Southern Cape barley producers indicated they won’t accept South African Breweries Limited (SAB’s) latest producer price of R3 011,22/t. This is almost 50% higher than prices attained for malting barley last year, but Leon Groenewald, chairperson of the Barley Operational Committee, feels it’s still not representative of free-market prices.
He points out that wheat prices have increased by more than 100% since last year, and malting barley costs by more than 65%.” Groenewald said the increased risks involved in malting barley production should translate into a premium over wheat prices, but the proposed barley prices are almost 11% under the current wheat price. He added the proposed price is comparative with prices for the poorest quality and cheapest barley in the world. “SAB continually complains that our barley isn’t of a good standard, but we’ve had it tested and the tests confirmed it’s of the best quality in the world,” he said.
The Barley Operational Committee is currently formulating a response to SAB’s price proposals. Even so farmers have already decided to reduce the area under malting barley production by 20%. This would be the third consecutive year this happens due to dissatisfaction with prices, said Groenewald. Groenewald added farmers are tired of listening to the SAB’s empty promises. In December SAB promised to review the price formulation mechanism, but farmers are still waiting for the new system.
Farmers were hoping for a similar pricing system to the one used for canola, which offers a minimum price and set price. The Safex wheat price could also be used as a price reference system. Janine van Stolk, SAB communications manager, said she was disappointed by the fact that farmers were airing their dissatisfaction with the proposed prices in public, as price negotiations were still underway. She added that these negotiations also involve the creation of the new pricing mechanism. – Glenneis Erasmus