidy on the

export costs of maize in the early 1980s, led to the special levy having to be

increased, which triggered greater resistance to the single-channel marketing

system for maize.

In 1994, in protest against the high levies, a number of the biggest maize buyers

(the Concerned Buyers Group) applied to the court to declare certain of the provi-

sions of the Summer Grain Scheme to be unconstitutional, and also submitted an

application for an interdict that would prohibited the Maize Board from collecting

levies on certain maize transactions. The application did not succeed.

However, the opposition to the scheme did not abate and certain parties in the maize

industry tried to circumvent the payment of the levies in various ways, for example by

entering into partnerships, contracts of employment, lease contracts and production

contracts, and establishing different legal entities in very complicated transactions

that made it difficult to pinpoint the evasion of the levy obligation.

Because of the circumvention of the system the maize industry started desta-

bilising, the gap between the producer and consumer price increased and the

Maize Board could not always budget properly for exports. The Maize Board’s

domestic sales declined, with a consequent larger export surplus. The fact that

the Maize Board was unable to collect the levies on the total crop had material

financial implications.

1994/1995 Marketing season

As no agreement on the producer price for maize that was acceptable to all the

role-players in the maize industry could be reached in the 1994/1995 marketing

season, it was agreed that the Summer Grain Scheme would be terminated on

30 April 1995 and replaced by a new maize marketing scheme. The core properties

of the replacement scheme were as follows:

• Maize prices would be determined without statutory intervention in the market

place.

• The functions of the Maize Board were amended and mainly comprised the

following: Running a single-channel export pool, administering a stabilisation

levy on purchases from producers as well as a producer levy, providing market

information and registering producers and buyers with a view to managing levies

and gathering information.

• The Maize Board could make maize from the export pool available for domestic

sale, provided that the landing price with the buyer would not be less than

import parity plus R20/ton.