A JOURNEY THROUGH TIME

THE

GRAIN AND OILSEED INDUSTRY

OF SOUTH AFRICA – A JOURNEY THROUGH TIME

variety of policy changes in the latter part of that period, indicated that the agri-

cultural sector was ready for change.

In 1976 parliament appointed a commission of enquiry into the Marketing Act – the

Wentzel Commission – to report and submit recommendations on the structure

of controlled marketing, with specific reference to the composition, powers and

functions of the National Marketing Council, the historic development of controlled

marketing, certain aspects of the application of the marketing schemes and the

functions of the control boards.

The Commission found that a degree of government control over the marketing

of agricultural products was in fact necessary. They were of the opinion that the

control-board system that had developed over time had made an important con-

tribution to sound and balanced agricultural development in South Africa. The

Commission also made various recommendations that, in their opinion, had to

receive immediate attention.

The 1980s were characterised by sustained pressure to change the policy direction.

In 1983 the Jacobs Committee proposed that the single-channel marketing system

be relaxed, but this was rejected by the Minister of Agriculture. In 1984 a White Paper

on Agricultural Policy was tabled by the Minister of Agriculture with the aim of

ensuring economic, political and social stability by promoting an economically

sound agricultural sector, optimising and preserving natural agricultural resources.

In this period political-economic pressure contributed to a more market-oriented

approach in the marketing of agricultural products in South Africa. Although the

marketing system was initially not totally reformed, the approach with respect to the

application of the Marketing Act was amended to be more market oriented in time.

In the maize industry deregulation effectively started in 1987 when the Maize Market-

ing Scheme changed from a single-channel, fixed-price scheme to a single-channel

pooled scheme, and the Maize Board was allowed to decide about the setting of the

maize price itself. This was done according to a fixed basis, however, and led to the

maize prices fluctuating every year, but government control was relaxed.

The Maize Board also started permitting direct transactions between producers and

local consumers and the restrictions in this regard were gradually relaxed over time.

Minor price differentiation was permitted between different localities – a sign that

deregulation was the order of the day. The enormous deficit that developed in the

Stabilisation Fund for maize by the middle to late 1980s led various role-players and

policy makers to realise that the system could not continue on the existing basis and

further contributed to the pressure for a change in the controlled marketing system.

More generally, pressure at international level increased to abolish quantitative

control measures and state subsidies on agricultural products.

In 1991 the yellow-maize processors and consumers proposed a totally deregulat-

ed market for yellow maize, and in 1992 a policy working group of the Maize Board

proposed that direct maize sales between producers and consumers be expanded,

but still with the retention of the single-channel system.

A start was also made to scale down price control on a large number of commodities

and a movement developed towards more market-oriented systems, away from

pricing, away from the cost-plus-pricing of before.

Producers’ increasing dissatisfaction with certain aspects of controlled marketing

on agricultural products, as well as the poor performance of the agricultural sector

in terms of productivity, put the system under further pressure. The economic

environment for agriculture was materially affected by changes to the macro-

economic policy, with a stricter monetary policy through interest rate hikes and

the weakening exchange rate being the most important. The higher interest rates

of the 1980s also caused a change in the Land Bank’s approach to subsidies, and

fiscal support was reduced by roughly 50% in the period between 1987 and 1993.

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