Wheat traded at US$473/t on the Chicago Board of Trade last week, continuing its fall from the $1191/t peak it scaled in March 2008. The current price is the lowest since March 2007.
An oversupply of wheat produced in response to the shortages experienced at the height of the “food crisis” in 2008 has created a huge surplus and is one of the main factors depressing global prices.
SA wheat growers — situated mainly in the Western Cape — also complain that they have to compete with wheat that is imported tariff-free from countries that subsidise their agriculture sectors.
SA farmers do not get state assistance and, local farmers say, imported wheat is often of a much lower grade than that produced domestically.
This season SA has imported wheat from Germany, Australia, the US and the Ukraine. Traditionally, Argentina is also a major importer.
The debate about tariffs on imported wheat has a long history and many farmers believe government has been shortsighted in its treatment of the industry.
In what GrainSA chairman Neels Ferreira referred to as government's quest for “cheap food for the masses”, it allowed wheat to be imported with little or no protection for the local industry.
GrainSA MD Kobus Laubscher made a strong call for substantial import tariffs on wheat at the recent AGM of the organisation's winter rainfall region.
“Imported wheat hampers local producers' ability to contribute to rural development,” he says. “An import tariff is now necessary to ensure sustainable wheat production in SA.”
Laubscher says profitable agriculture is the best way to stimulate rural development and move towards eradicating rural poverty, key items on government's agenda.
Ferreira told the AGM that it was impossible to produce wheat profitably at current prices. In addition to calls for substantial import tariffs, it was proposed at the AGM that only high-grade wheat be approved for importation to ensure fair competition with SA's produce.
The issue has clearly come to a head for wheat farmers, with emotional calls for “unity” among agricultural organisations such as Agri SA, the Transvaal Agricultural Union and the National African Farmers' Union.
Says Ferreira: “Unity in agriculture must be preserved at all costs for the benefit of the producer. If there are three groups, government will listen to the one that suits it best.”
Source: Financial Mail
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