April 29, 2010
US wheat yields to trim down
Wheat production is expected to scale down by about 300,000 tonnes to 1.6 million tonnes, a 40-year low, blamed on the lack of government's subsidies or non-imposition of higher tariffs against imports.
Grain SA chairman Andries Theron said on Monday (Apr 26) that farmers would reduce production as falling international prices made it impossible for the local harvest to remain profitable. "In the areas under irrigation, we expect production to fall by at least between 20% and 22% this harvest season," said Theron.
"We are facing competition from highly subsidised countries in Europe, especially Germany. We have similar problems with imports from the US and to some extent from Canada, Australia and Argentina. Grain SA had approached the International Trade Administration Commission (Itac) last year for a tariff hike on wheat imports," Theron added.
Theron said Grain SA had recommended that an average tariff of US$260 a tonne be charged for the next five years and proposed a subsidy value. "This is a control measure to cover local farmers against the imports," he said.
''Another problem was that the quality of the imports was low but they were determining the prices of local corn, which maintained high quality standards,'' said Theron.
"The playing field in world markets for agricultural commodities is very uneven - the US and Europe subsidise their farmers to a great extent - which results in depressed commodity prices and South African agriculture, being open to world trade, can be severely affected," Louis van der Merwe, head of commercial agriculture at FNB, said.
Van der Merwe added that agriculture was prone to cycles caused by a number of factors, including the weather, world economic conditions, oil price and others.
"It is for the authorities to decide on the nature and extent of assistance, whether in the form of a tariff or subsidy…taking into consideration that wheat products are an important basic food for the majority of the population," he said.
