The competitive status of the South African Wheat Industry

Johannes Van Der Merwe,Herman Van Schalkwyk,Philippus Cloete

doi:10.4102/jef.v9i3.63

Johannes Van Der Merwe, Herman Van Schalkwyk + Show 1 more

Open Access

https://doi.org/10.4102/jef.v9i3.63

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Abstract

This article investigates the competitiveness of the South African wheat industry and compares it to its major trade partners. Since 1997, the wheat-to-bread value chain has been characterised by concentration of ownership and regulation. This led to concerns that the local wheat market is losing international competitiveness. The competitive status of the wheat industry, and its sub-sectors, is determined through the estimation of the relative trade advantage (RTA). The results revealed declining competitiveness of local wheat producers. Compared to the major global wheat producers, such as Argentina, Australia, Brazil, Canada, Germany and the USA, South Africa’s unprocessed wheat industry is uncompetitive. At the same time, South Africa has a competitive advantage in semi-processed wheat, especially wheat flour. The institutional environment enables the importation of raw wheat at lower prices and exports processed wheat flour competitively to the rest of Africa.

Highlights

This study investigates the competitive status of the South African wheat industry and its subsectors, and compares it to its most important global trade partners
The competitive status of the South African wheat industry was assessed in this study
The study estimated the competitive advantage of the wheat industry and its sub-sectors of South Africa’s most important trade partners

Summary

Introduction

This study investigates the competitive status of the South African wheat industry and its subsectors, and compares it to its most important global trade partners. In order to feed the world’s estimated 9.1 billion people by 2050, the Food and Agriculture Organisation (FAO) (2009) estimates that world food production will have to increase by approximately 70%. The agricultural industry will have to assist in the development of agriculture-dependent countries, deal with climate change and develop efficient and sustainable production methods (FAO, 2009). In addition to these global challenges, each country and industry has its own identity and its own unique challenges. The South African wheat industry (SAWI) is a good example of an industry influenced by both global and local developments, which, in turn, affect its competitiveness

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