Table of Contents

Also see the "Grains & oilseeds" chapter.

 

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

Find the Wheat Atlas at http://wheatatlas.org/. Circulars on the global environment by the United States Department of Agriculture (USDA) gain by read at https://apps.fas.usda.gov/psdonline/circulars/grain.pdf 

  • The world’s top wheat producers are China, EU countries (France and Germany), India, Russia, the USA, Canada, Ukraine, Turkey, Australia and Pakistan (USDA, 2017).
  • Russia, EU, USA, Australia, Canada, Ukraine and Argentina export the most wheat globally (USDA, 2017).
  • Egypt, Indonesia, Algeria, Brazil, Bangladesh, EU, Japan, Philippines and Mexico import the most wheat (USDA, 2017).

“Despite a reduction in area harvested, global wheat production increased by 2% in 2016/17 on the back of excellent yields achieved by most major producers, but particularly in Russia, North America and Australia (BFAP, 2017).” The annual Bureau for Food and Agricultural Policy (BFAP) Baseline places wheat farming in South Africa in the global context. Find the document at www.bfap.co.za.

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. An import tariff of R752.40/t was announced in September 2017.
  • The top exporters of wheat to South Africa in 2016 were Russia, Germany, Poland, USA, Ukraine, Canada, Argentina and Australia (ABSA, 2016).
  • A quota of 300 thousand tons can be imported duty free from the European Union under the new EPA (BFAP, 2017).
  • South Africa is projected to import almost 2 million tons by 2026, just about the level imported under the 2015 drought conditions (BFAP, 2017).

 

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 share of the Free State has fallen from almost 50% in 2006 to less than 22% in 2016. BFAP (2017) expects this province to account for account for approximately 14% of total area over the 2017-2026 Outlook period. Reasons for the swing away from wheat include changing rainfall patterns which make dryland wheat production risky, and the competitive returns from growing soybeans (BFAP, 2017). The long-term expectation is for a 65% production of the country’s wheat to come from the winter-rainfall areas of the Western Cape, and for national production to increase by less than 1% to be around 1.7 million tons by 2026 (BFAP, 2017).

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.

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, the tariff at 2017, September 28 is R752.40/t a metric tonne.

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. The 2016/17 one is here.
  • Find the Grading Regulations for wheat and requirements for grain exports at http://agbizgrain.co.za.