• After maize, wheat is the second most produced food worldwide (rice is third).
  • Wheat is mainly used for human consumption. It can also be used as seed and as animal feed.
  • The grain is a staple food from which bread, biscuits, cake, cereal, pasta, noodles and couscous can be made. It is used for fermentation to make beer, alcohol and vodka (its alcohol can also be used for biofuel).
  • Other non-food uses include the production of absorbing agents for disposable diapers, cosmetics, adhesives and industrial uses such as starch on coatings.
  • The straw can be used as fodder for livestock or as a construction material for roofing thatch. To a limited extent, wheat is planted as a forage crop.

Source: A Profile of the Wheat Market Value Chain (see heading 9)

International business environment

Find the Wheat Atlas at http://wheatatlas.org/. Circulars on the global environment by the United States Department of Agriculture (USDA) gain by read at https://apps.fas.usda.gov/psdonline/circulars/grain.pdf

  • The world’s top wheat producers are China, EU countries (France and Germany), India, Russia, the USA, Canada, Ukraine, Turkey, Australia and Pakistan (USDA, 2017).
  • Russia, EU, USA, Australia, Canada, Ukraine and Argentina export the most wheat globally (USDA, 2017).
  • Egypt, Indonesia, Algeria, Brazil, Bangladesh, EU, Japan, Philippines and Mexico import the most wheat (USDA, 2017).

“Despite a reduction in area harvested, global wheat production increased by 2% in 2016/17 on the back of excellent yields achieved by most major producers, but particularly in Russia, North America and Australia (BFAP, 2017).” The annual Bureau for Food and Agricultural Policy (BFAP) Baseline places wheat farming in South Africa in the global context. Find the document at www.bfap.co.za.

South Africa: imports and exports

  • South Africa is a net importer of wheat, and so the price farmers get for their crop is tied to import parity. An import tariff of R752.40/t was announced in September 2017.
  • A quota of 300 thousand tons can be imported duty free from the European Union under the new EPA (BFAP, 2017).
  • South Africa is projected to import almost 2 million tons by 2026, just about the level imported under the 2015 drought conditions (BFAP, 2017).
  • In the 2017/18 marketing year, which ends in September 2018, South Africa’s wheat imports are estimated at 1.9 million tonnes, up from 681 559 in the 1994/95 season. So far, 84 percent of this has already been imported. The leading suppliers were Russia (35% share – largest supplier thus far), Germany, Lithuania, Argentina, Latvia, Romania, Ukraine, the United States and Poland (Agbiz, 2018).

Local business environment

Wheat is planted mainly between mid-April and mid-June in the winter rainfall area (Western Cape) and between mid-May and the end of July in the summer rainfall area (eastern Free State).

The share of the Free State has fallen from almost 50% in 2006 to less than 22% in 2016. BFAP (2017) expects this province to account for account for approximately 14% of total area over the 2017-2026 Outlook period. Reasons for the swing away from wheat include changing rainfall patterns which make dryland wheat production risky, and the competitive returns from growing soybeans (BFAP, 2017). The long-term expectation is for a 65% production of the country’s wheat to come from the winter-rainfall areas of the Western Cape, and for national production to increase by less than 1% to be around 1.7 million tons by 2026 (BFAP, 2017).

Because so much of the country’s wheat stock is imported, the price farmers get for their wheat is strongly affected by international prices and where the exchange rate is at.

The wheat marketing season in South Africa commences on 1 October and ends on 30 September the following year. The only government intervention in the market is the tariff on wheat imports. In a bid to protect the local industry, the tariff at 2017, September 28 is R752.40/t a metric tonne.

South Africa remains the largest wheat producer in Sub-Saharan Africa after Ethiopia.

Suggested reading:

  • Statistics (e.g. crop estimates, export/import etc) may be found on the Department of Agriculture, Forestry and Fisheries (DAFF) and South African Grain Information Service (SAGIS) websites, www.daff.gov.za and www.sagis.org.za.
  • The annual Wheat Market Value Chain Profile on the DAFF Directorate Marketing web pages at www.daff.gov.za is a thorough investigation into the wheat value chain in South Africa.
  • Wheat crop reports can be found on the Southern Africa Grain Laboratory website, www.sagl.co.za.
  • Find the Grading Regulations for wheat and requirements for grain exports at http://agbizgrain.co.za.

For the newcomer

Find details of the Wheat production guideline document available from DAFF and other grower notes under heading 7.

As a regular wheat importing country, South Africa and its wheat industry is fully integrated into the global wheat market which has become increasingly concentrated and sophisticated, and many variables need to be taken into consideration. Exchange rate fluctuations, for example, make it a challenge for even the most sophisticated farmers to plan effectively and to be profitable. SAFEX is a good tool to help hedge against exchange rate risk, but the minimum quantities required to trade on SAFEX make it less applicable for small emerging farmers. While transformation of the industry is important for its long-term sustainability in South Africa, this transformation has to happen in an economically viable way. It is not appropriate to encourage primarily subsistence level farmers to invest their scarce resources in what is at present a declining industry. It is almost certainly better to help the larger, more sophisticated emerging commercial farmers to enter the industry in a viable manner.

Source: adapted from a report commissioned by the Wheat Forum investigating the potential entry and successful participation of emerging black farmers into wheat production. Contact the Wheat Forum (details under heading 6)

Agricultural Research Council’s Small Grains (ARC-SG) has a very active Farmer Support Programme, and they have many projects running with the emerging farmer in mind. It runs a three-day wheat production course, specifically for students and extension officers working with emerging farmers. See publications available under “Websites & publications” in this section.

