Excerpts from an article written by Dr Tobias Doyer, CEO of Grain SA. Read the original here.
The crisis and reality that wheat producers globally and specifically South Africa, are facing goes largely unnoticed: South Africa’s wheat producers are under severe economic pressure, and the system that should stabilise local production is failing to respond fast enough.
This is not just speculation anymore – I get phone calls from distressed farmers, read notices of foreclosure sales and observe similar messages on social media and international agricultural discussion forums. It is already visible in declining margins, rising break-even yields, and increasing dependence on imported wheat. The wheat industry is not collapsing because farmers are inefficient. It is under strain because local producers are absorbing global and structural shocks that the system no longer cushions.
When global prices fall, South African wheat producers absorb the shock
International wheat markets are currently in a downward price cycle, driven by:
- subsidised production in major exporting countries,
- geopolitical trade flows,
- and oversupply dynamics beyond South Africa’s control.
In theory, cheaper global wheat should benefit consumers.
In practice, the first and hardest impact is felt at farm level. Local wheat producers operate without the subsidies enjoyed by their international competitors. They are price takers in both input and output markets. When world prices decline, producers face:
- lower producer prices,
- unchanged or rising input costs,
- and delayed or insufficient trade remedies.
Down- and upstream, however, large parts of the value chain continue to show healthy margins. Farmers have effectively become the shock absorbers between volatile global prices and a stable retail food environment. That shock-absorbing capacity is now reaching its limit.
Wheat is not the driver of bread prices
One of the most persistent myths in the wheat debate is that higher wheat prices make bread unaffordable. The data tells a very different story.
- Wheat contributes only about 18% to the cost of a standard 700g loaf of bread – roughly four slices.
- On a loaf priced at R17.92, the wheat producer receives about R3.23.
- One ton of wheat yields approximately 1 700 loaves of bread.
The main drivers of bread prices are processing costs, electricity, fuel, labour, logistics, and broader value-chain dynamics.
The wheat tariff is a trade remedy – not a subsidy
South Africa’s wheat import tariff is often misunderstood – it is not a subsidy – it is a rules-based trade remedy, designed to offset global distortions and stabilise domestic production.
Its purpose is to:
- prevent dumping-driven price collapses,
- provide predictability for planting decisions,
- and safeguard long-term production capacity.
However, a protection mechanism that is:
- slow to trigger,
- based on misaligned reference prices,
- or implemented months after market damage occurs,
fails in its primary function – by the time protection arrives, farmers have already absorbed the loss.
This is not unique to South Africa – but our exposure is
Every major wheat-producing country supports its farmers in one form or another:
- through direct payments,
- insurance and disaster relief,
- border measures,
- or structural support.
South Africa is unusual in expecting wheat producers to compete in a globally distorted market with minimal buffering, while still delivering affordable food and rural employment. This is not free trade. It is asymmetric exposure.
What needs to happen – urgently
If South Africa intends to retain a viable wheat industry, three areas require immediate attention.
- More effective import protection
Grain SA and SACOTA have already submitted proposals to ITAC, including:
- an adjusted base reference price aligned with actual import quality,
- an automated trigger mechanism for faster tariff activation,
- limits on imports during the local delivery season.
These measures are aimed at price stabilisation, not artificial inflation.
- Modern production and genetics
- Modernisation of plant breeding and biotechnology regulation.
- Realistic quality standards aligned with local production realities.
- Recognition of white wheat in the national basket to support diversification and yield stability.
- Risk management and production support
- Protection of existing crop-protection tools and resistance-management strategies.
- Subsidised or supported crop insurance to absorb systemic shocks.
- Review of area differentials and market mechanics on SAFEX.
- Coordinated engagement with financiers to manage cyclical stress.
The window for action is narrowing
Without coordinated action across policy, trade administration and the value chain, the South African wheat industry faces a genuine survival risk. If producers exit:
- consumers do not automatically benefit,
- dependency increases,
- food security weakens,
- and rural economies contract.
Meanwhile, large parts of the value chain remain profitable.
This raises an uncomfortable but necessary question: How committed is the rest of the system to the long-term sustainability of local wheat production?
The cost of inaction will not disappear. It will simply shift – eventually landing with consumers and the state. The wheat industry is not asking for protection from reality. It is asking for a fair, responsive system that recognises risk, timing and national interest.
The time to intervene is now.
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The article first appeared on LinkedIn. Read the complete, original here.
Photo by Evi Radauscher on Unsplash
