The South African Cereals and Oilseeds Trade Association (Sacota) recently met with minister of agriculture John Steenhuisen to discuss the important role traders play in the value chain, moving products from farm gate to processing facilities and abroad.
Executive director of Sacota, André van der Vyver, said the meeting also deliberated on how to address inefficiencies in the value chain, particularly in view of a potentially large crop, and the need to efficiently export surpluses in the next few months.
Van der Vyver highlighted that imports are equally important. “For example, South Africa only produces approximately 50% of its requirements for wheat, while the balance must be imported. This must occur as efficiently as possible; otherwise, added cost will eventually translate into higher flour and bread prices for the consumer.
“A key issue in the wheat market remains the ongoing International Trade Administration Commission of South Africa (Itac) wheat tariff application. It is now sixteen months since Itac announced that they have all the necessary information to conduct their investigation, and yet we have seen no outcome,” he said.
Addressing inefficiencies in the value chain
According to Van der Vyver, part of the application was for adjustments in the wheat tariff to be implemented monthly, similar to the fuel levy system. He said in doing so, this will greatly increase efficiencies in the wheat value chain.
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“Another critical outstanding wheat matter is the signing off on the annual implementation of the EU-SACU Economic Partnership Agreement, and specifically the tariff rate quotas (TRQs). This allows for approximately 250 000 tonnes of EU wheat to enter SA duty-free, in exchange for SA products, such as citrus, to obtain preferential access to the EU market.
“It is supposed to become effective on 1 February each year. Currently, seven wheat vessels are waiting in Durban to offload. Some have already started clearing small parcels or have placed some wheat in-bond,” he added.
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The meeting also dealt with inefficiencies in logistical infrastructure and access to global markets. With a large maize and soybean crop imminent, it will be necessary to export surpluses before prices increase again, all things being equal.
“As Sacota, we anticipate bottlenecks, especially with rail transport having deteriorated even further, and large volumes that will have to be moved ina short time frame. It requires a coordinated effort to minimise delays and additional costs.
“The industry is always on the lookout for additional markets to diversify its portfolio of clients. Every service provider throughout the value chain is important to ensure a global competitive and efficient export programme,” he said.
Meanwhile, Steenhuisen confirmed that the communication channels between him and the department of agriculture, on the one hand, and Sacota export members and industry, on the other, will remain open to ensure the most efficient export programme possible despite challenges.
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