Grain SA unhappy over transport costs

Farmers' organisation Grain SA expressed dismay on Monday (26 August) at the planned increase in location differential costs announced by the Johannesburg Stock Exchange (JSE).

28 Aug 2013

It said the proposed average differential, announced last week, could increase by 36.9% for the Western Cape region.

Location differential prices are the transport cost of moving grain from registered silos in different production areas in South Africa to a central point at Randfontein.

The average increase for the delivery of the Randfontein wheat contract amounts to 25.85%, and for the Paarl contract, with delivery points only in the Western Cape is 18.45%.

Grain SA executive head Jannie de Villiers said the implication of a higher location differential charges meant producers would be offered even less for their product because of the direct impact the new proposed prices would have on pre-season contract prices for the coming season.

Grain SA said the location differential limited healthy competition in the cash market, adding that the official Grain SA standpoint on the matter was that location differential should no longer exist.

"We think the open transport market could determine the transport prices," he said.

Grain SA appealed to the JSE to abolish the location differential, which was unpopular with grain producers. Comments on the suggested location differential prices must reach the JSE by Thursday, 29 August.

Source: Sapa via I-Net Bridge

Source: I-Net Bridge

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