South African Cereals and Oilseeds Trade Association (Sacota) directors recently met with agriculture minister John Steenhuisen to discuss these and other issues. They focused on the important role traders play in the value chain to move products from the farm gate to processing facilities and abroad.

Sacota also raised inefficiencies in the value chain, particularly in view of a potentially large crop, and the need to sufficiently export the surpluses was discussed.

Higher flour and bread prices

South Africa only produces approximately 50% of its requirements for wheat, while the balance must be imported. This must occur as efficiently as possible, otherwise cost will eventually translate into higher flour and bread prices for the consumer.

A key issue in the wheat markets remains the ongoing ITAC wheat tariff application. Part of the application is for adjustments in the wheat tariff to be implemented monthly, similar to the fuel levy system.

Unnecessary delays are costing the economy and consumer millions of rand. Photo: Pexel

Sacota mentioned another critical outstanding wheat matter is the signing off on the annual implementation of the EU-SACU economic partnership agreement, and specifically the tariff rate quotas. 

This allows for approximately 250,000t of EU wheat to enter South Africa duty-free, in exchange for South African products, such as citrus.

It is supposed to become effective on 1 February each year. At the moment, seven wheat vessels are waiting in Durban to offload. The unnecessary delays are costing the economy and ultimately the consumer many millions of rand.

Transparency

Another issue of importance that was raised is the requirement for a higher degree of transparency on commodity trading practices on the JSE. Significantly higher volatility in prices has led to a demand by Sacota and the industry for reports such as a “Commitment of Traders” report, similar to overseas exchanges.

Sacota also mentioned the last two pertinent issues were inefficiencies in logistical infrastructure and access to global markets. With a large maize and soybean crop imminent, it will be necessary to export surpluses before prices will be able to increase again, all things being equal.

Steenhuisen confirmed the communication channels between him and the department of agriculture, and Sacota will remain open to ensure the most efficient export programme, despite challenges.

• Share your agriculture news: agri@ofm.co.za.

OFM Agri/Isabel van Tonder dg