Why we should fight for the survival of SA’s wheat producers

Bread may seem simple, but as Dr Tobias Doyer, CEO of Grain SA, explains, its production relies on a complex chain of science, farming, milling, and policy. South Africa’s wheat sector is under serious strain. Protecting local producers isn’t just about charity, he argues, but about safeguarding rural economies, jobs, and the stability of the nation’s food system.

Bread remains one of the most basic foods on the South African table. For the privileged, it is a go-to snack or accompaniment to an interesting meal, but for millions of our poorest citizens, bread is not discretionary or an accompaniment – it is the whole meal.

We’ve all stood in a queue with somebody that was only buying a loaf of bread, sometimes with a small shebo (relish for our non-SA friends) on a ‘treat’ day and realised this is the only item they are buying today.

Bread is easily taken for granted just because it is always there. Behind this simple product lies one of the most complex and scientifically advanced food systems in our economy. It starts with decades of research, where scientists identify, refine and stabilise the traits required in a wheat plant to ensure yield, resilience and quality.

These cultivars are then grown at scale by farmers who carry climatic, biological and market risk long before a single loaf reaches a shelf. The harvested grain is transported and stored in silos – some capable of storing up to 5 000 tons, before being sent to mills when the bakers need flour to bake bread.

Farmers struggles

The millers transforms wheat grain into a wide range of flours, each engineered to meet specific baking requirements.

Only after this carefully coordinated process does flour become bread – mixed, fermented, baked, sliced, packaged and distributed – ultimately appearing at a convenient location for us to fetch and enjoy without much consideration to the vast and advanced system that delivered that loaf at the right place, price, taste and texture for you to enjoy.

The crisis and reality that wheat producers globally and specifically South Africa, are facing goes largely unnoticed: South Africa’s wheat producers are under severe economic pressure, and the system that should stabilise local production is failing to respond fast enough. This is not just speculation anymore.

I get phone calls from distressed farmers, read notices of foreclosure sales and observe similar messages on social media and international agricultural discussion forums.

It is already visible in declining margins, rising break-even yields, and increasing dependence on imported wheat. The wheat industry is not collapsing because farmers are inefficient. It is under strain because local producers are absorbing global and structural shocks that the system no longer cushions.

The reliability of the bread value system depends on sustained investment, scientific capability, functioning markets and policy frameworks that recognise the importance of maintaining domestic production capacity. When any part of this chain is weakened, the apparent simplicity of bread quickly gives way to fragility – with consequences far beyond the farm gate.

Let’s step back for a moment – why should we be ‘protecting’ local wheat production? Why do nations protect their agricultural producers? Is it worth it and should we be doing this?

The first comment here is that I will get taken to task by the wheat farmers – they don’t need ‘protection’ they just need a fair deal… To my mind they are correct and this is supported by statistics: at the implementation of the current tariff regime, local wheat production was in free-fall and being replaced by imported wheat.

This stabilised when appropriate and correct support was provided. However, we also need to recognise that this current situation is not only about the ability of our farmers to produce higher quality at a lower price than their international peers i.e. competing on the market.

South African wheat producers have proven that they (and other grain farmers) are imminently capably of competing with their international counterparts on price and quality and that on an uneven playing field as south African producers receive very limited subsidies.

The market is currently in a bearish or down cycle – why? Simply because agriculture – harvests have been good, the rains came on time, international grain stores are full. This is the normal price cycle – so why should we protect wheat farmers if these are normal market factors?

The simple reason is that internationally wheat producers in similar circumstances will also lobby their governments and the responses of these governments will set off the unfair race to the bottom. See e.g. Farmers welcome Trump’s $12 billion aid package, say additional relief is needed. This is history repeating itself as we know supporting farmers against the momentum of the market always comes to a tearful end.

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However, this is a very expensive and dangerous game of chicken – who will play bankrupt first? South African wheat farmers or the governments supporting our competition? The cost of this realty however, hits very different. The subsidising government’s coffers will be empty and they might raise taxes, but our wheat sector will be decimated:

Fields will be converted to other uses and turning back is difficult: We still haven’t managed to convince eastern Free State farmers, who anecdotally produced the highest quality wheat in SA, to revert to wheat.
Knowledge lost: We are quite aware of ‘terroir’ in wine as the wine makers tell us ad nauseam, but the reality is the same in producing other crops. Every hillside, soil type, nook and cranny responds differently to weather, nutrition, heat and cultivation practice – after a season or two of not producing wheat that knowledge starts fading. This not only the famer, but farm workers also forget, local grain merchants lose their gut feel for the market and crop protection and soil nutrition advisors don’t remember best practices to nurture the crop.
Equipment is sold, converted or perishes and new equipment is atrociously expensive and hence risky – not only on the farm, but also storage, transport, and processing equipment.

