South Africa - Wheat Shortage is the Real Problem
Lauren Cohen Published:Jan 19, 2008
The soaring wheat price is to blame for bread price increases, with farmers battling to produce enough ‘‘white gold” to meet local demand, industry stakeholders said this week.
The Chamber of Milling, which represents about 95% of South Africa’s wheat producers, said wheat prices had risen from less than R2000 a ton last January to R3100 a ton this month.
Chamber executive director Jannie de Villiers said the increase was based on economic factors and that bakeries would be forced to increase prices up to 75c a loaf in the next six months to keep up with wheat price increases.
“The South African crop is 1.8-million tons and we mill 2.8-million tons, meaning we must import a million tons at prices between R3600 and R4100 a ton,” he said.
He said that a wheat price of R2300 a ton equated to a retail bread price of R5.75 for a white loaf.
De Villiers said that wheat stocks globally were at a 40-year low, with prices at a 40-year high.
“Wheat farmers in the Southern Hemisphere have had a poor season, so demand is higher than supply. Europe is using wheat for biofuels, which also drives demand for it. Some farmers have switched to maize since the price of it has risen — maybe now they will switch back to wheat,” De Villiers said.
“People in the emerging markets of China and India are eating more meat, which has substantially increased the demand for animal feed.”
He said five years ago it cost 20 a ton to transport imported wheat.
‘‘But for the past year it has been 90 a ton, which means an extra R500 a ton added to the freight price — this should have meant an extra 30c per loaf months ago.
‘‘It is also difficult to charter ships to come to South Africa as they are all going to China. Trade unions say the government must control the bread price, but how can you control the international freight price, and the weather in Australia?
“Food prices are about affordability and availability. Right now we are battling with affordability and the government could assist with tax rebates,” De Villiers said.
The Western Cape and Free State are the two major wheat-producing areas.
Nico Hawkins, industry services manager for Grain South Africa, said wheat prices had risen between 50% and 70% in the past year, depending on when farmers sold their crop.
“South Africa’s crop decreased from 2.5-million tons in 1997 to 1.77-million tons last year. As a result, imports have increased in the same period by 25%,” Hawkins said.
