Photo: Glenneis Kriel
Wheat farmers are under mounting financial pressure, as prices for the grain remain below viable levels. At the time of writing, the spot price stood at R5 698/t, while December 2025 and March 2026 contracts traded at R5 859/t and R5 937/t, respectively.
This is far out of step with rising production costs, which currently average R16 000/ha. Farmers need yields of at least 3,4t/ha to break even, yet the 2025 national harvest, including dryland and irrigated wheat, is expected to average just 3,92t/ha, according to the Crop Estimates Committee, leaving producers with a wafer-thin margin.
Conditions in the Western Cape, where just over half of the country’s wheat is produced, all under dryland, are even tougher. Average yields there are expected to remain unchanged from last year at only 2,9t/ha, which is well below the breakeven point.
According to Grain SA, this imbalance not only threatens the viability of individual farms but also the wider wheat industry, which directly employs about 12 600 people, 73% of whom are based in the Western Cape. Consumers could also end up paying as much as R643 million more per year for the same quality of bread if the local industry collapses.
Critical interventions needed
To help stabilise the industry, Grain SA has outlined five urgent interventions. First on the list is an improved import tariff system.
Speaking to Farmer’s Weekly, Grain SA chairperson Richard Krige said producers want the current reference price increased from US$279 to US$289 (around R4 778 to R4 950).
“Farmers feel that protection should be higher than the agreed-upon level, because many countries are stepping in to support their farmers during the current crisis. The purpose of tariffs, after all, is to shield local producers from the impact of such external support and the way it influences global prices,” he said.
Along with this, producers want an automatic trigger mechanism to allow new tariffs to take effect quicker. Krige said they would like to see a system similar to the one used for fuel prices, where adjustments are made monthly and automatically based on international price movements.
“The bureaucracy is negatively affecting market liquidity and prices. It allows people to step in and out of the market and wait for lower or higher tariffs to be announced,” he explained.
The application for an adjusted reference price and an automatic trigger mechanism was submitted in June 2024 and now awaits finalisation. Krige said progress has been held up by resistance within the milling industry to changes in the reference price.
“Disagreement exists about which futures exchange should serve as the reference point. The millers and bakers believe MATIF [Marché à Terme International de France, now part of Euronext] is more appropriate, as most wheat imports originate from the EU and Black Sea region.
“However, producers argue that local wheat quality is more comparable to US wheat, making the Chicago Board of Trade [CBOT] more suitable as a benchmark,” he explained.
Second on the list of interventions is a call to restrict imports during the local harvest. Krige said large import volumes arriving just before or during harvest depress local prices and cut into farm income.
“This practice limits delivery points, clogs up traffic, and leads to long queues, all at the farmers’ expense. It also weakens market liquidity, because high stock levels put pressure on prices,” he said.
The third is modern genetics and production technologies.
“We want regulations governing new breeding techniques to be updated and for white wheat to be included in the national basket, as it will strengthen diversification and yield stability,” Krige explained.
Number four is improved production support and risk-management tools. He said the industry wants government-subsidised crop insurance to help manage climate risks, as well as a fairer location-differential system on SAFEX.
A new model is currently being tested for soya bean, and Krige said he hopes it will be approved, as it will clear the way for an alternative differential for wheat.
“It’s ludicrous that a Western Cape miller gets an R800 discount under the current system, when half the province’s wheat is consumed locally, all while producers are struggling to survive,” he said.
Finally, Grain SA is calling for the restoration of efficient transport and logistics systems, because poor logistics is raising costs for producers and consumers.
The organisation noted that raising the wheat price would not significantly affect the cost of bread. Wheat currently accounts for only 18% of the retail price of a loaf, meaning farmers receive just R3,23 from a loaf that sells for R17,92.
