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CHAPTER 2
IN 1931, THE YEAR IN WHICH THE MEALIE
CONTROL ACT CAME INTO EFFECT, 1,36 MIL-
LION TONS OF MAIZE WERE PRODUCED IN
SOUTH AFRICA. WHEN THE MAIZE BOARD
WAS ESTABLISHED IN 1935, PRODUCTION
AMOUNTED TO 2,557 MILLION TONS.
1931 Congress
On 10 June 1931 the
Landbouweekblad
reported about a Congress where dele-
gates from more than a hundred farmers’ associations from the maize-producing
regions of the former Transvaal and Orange Free State met to reflect on measures
for improving the serious condition in which the maize industry found itself. The
Chairperson of the meeting explained that it had been convened to try and find a
solution to save the maize industry from ruin. However, at that stage maize was
not yet a recognised agricultural product and an urgent appeal was made to the
government to recognise maize as such, while producers were encouraged to join
co-operatives in order to increase the bargaining power of the co-operatives with
the government.
At this Congress the acting Secretary for Agriculture at the time announced
that the government was considering measures to support the maize industry.
This would include removing the surplus maize from the fields, dividing the
export losses between traders and co-operative associations, and stabilising the
domestic market.
1931 – Maize Control Act
The first steps taken by the government to support the domestic maize prices (which
were at that stage determined by the export price less transport costs) included the
introduction of export quotas under the Mealie Control Act of 1931.
The quota system forced domestic buyers to purchase a portion of the exportable
surplus maize and export it, sometimes even at a loss, which was subsidised by the
government. This was an attempt at creating an artificial shortage domestically in
order to ensure better maize prices for local producers in the short term, and freeing
domestic price levels from international price levels, which had dropped by up to
50% as a result of the Great Depression.
However, in practice these measures created several problems. Firstly, the quotas
had to be determined on the basis of early crop estimates. Secondly, for practical
reasons the quotas had to be negotiable, which led to a large speculative market,
and because the government guaranteed the purchase price of the quotas, the
government incurred material losses in some years. It also became clear that even
compulsory co-operative marketing – in terms of which producers had since 1931
been permitted to sell their maize only to licenced traders – could not support
the maize price, as co-operatives competed with one another. The domestic price
consequently dropped to export parity.
1935 – Maize Control Amendment Act
As a result of the problems mentioned above the measures introduced under
the Mealie Control Act of 1931 were adjusted from 3 May 1935, when the Mealie