Grain SA says a difference of almost R700 million could be at stake due to the JSE’s decision to abandon a pilot pricing model for soya bean location differentials and return to a single reference point.
In a press release dated 19 August, the organisation announced that the JSE would oppose its application for an interdict. Grain SA is seeking to prevent implementation of the decision while it challenges the process through which the Multiple Reference Point (MRP) model was rejected.
Efficiency and transparency
Dr Dirk Strydom, managing director of Nampo, said the principle behind the MRP model was to match available grain with processing demand through the most economical route. He stated that calculating the price as though grain must move towards a distant central point could create a theoretical transport cost that does not arise in the physical movement of the crop.
Grain SA argues that such deductions could weaken already narrow producer margins and reduce the efficiency and competitiveness of the wider food value chain. Any effect on consumers would depend on whether, and to what extent, added costs are passed through processors, manufacturers, and retailers.
The organisation is calling for a system that reflects actual grain flows, uses efficient routes between supply and demand, limits unnecessary costs, and protects transparent price discovery.
“If an unnecessary cost is built into the system, somebody ultimately pays for it. The farmer may receive less, costs may move further through the value chain, or both,” Strydom said.
Grain SA said it would continue with technical engagement and legal proceedings. The JSE’s decision to oppose the interdict means the immediate question of implementation will now be contested in court while the broader disagreement over the pricing methodology continues.
Grain SA quantifies potential difference
Grain SA calculated that the average transport deduction under the MRP methodology was about R113/t, compared with about R333/t under the Single Reference Point (SRP) system — a difference of roughly R220/t.
Applied across the soya bean volumes and silo points included in its analysis, the organisation estimated a total difference of about R696 million. The figure represents Grain SA’s calculated difference between the two methodologies; it is not a confirmed loss already incurred by farmers or consumers.
A higher futures-contract differential can, however, increase the scope for deductions from prices offered to farmers in the cash market, particularly where the published transport assumption does not reflect the crop’s actual destination.
“Farmers are being asked to accept a system that, on our calculations, adds significant costs to the value chain,” Grain SA CEO Dr Tobias Doyer said to Farmer’s Weekly.
“The question South Africans should be asking is simple: if there is a more efficient way to move grain from where it is produced to where it is processed, why should the system allow hundreds of millions of rand in additional cost?”
Dispute centres on transport deductions
Location differentials are transport-related adjustments applied to soya bean futures contracts at JSE-registered delivery silos. They influence the relationship between the futures price and the price a producer may receive in the physical market.
SRP system calculates each silo’s differential relative to one benchmark location, even when
soya beans are sold to a processor closer to the production area and never move towards that point. The JSE has proposed replacing Randfontein with Driefontein as the benchmark when the SRP methodology is reintroduced from 1 March 2027.
The MRP model instead considers several demand centres, regional soya bean availability, and the transport route between supply and processing demand. It was piloted over two marketing seasons after the JSE invited industry participants to develop alternatives to the existing methodology.
Grain SA maintains that the pilot better reflected where soya beans are produced, processed, and physically moved. The organisation has also questioned whether the agreed assessment criteria and recommendations arising from the technical evaluation were adequately addressed before the JSE decided to discontinue the model.
Producers take protest to Sandton
The dispute moved beyond technical submissions on 13 August, when Grain SA leaders, board members, and producers marched peacefully to the JSE’s offices in Sandton. They handed over a memorandum and a petition supported by 965 signatures and 511 comments.
Grain SA chairperson Richard Krige said the protest addressed concern over confidence in the price-discovery system, rather than only the choice of a reference point.
“This is not simply about one reference point. It is about whether the system reflects the realities of the physical market and whether producers can have confidence that decisions affecting their businesses are based on transparent evidence,” he said.
Participants carried bags of maize meal to symbolise the link between sustainable primary production and food security. The maize meal was donated to charities after the march.
