South African farmer body Grain South Africa (GSA) on Monday reacted sharply to the statements made by the Deputy Director General of Agriculture, Masiphula Mbongwa, regarding efforts by GSA to get producers to cut back grain production in an attempt to increase prices to consumers.
GSA also reacted to the expressed intention of the Department of Agriculture to continue with its plan to establish a strategic grain reserve in an effort to influence the free market process.
Local producers are unable to compete in the international market because of the high level of subsidies paid by developed countries, including the United States and European Union, to their producers, GSA chairperson Bully Botma said.
South Africa is one of three countries, including Australia and New Zealand, where little or no subsidies are paid to producers.
For this reason, producers in South Africa are dependent on the local market and any surplus would drive local prices down to export parity, making it impossible for farmers to sustain production at those levels.
It is therefore important, said Botma, that the market in South Africa should be more or less in equilibrium in order that local prices could be sustained somewhere between import and export parity.
Shortages in the market would necessitate imports that would drive prices up to import parity and increase local staple food prices.
Botma said that it is not in the interest of South Africa to import staple food on an ongoing basis.
Should grain prices in the local market be kept at an artificially low level due to government intervention, then many producers would go out of production leading to ongoing imports, raised price levels to consumers and increased unemployment, Botma said.
Regarding the Department of Agriculture’s intention to continue with its plan to establish a strategic grain reserve, Botma said that during the development of a strategic plan for grain in South Africa in 2003, the entire grain industry had agreed it would not pursue the strategy.
The free market is the most cost-effective way of providing affordable food to South Africans, Botma added.
The management of the strategically important grain industry is a priority for GSA and he rejected the suggestion in the statement made by Mbongwa that producers were acting only in their own interests, he said. — I-Net Bridge