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Thesurveyed resultsamong tradersandagri-businessescompletely
matched those obtained from the producers. Without exception, all
rated the services offered by them aswell as cash requirements, as
the twomost important reasons by far for not participating directly
onSafex.
Preferredpricingmethod
The respondents’ preferred pricing method was considered
important. The respondents indicated that they prefer fixed tons
coupled with a fixed price as a sales contract. 76% of respondents
said that they market their entire wheat crop in this manner. Fixed
tons with deferred pricing (13%) was the second most popular
method followed by a minimum price. None of the respondents
indicated that they usedminimum/maximumpricing.
Brokers (traders and agri-businesses)
The next three questions dealt with the respondents’ view towards
tradersandagri-businesses.The followingquestionmightbesingled
out as probably the most important question asked in the survey,
namely “Do producers believe brokers offer all of the marketing
options that couldbeachievedby tradingdirectlyonSafex?”Having
the benefit of already having analysed the response to the previous
questions, the answer to this question (as depicted in
Graph 2
),
might havebeen expected.
However, the response was overwhelming, 97% of respondents
said brokers offer all of themarketing options they were interested
in (keep in mind that if a producer’s knowledge about Safex is
limited, therewill be a higher tendency to respondpositively on this
question).
Nonetheless, the overwhelmingly positive response again confirms
that respondents have no need to trade directly onSafex anymore.
Havingestablished that brokersoffer all the services requiredby the
respondents, the survey now attempted to determine what these
services areandhow the respondents ranked them.
Graph3
depicts
the top reasons for using abroker.
The broker or trader’s knowledgewas singled out as the top reason
by theproducer respondents, followedbycompetitivepricesoffered
by the trader or broker.
Producers’ view regarding brokers (traders and agri-businesses)
could be summarised as follows: Wheat marketing is a specialised
function and producers value the services offered by brokers. The
respondents believe that the services offered by the brokers are
sufficient, not warranting them to directly participate in Safex. As
the top reason for using a broker, producer respondents ranked
“broker knowledge”,whilebrokers themselves ranked “financing” as
the top reason.
In conclusion
The survey and analysis of results confirmed that there is a sharp
decline in direct participation by producers on Safex. As for the
reasons, the decline is the direct result of the all-inclusive services
offeredby traders and agri-businesses.
The producer signs a forward contract with his broker while the
broker offsets his risk on Safex. It should be emphasised that the
broker would not have been able to offer the variety of marketing
choices to theproducer if hehadnot been able tooffset it onSafex.
There isanelementofcaution though.Given the importanceofwheat
in the Western Cape and particularly in the Swartland, producers
could not walk away from their responsibility to acquire ormaintain
a minimum knowledge of the functioning of Safex. Irrespective of
whether the producer deals directly on Safex or through his broker,
knowledge now and in the future will hold the key to hismarketing
performance and cannot be replacedby using abroker.
This projectwasmade possible by the funding of theWinter Cereal Trust. The complete report is avail-
able on theirwebsite. The contribution of A. Nordier, C. duPlessis and J. Hartwigsen is recognised.
Has producer hedging entered a new era?
SAGrain/
Sasol Nitrophoto competition
Graph 3: Reasons formarketingwheat through abroker.
Graph 2: Pricing option provided by broker as op-
posed to tradingonSafex.
ON FARM LEVEL
Marketing
