Southern Cape barley producers are still waiting on South African Breweries Ltd (SAB) to announce a new mechanism for malting-barley price determination. Producers actively negotiated the implementation of a new mechanism the whole of last year, due to dissatisfaction with prices.
“Local prices remained relatively stable, while international prices sky-rocketed. Southern Cape farmers, in the end, only received around half the import tariff for barley as a result,” claimed Leon Groenewald, chairperson of the Barley Industry Committee. Import parity for Australian and French malting barley was around R2 972/t and R4 262/t respectively on 31 January this year. Groenewald said the low prices had significantly damaged the relationship between producers and SAB.
“Producers are unsatisfied because there’s only one market for their malting barley. SAB is now also expanding internationally, which means they would become even more of a monopoly,” he explained. A huge problem is that farmers can’t afford to stop planting malting barley. It forms an integral part of the crop rotation system used in the southern cape. Another problem is that the grade and production method for feed barley differs from that of malting barley. That makes it difficult for producers to divert their produce from SAB to the feed market.
Groenewald said SAB had agreed a new pricing mechanism would be implemented at the start of December, before farmers needed to order new seed. “It’s now February and we’re still waiting,” he said. Farmers want a similar pricing system to the one used for Canola, which offers a minimum price and a set price. “The Safex price for wheat could be used as a price reference system, but the price should then be proportionately higher than the wheat price, not lower,” said Groenewald. “Malting barley production has higher risks.” He added that it won’t work to list malting barley on the Safex as there is only one buyer. SAB were unable to give a response at the time of going to press. – Glenneis Erasmus