June 23, 2004

Falling Producer Prices Put Pressure On Grain In South Africa

Falling producer prices and high production costs are placing tremendous pressure on profitable grain production this season. Bully Bothma, the chairperson of Grain South Africa, says this deteriorating price relationship will seriously effect sustainable crop production, which may force grain producers out of the industry.

The international prices of maize, soybeans and wheat on world markets have declined sharply over the past few months. Since the beginning of this month, the free on board price of maize in America has declined from $143 to $123 per ton. International soybean prices have declined from $400 to $350 per ton and wheat prices have declined from $179 to $160 per ton over the same period, says Bothma.

According to Grain SA, local farmers are not able to compete with wheat and vegetable oil imports at internationally subsidised prices. This will force farmers to seriously consider further reductions in grain production.

Bothma says the core strategies of the strategic plan for agriculture and the grain industry were aimed at developing greater access and participation for all farmers, to promote sustainability, as well as to ensure food security. Bothma says these strategies will require immediate action and implementation by government and all other role-players.

Bothma says South Africa has a surplus maize stock of 2 million tons at present.