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CHAPTER 3
Sound bite: Circumvention of the maize
marketing system which occurred, placed
severe pressure on the one channel mar-
keting system – Mr Cerneels Claassen.
CONSEQUENCES OF DEREGULATION
The deregulation of agricultural marketing not only changed the entire grain
marketing landscape in South Africa radically, but also caused large-scale changes
in many related fields, including farming methods, production, financing, storage,
mechanisation, labour and research and development.
The first indication of changes in producers’ decisions about crop production was
observed in the maize industry. Although the total area that had been cultivated under
maize was reduced in the first years after deregulation, this was mainly with respect to
yellow maize. Statistics show that, since deregulation, the sentiment of producers and
traders has turned towards white maize.
It will not be an easy task to try and determine the ultimate consequences of
deregulation in all its facets, and it does not fall within the scope of this publication,
but a few of the immediate consequences do deserve attention.
The biggest change caused by the deregulation of agricultural marketing was
that the prices of agricultural commodities were no longer regulated, but were
determined by the action of market forces in the free market. This created a totally
new agricultural marketing environment from the regulated system that had
applied for several decades. The transition was made very rapidly, without a
proper phasing-in period, and therefore without proper planning.
Many new players entered the market and a new risk developed because of role-
players who did not adhere to their agreements. This led to the development
of standard contracts for marketing grain, which created greater certainty and
contributed to more order in the market.
In Chapter 4 reference is made to initiatives by NAMPO and later Grain SA to pro-
vide training to producers about the operation of the maize markets. A broker ser-
vice was also established to accomplish transparency in the market.
The abolition of the control boards also meant the end of an era where producers
with a guaranteed majority vote on the various control boards could direct
industry decisions.
Pricing: Grain and Oilseeds
During the period of regulation the control boards handled all the marketing of
grain in South Africa. Producers had no control or decision-making responsibility
From 1 May 1995 the course of maize mar-
keting was altered when the final move
was made from the old one channel mar-
keting system to the new deregulated mar-
keting system for maize.