And this is the positive picture when farmers can convert to another crop – foreclosures, bankruptcies, job losses, rural decay, disinvestment in agriculture, lost markets for suppliers and all the job associated rural economic opportunities: when other options are not available the whole system closes down and will be extremely expensive to re-start.

We will be pushing against an existing trend and momentum – people are urbanising and will only return to rural areas with great difficulty as, face it, opportunities are limited and will become more so if we are not conscious in protecting these rare and precious opportunities.

Grain fields stretch across the landscape as experts call for stronger government support for farmers. Photo: Supplied/Food For Mzansi

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Re-starting any enterprise, and a farming enterprise, will require new equipment and a steep learning curve in a highly competitive low margin environment. Logistics and processing will be built around imported wheat and can only be redeployed at great capital cost. Jeff Bezos famously categorised decisions as “one door” (irreversible) and “two door” (reversible) decisions.

The wheat industry decision is clearly a “one door” decision with irreversible consequences and we need to approach with great caution, deliberation and appreciation for the long-term impact of our decision – there is a lot on the line.

The policy environment in South Africa is complex. Just read the excellent books The Uncomfortable Truth about South Africa’s Agriculture and A Country of Two Agricultures by the superlative Wandile Sihlobo and Prof Johann Kirsten . In this case the decision is difficult in the sense that the political economy debate will be around do we support? White commercial wheat farmers OR transforming the participation in the agricultural and rural economy.

Will supporting the existing skewed participants not entrench previous interests and make it more difficult to ensure wider participation in local and rural economies? This is an important question ask, but to my mind we are missing a bigger debate around rural economic development and the industrialisation of agriculture.

Yes, in all likelihood the result of this crisis will be further concentration of economic activities around fewer industrialised and capital-intensive farmers. The result will be fewer job opportunities, migration and resultant social pressures in urban centres, smaller rural economies and rising rural poverty. The policy discussion in other countries will be around the rural urban balance, family or industrialised agriculture and supporting rural communities.

We need to clearly separate the two issues – if we fail to support the current structures and wheat producers, the result will be an industrialised and de-populated rural landscape and economy that will be impossible to turn around. We need to be clear: this is not only a choice on support to farmers or not but will have a substantial impact on rural economies.

So why do governments support agriculture?

Xenophon of Athens c. 430 – 355 BC was a Greek military leader, philosopher, and historian. He was a contemporary of Socrates and published “Oeconomicus”, a dialogue with Socrates on household management, of which agriculture is an important aspect. In this he makes the following comments on agriculture:

“It was an excellent saying of his who named husbandry “the mother and nurse of all the arts,” for while agriculture prospers all other arts like are vigorous and strong, but where the land is forced to remain desert, the spring that feeds the other arts is dried up; they dwindle, I had almost said, one and all, by land and sea.

These utterances drew from Critobulus a comment:

Socrates (he said), for my part I agree with all you say; only, one must face the fact that in agriculture nine matters out of ten are beyond man’s calculation. Since at one time hailstones and another frost, at another drought or a deluge of rain, or mildew, or other pest, will obliterate all the fair creations and designs of men; or behold, his fleecy flocks most fairly nurtured, then comes murrain, and the end most foul destruction.

To which Socrates: Nay, I thought, Critobulus, you full surely were aware that the operations of husbandry, no less than those of war, lie in the hands of the gods. I am sure you will have noted the behaviour of men engaged in war; how on the verge of military operations they strive to win the acceptance of the divine powers; how eagerly they assail the ears of heaven, and by dint of sacrifices and omens seek to discover what they should and what they should not do.

So likewise as regards the processes of husbandry, think you the propitiation of heaven is less needed here? Be well assured (he added) the wise and prudent will pay service to the gods on behalf of moist fruits and dry, on behalf of cattle and horses, sheep and goats; nay, on behalf of all their possessions, great and small, without exception.

Governments support agriculture (via subsidies, price support, tax relief, concessional finance, crop insurance, input support, R&D, infrastructure, etc.) because the sector sits at the intersection of food security, national stability, rural livelihoods, and public goods – and because farming is unusually exposed to risk and market failures. The way it’s motivated is usually typically a blend of pragmatic risk management plus values-based arguments about national interest.

Governments around the world support agriculture by intentionally, nor only because of history or politics. They do so because food production is of national interest.