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The Wheat Forum has applied for the establishment of a Section 7 Committee to conduct a comprehensive investigation into the state of the South African wheat industry. The outcome of the request is still pending, but an answer is expected soon, says Prof André Jooste, chairperson of the Wheat Forum.
The forum submitted the application in light of the severe pressures on the wheat industry due to rising input costs and low farm-gate prices, which are eroding farm incomes to the point where it is not financially feasible to produce wheat, whilst there are limited alternatives, if any.
Prof Jooste says if the forum’s request is approved, the National Agricultural Marketing Council (NAMC) will determine the composition of the Section 7 committee, although it is typically drawn from members of the directly affected group cohort, for example, producers, traders, processors, and retail.
What is a Section 7 investigation?
According to Prof Jooste, the Marketing of Agricultural Products Act, 1996 (Act 47 of 1996) provides for Section 7, under which the NAMC Council may appoint Section 7 committees to advise the Council or carry out functions assigned to them.
These committees operate under the Council’s direct oversight and are designed to include representatives of all directly affected groups, enabling coordinated engagement between industry stakeholders and government at a high level. Their purpose is to create a structured platform where affected parties can jointly assess challenges, develop strategies, and propose practical solutions for a sector or a specific challenge or problem experienced in an agricultural value chain.
Prof Jooste says recommendations can also be made to the minister of agriculture as custodian of the Act.
Wheat is more than food
Wheat remains a critical component of national food security, particularly in a context of global geopolitical uncertainty, climate-change impacts, and volatile markets, says Prof Jooste.
It is important to recognise that the wheat industry forms the economic backbone of several rural towns in the Western Cape through its demand for inputs, financing, and services, as well as the employment it generates along the value chain. “A significant contraction of this industry would have severe consequences for the country.”
“Substitution options for wheat are limited, especially in key production areas such as the Swartland in the Western Cape, where agro-ecological conditions strongly favour wheat,” says Prof Jooste. “As a result, the long-term viability of wheat production in these regions is under significant pressure.”
What are the main issues?
Prof Jooste says there are four main issues that will be investigated. These are the following:
- The reference price and import tariff trigger mechanism: Industry stakeholders are of the opinion that the current price-monitoring and tariff-trigger system has broad effects on pricing, market alignment, and value-chain efficiency. Prof Jooste says with rising input costs, climate pressures, and declining wheat production, particularly in the Western Cape, there is a need for a transparent and balanced tariff framework. Such a framework is viewed as essential to support the domestic industry, safeguard national food security and support rural economies (especially in the Western Cape).
- Price discovery and lack of transparency: Industry stakeholders have expressed concerns about price discovery, price convergence, and the overall transparency of the wheat market. There are concerns that the JSE’s Equity Derivatives Market (formerly known as Safex) prices may not reflect the intrinsic value of wheat, which undermines effective price convergence. Prof Jooste says the limited visibility of market participation makes it difficult to assess whether current prices truly reflect underlying supply and demand conditions.
- Storage capacity and logistical challenges: Industry stakeholders raised concerns about inadequate and ageing storage infrastructure, highlighting risks to grain quality, traceability, and proper segregation. These shortcomings, along with limited investment, hinder market efficiency and distort price discovery, according to Prof Jooste. Strengthening storage capacity is therefore essential for a resilient wheat sector and for safeguarding national food security.
- Transformation and inclusivity: The industry has acknowledged the limited participation of previously disadvantaged individuals in wheat production and processing, and the need to accelerate inclusive growth. Stakeholders have agreed that the sector must reflect more seriously and act more decisively to advance transformation in a way that supports long-term sustainability, strengthens competitiveness, and aligns with national goals for inclusive agricultural development.
These challenges need to be addressed
Prof Jooste said the issues to be considered by the Section 7 Committee are the following:
- Review and refine the reference price and import tariff trigger mechanism.
- Improve price discovery and market transparency.
- Assess storage capacity and logistical constraints, and find solutions.
- Devise strategies to advance transformation and inclusivity in the wheat value chain.
- Consider the impact of certain policies on the viability of the wheat industry.
- Formulate integrated policy and institutional recommendations.
Wheat Forum’s purpose
The Wheat Forum functions as the industry-wide consultative and advisory body, providing a platform for discussion, coordination, and stakeholder input across the wheat value chain and supporting the South African Winter Cereal Association (Sawcia).
The Wheat Forum and Wheat Forum Steering Committee proceedings are conducted in strict compliance with the Competition Act, 1998 (Act 89 of 1998) and the principles of good governance. The structure is open to any wheat industry stakeholder that is registered with the National Agricultural Marketing Council (NAMC) as a Directly Affected Group (Dag), says Prof Jooste. – Hugo Lochner, Plaas Media
