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THE
GRAIN AND OILSEED INDUSTRY
OF SOUTH AFRICA – A JOURNEY THROUGH TIME
ႃႄ
NOORDWES KOÖPERASIE (NWK) TOOK CHARGE
OF ITS FIRST GRAIN ELEVATOR, CONSTRUCTED AT
LICHTENBURG, IN 1959.
THE FIRST SILO FOR SENTRAALWES KOÖPERASIE
(SENWES) WAS BUILT AT BULTFONTEIN AND
COMMISSIONED IN 1964.
and sell grain after deregulation. This paved the way for alternative and cheaper
storage methods, like bulk silo sacks (which were introduced from Argentina as
a new storage solution to producers), grain dams and private storage facilities
on farms.
Because producers could market their grain directly, private storage and the sale of
grain directly from the field (the process known as land load) gradually increased,
which placed great pressure on the profitability of traditional silo structures.
Farm storage had the benefit for producers that harvesting was shortened because
the trailers of trucks had a shorter turnaround time and the vehicles did not have to
drive on public roads. The shortened harvest also meant that producers could start
preparing their fields for the next season more quickly. Producers could store grain
for own use much more cheaply, without the expense of transporting it back from
the traditional silos when required. This naturally also entailed certain demands,
like capital investment and constant managing of the grain in storage, which was
handled by the co-operative silo owners with established expertise.
The flexibility of the deregulated market environment made it possible for pro-
ducers who had their own storage facilities to market their grain more effectively
by better utilising opportunities offered by the market. Analysts and academics
also think that the deregulated environment promoted the profitability of maize
production for the producers in the first decade after deregulation. This could
place producers in a better financial position to implement structural changes in
the running of their farms, like constructing their own storage facilities.
All these factors, together with the tax benefits of building silos on farms, consider-
ably stimulated the creation of alternative storage facilities away from the traditional
structures of the agribusinesses and co-operatives.
Commodity traders who did not, like the co-operatives, have their own storage
facilities, also started to establish alternative storage facilities like grain bunkers
in areas close to the mills they supplied with a view to reduce storage and han-
dling costs.
However, at the same time, grain started trading on Safex with the requirement that
contracts could be traded only by Safex-approved silos. This limited the use of the
new alternative facilities for trading on Safex, except in the case of localities that had
been approved for this purpose by Safex.
Transport
The way in which grain was transported to markets changed constantly since the
beginning of the twentieth century as transport methods and storage facilities
changed. For the greatest part of the period up to the middle of the 1990s the ma-
jority of grain was transported by rail.
During the regulated era the control boards were essentially the only entities that
transported grain on a large scale in South Africa. They mainly used rail transport,
which was provided only by the government’s Railways and Harbour Administra-
tion (later Spoornet). It was therefore easier to co-ordinate transport needs to the
interior as well as to and from the harbours, and effective methods and practices
were developed in time to make this possible.
The control boards were informed about expected crop sizes and their distribution
across the country and could therefore ensure timeously that effective transport