Table of Contents

Also see the "Grains & oilseeds" and "Baking" chapters.

 

1. Overview

  • 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)

 

2. 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 is a net importer of wheat, and so the price farmers get for their crop is tied to import parity. A new wheat tariff of R640.60 p/ton was published on 24 August 2018.
    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).
  • A quota of 300 thousand tons can be imported duty free from the European Union under the new EPA (BFAP, 2018).

 

3. 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 total area cultivated to wheat in South Africa has stabilised over the past 5 years, having declined consistently for a long period up to 2012. The bulk of the decline is attributed to the Free State, where wheat lost competitiveness and is perceived as a more risky crop to produce relative to alternatives such as maize and soybeans. As a result of the loss in Free State wheat area, the share of wheat area situated in the Western Cape’s winter rainfall areas relative to the total South African wheat area increased over time, reaching 66% by 2017 when 326 thousand hectares were planted to wheat in the Western Cape (BFAP, 2018).

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. Domestic price levels have been more in line with Black Sea imports though, which is typically of lower quality than South African wheat. This suggests that South African wheat trades at a discount to similar quality imported wheat (BFAP, 2018).

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 heading 2).

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.