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CHAPTER 2
The appointment of a Commission of Enquiry into the Marketing Act by the Minister
of Agriculture in June 1992 was probably the main event that led to the process
of market deregulation from the beginning of 1993. Eight marketing councils were
abolished on the basis of the Commission’s report.
From 1993 the argument that producers’ remuneration be better aligned with the
principles of supply and demand became increasingly stronger. The opinion grew
that ineffectiveness in the market should be resolved by sound competition and
that market mechanisms should be created to make it possible for new participants
to enter the market.
These arguments and conditions paved the way for the deregulation of agricultural
marketing in South Africa. This was supported by pressure from the negotiation of
the General Agreement on Tariffs and Trade (GATT) for the abolition of quantitative
control and the introduction of tariffs on agricultural commodities with a view to,
among other things, reducing the role of governments and promoting competition.
As a founding member of GATT, South Africa participated in all the negotiations
involving GATT from the Uruguay discussions in 1986 until the signing of the
Marrakech agreement in December 1993 and the signing of the final agreement
of the World Trade Organisation (WTO) in 1994. Some commentators and experts
maintained that, in view of South Africa’s dependence on international trade,
South Africa could not but take thorough cognisance of these agreements.
Agricultural trade in South Africa was traditionally controlled by quantitative control
measures in terms of the Marketing Act. Under the Marrakech agreement, this type
of control measures had to be replaced by a specific tariff system in order to register
the products for export with theWTO. The agreement had the further aimof reducing
the tariffs in time.
Although the GATT agreements did not involve only agricultural products, this was
the sector on which the tariff reductions arising from them had the biggest impact.
Consequently, South Africa submitted counterproposals for the implementation of
the agreements. South Africa’s proposal that it be classified as a developing country
was not accepted, but the USA was prepared to support a proposal that South Africa
be regarded as an economy in transition, similar to the former communist states in
Eastern Europe.
After 1994 the new South African government introduced a policy to reform com-
merce, which often exposed businesses in the country to tariffs that were even
lower than the fixed tariffs agreed upon in the Uruguay round of GATT.
In the 1994/1995 season the prices, levies and other marketing arrangements with
respect to agricultural products were determined by the Minister of Agriculture, and
all the role-players were forced to honour them. Because of dissatisfaction from
certain role-players in this regard, the Minister instructed a new maize marketing
scheme to be developed for the 1994/1995 season, for which purpose the so-called
Maize Facilitating Committee (MFC), led by Mr Attie Swart, was appointed in 1994.
The MFC’s recommendations were accepted by the Maize Board and the scheme was
submitted to the Minister through the National Marketing Council (NMC). However, the
Minister did not accept the recommendations, apparently because of the influence of
the Chairperson of the NMC. Because of the extreme dissatisfaction of the NAMPO
Congress with the Minister’s decision, the MFC was requested to reconsider the
matter. The MFC’s somewhat amended proposal was eventually accepted. The main
elements were:
• Selling prices would be formed in the market place without any statutory inter-
vention.
• The Maize Board would operate a surplus export pool and only the Maize Board
may export maize.
• A stabilisation levy would be charged on all domestic sales according to a fixed
formula to support the producer price of the surplus export pool.