New plans to increase the profitability of wheat production

A transparent and well-functioning cash market was the best option to revive South Africa’s ailing wheat production industry, according to Jannie de Villiers, CEO of Grain SA.

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He said wheat farmers in the Western Cape were adversely affected by the JSE’s high transport differential costs. Alwyn Dippenaar, a wheat producer from Riebeek-Wes in the Western Cape, said the only way forward was to scrap the differential and create an opportunity for wheat producers to operate a free market system.

The transport differential was based on a producer’s location in relation to Randfontein and deducted from the wheat price the producer received.

The people of South Africa did not realise how dire local wheat producers’ circumstances were, said Dissie Kruger, a wheat producer from Orania in the Northern Cape. More than a million hectares once planted to wheat were lost to other crops during the past 10 years because of ever-dwindling profitability.

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This represented a decline of 2,5 million tons, calculated at an average yield of 2,5t/ha, he said. The situation is exacerbated further by extremely strict cultivar release criteria and an unfair grading system determined by the milling and baking industries, said Kruger.