National strategy and government contact

Refer to this heading in the Grains & Oilseeds General chapter.

  • International Trade Administration Commission of South Africa (ITAC) Tel: 012 394 3688 www.itac.org.za
  • National Agricultural Marketing Council (NAMC) Tel: 012 341 1115 www.namc.co.za

The Agricultural Policy Action Plan (APAP) 2015 – 2019 addressed the wheat industry. It noted the following:

  • Wheat has a low labour multiplier, and production costs are presently high.
  • The main contributing factor to the stagnation in wheat production and ever decreasing area put under wheat is the declining average gross income per hectare.
  • The main rationale for seeking to revive the wheat sector is to ensure less dependence on imports, which contributes to volatility in consumer prices and has hurt traditional wheat growing areas.
  • At the time, wheat farmers employed around 28 000 people. Supporting this sector could see a further 8 000 employed.
  • The number of wheat producers was estimated to be between 3 800 and 4 000, predominately white commercial farmers. There was space for transformation.
  • The Western Cape is the country’s greatest wheat producer, yet a lot of this wheat is transported to Gauteng and beyond, and so transport costs detract from the profitability of this crop. Reducing bulk transport costs by progressively increasing use of rail was also essential. A further intervention would be to increase milling capacity in the Western Cape.

Increasing the investment in new cultivars, particular as part of a conservation and uptake/adaptation of conservation agriculture was seen as another important way to reduce production costs.

The South African Cultivar & Technology Agency NPC (SACTA) was established in 2016 to administer the breeding and technology levy and will make payments to the seed companies from funds collected by means of the levies. This is to encourage more cultivars and greater investment in the market. The levy of R25 per tonne is only on locally produced wheat and comes on top of the existing R10.70 per metric ton.
 
Proponents believe producers will gain from the SACTA measures because yields will be higher. There will be more locally produced wheat. Higher volumes of local wheat production will lead to less imports and thus less tariff payments, a counter to increased food inflation (Agbiz Grain, 2016).

Find the presentation “Monitoring biosecurity for the Grain Value chain” by Dr Marinda Visser (Grain SA) at www.agbizgrain.co.za/uploads/documents/Events/Mini%20Symposium%202017/Marinda%20Visser,%20Grain%20SA.pdf

Role players

Associations

  • Agbiz Grain Tel: 012 807 3002 http://agbizgrain.co.za/
  • Grain SA Tel: 0860 047 246 www.grainsa.co.za
  • SA Cereals & Oilseeds Trade Association (SACOTA) Tel: 012 663 9097 www.sacota.co.za
  • South African Grain Information Service (SAGIS) Tel: 012 941 2050 www.sagis.org.za
  • The Wheat Forum is representative of major sectors involved in the wheat and wheat products industry, namely wheat producers, millers, bakers, trade unions, consumers and government that deal with policy issues of mutual concern. Call 012 007 1200.
  • Winter Cereal Trust Tel: 012 007 1200 www.wintercerealtrust.co.za
  • SA Chamber of Baking Tel: 012 663 1600 www.sacb.co.za
  • South African Cultivar & Technology Agency (SACTA) c/o Agbiz Grain Tel: 012 807 3002

Training and research

The Winter Cereal Trust is responsible for the allocation of funding and appraisal of relevant research projects in the winter grain industry. Since 1998, statutory levies on sales of winter cereal have been imposed to finance the Winter Cereal Trust. The Agricultural Research Council’s Small Grains campus in Bethlehem conducts the research on wheat and other winter grains.

  • ARC-Small Grains (ARC-SG) Tel: 058 307 3400 Training is done on demand: should somebody be interested, the ARC-SG puts together a programme. In addition to training, the ARC-SG carries out a number of other services e.g. plant analysis, they run a wheat quality laboratory etc. Find details on www.arc.agric.za.
  • Grain SA Tel: 0860 047 246 www.grainsa.co.za Included in its Farmer Development Programme is a week long introduction to producing wheat.
  • Grain Training Institute Tel: 071 312 7413 www.gtinstitute.co.za
  • NOSA Agricultural Services Tel: 033 345 8990/9238 www.nosaagri.co.za Training and/or training materials
  • Southern African Grain Laboratory (SAGL) Tel: 012 807 4019 www.sagl.co.za
  • Stellenbosch University (i) Department of Agronomy Tel: 021 808 4803/5 www.sun.ac.za (ii) Department of Food Science Tel: 021 808 3578 www.sun.ac.za/foodsci
  • University of the Free State Department of Plant Sciences Tel: 051 401 2514 www.ufs.ac.za/plantsci

Companies involved

For an extensive list go to www.sagis.org.za – take the “List of Co-workers” and then “Wheat” menu options.

Websites and publications

Visit websites listed earlier in this chapter.

The Agri Processing Index (API) developed by the Western Cape Department of Agriculture ranked the potential of some 130 different products, measuring employment potential, production performance and global market growth. Wheat Meal and Wheat Flour were in number six on the Top 20 products list, showing the potential of backing this product. The table appeared in the BFAP Baseline Agricultural Outlook 2015-2024.

A Wheat Museum – “one of the only three of its kind in the world where the history of wheat is depicted” – can be visited in Morreesburg (Western Cape). Call 022 433 1093 or take a look at http://moorreesburg.net/museum.htm.

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