• 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 "Websites & publications" heading)

International business environment

  • The top producers of wheat are the EU and China, followed by India, Russia and Canada (USDA, 2018).
  • The top exporter of wheat is the USA, followed by Russia, Canada, the EU and Ukraine. The biggest importers are Egypt and Indonesia (USDA, 2018).

Further reading:

 

South Africa: imports and exports

  • South Africa will produce 1,77 million tons of wheat and import 1,8 million tons of wheat in 2019 (Absa, 2019). By the end of 2022, South Africa’s imports are expected to average 1,85 million tons (Absa, 2019).
  • Wheat imports in 2019 have mainly been from Germany, Russia, Lithuania, Canada, Czech Republic and USA (Sihlobo, 2019).
  • Because so much of South Africa’s wheat is imported, the price farmers get for their crop is tied to import parity (and so exchange rate and world price levels play a crucial role).
  • The need for a continued import tariff is justified by South African producers’ inability to compete with international, particularly Northern Hemisphere counterparts, from a yield and production cost perspective (BFAP, 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 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, tariffs on imported wheat apply (see “South Africa: imports and exports” under the previous heading).

Local consumption is expected to increase from 3,34 million tons in 2019 to 3,51 million tons in 2022 (Absa, 2019).

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

Notes from the 2019-2028 BFAP Baseline

  • After a period of continuous decline, wheat area stabilised over the past 5 years, following the increase in the reference price that triggers the variable import tariff in 2013. The decline in wheat area was particularly rapid in the Free State, where wheat production became less competitive and riskier compared to alternatives such as maize and soybeans. With the area planted to wheat in the Free State stabilising at approximately 105 thousand hectares, the share of South Africa’s total wheat area attributed to the winter rainfall areas of the Western Cape increased steadily, to reach 63% in 2018.
  • Over the course of the coming decade, wheat area in the Western Cape is expected to contract slightly, to reach approximately 300 thousand hectares by 2028. This contraction comes as a result of further expansion in both barley (to approximately 125 thousand hectares by 2028) and canola (to approximately 110 thousand hectares by 2028). Over the next 10 years, the Free State wheat area is expected to increase marginally, to reach approximately 110 thousand hectares by 2028. In the irrigated regions, neither the wheat nor barley area is projected to expand significantly, with competition from a number of alternative crops (amongst them pecan nuts) simply being too strong.
  • The combination of growing income, increasing urbanisation and expanding population is also expected to support consumption growth of 21% over the same period. Consequently, although net imports will also expand, the share of imported products in total consumption is expected to decline marginally, to 43.5% by 2028.
  • The wheat price is projected to increase by an annual average of 2.6%, insufficient to match general inflation.
  • The support provided to domestic producers has declined in recent years, firstly through the reduction in the reference price that triggers the variable import tariff from 294 USD per tonne to 279 USD per tonne in mid-2017. Support was further eroded by the introduction of the quota of 300 thousand tonnes that can be imported free of this duty from the European Union under the Economic Partnership Agreement (EPA).

 

Suggested reading:

  • Statistics (e.g. crop estimates, export/import etc) may be found on the Department of Agriculture, Land Reform and Rural Development (DALRRD) 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 DALRRD 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 DALRRD and other grower notes under the “Websites & publications” heading.

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 "Role players" heading).

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.

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.

 

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. Visit www.sactalevy.co.za.

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) www.sactalevy.co.za

 

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 ARC-SG has the following publications: (i) Wheat Diseases in South Africa (ii) Field guide for the identification of wheat insects in South Africa (iii) Guidelines for the production of small grains in the summer rainfall region (iv) Guidelines for the production of small grains in the winter rainfall region. The Guidelines for the production of small grains in the summer rainfall region and Guideline for the production of small grains in the winter rainfall region are highly comprehensive and essential publications. Topics include management of wheat production (e.g. reaching target yields), soil tillage guidelines, cultivar choice guidelines, fertilization guidelines, and weed and insect control. For the above publications, visit www.arc.agric.za or phone 058 307 3507.
  • Order online at www.arc.agric.za, call 012 842 4017 or send an email to stoltze [at] arc.agric.za for the following publications, available from the ARC Agricultural Engineering: Agro-processing of Cereal Crops Vol. 2 (Sorghum, wheat).
  • Find the Pannar Wheat Production Guide at www.pannar.com.
  • Find the latest annual A Profile of the Wheat Market Value Chain under “Annual publications” on the web pages of DALRRD‘s Directorate Marketing at www.daff.gov.za. Also available on this website are the Technical Manual: Karnal Bunt of Wheat and Wheat production guidelines.
  • Find the wheat option at www.sagl.co.za, website of the Southern African Grain Laboratory (SAGL). Options cover national wheat crop and other reports.
  • Watch “Nasie in Gesprek besoek die koringbedryf” (June 2018) on YouTube.

 

Some articles

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 www.moorreesburgtourism.co.za/wheat-industry-museum/.

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