Jannie De Villiers, Executive director of the National Association of Maize Millers, advised members to keep the transport differential. This follows the Agricultural Marketing Council’s Safex report findings that the transport differential should not have a negative impact on price and that there should be many other alternatives for farmers to market their product to obtain a better price.
De Villiers warned that it would be hard to find a substitute for the current transport pricing mechanism. “Many farmers would be negatively affected if the differential had to be removed and if they had to negotiate their own transport costs. The majority don’t have sufficient negotiations skills or enough volumes to get better prices than what’s offered by the transport differential.”
He added that even if the transport differential is only 90% accurate, it gives an indication of what transportation costs should be and thus provides a benchmark against which buyers and sellers can compare costs. e Villiers said he’s annoyed that the transport differential has been brought up for debate again. “Numerous other factors have been identified to help improve market efficiency. I think we should rather focus on these than fall back to the transport differential every other month.”
He added that he’d advise Safex to place a moratorium on the differential for at least the next two years, but preferably the next three, before allowing it to become open for discussion again. hris Sturgess, assistant manager of the agricultural division at the JSE, said the company is a market-driven mechanism and as such, has to adhere to what the majority of the market wants.
“The JSE is not for or against the maintenance or replacement of the transport differential,” he said, but added it would be better to maintain a system for at least two years before replacing it, as this would add stability to the market. – Glenneis Erasmus
