However, amidst the whole speculation of whether maize pricing is unfair or not or whether there is collusion or not, there is one essential element that remains and that should not be forgotten. Maize is the staple food for the vast majority of South Africans, most of them lining below the poverty line. This issue is not only about the theory behind the volatility of the maize price, but is also about the livelihood of many South Africans who have to struggle daily to feed themselves and their dependents.
With little or no theory to suggest that futures markets increase cash market volatility, and with little evidence to indicate that increased volatility (should it occur) is necessarily bad, it is surprising how contentious the volatility issue has been throughout the history of the maize futures market in South African.
The fact that Grain South Africa has called on the National Agricultural Marketing Council (NAMC) to investigate the role play by speculators in price volatility on SAFEX are ludicrous if one understand the point that the futures market is not at fault. What is at fault is that agricultural marketing in particular has not yet been fully accepted as an essential element in agricultural development in South Africa.
The reasons for this lie mainly with the government. The principal cause is the lack of understanding on the part of government officials of what constitutes agricultural marketing, particularly on the part of officials at the policy-making level. Linked to this are the problems of uncritical acceptance of opinions and impressions as fact; unwillingness to appreciate facts which are contrary to the opinions held by high-level officials and/or contrary to government policy; inability to understand the role of marketing institutions; and general bureaucratic procedures.
Without the right price farmers will never grow wheat or maize, and without the right price flour millers will not be able to sell their flour or bread to consumers. That is why agricultural marketing and pricing policy is so important. Unless the Government gave priority to dealing with issues of governance, improving market incentives, invest in institutions of public goods, the subject of managing food price risks and instabilities would continue to remain.