Representing the interests of the South African wheat and maize milling industries, the National Chamber of Milling has no shortage of important issues to address.
Whether it’s taking positions on a controversial topic such as genetically modified (GM) crops or offering technical education courses for its membership, the Chamber of Milling said it is intent on staying true to its mission of "adding value via leadership, information, knowledge and negotiations to enhance the competitiveness and profitability of our members."
A not-for-profit organization, the Chamber of Milling represents 13 wheat milling and 22 white maize milling companies in South Africa, including the nation’s four biggest milling companies: Premier Foods, Tiger Brands, Sasko and Ruto Mills. According to the South African Grain Information Service, 65 wheat mills and 245 maize mills are registered in South Africa.
"The basic trend is that the number of wheat millers is decreasing," Jannie de Villiers, executive director of the Chamber of Milling, told World Grain. "Since (government) deregulation, partly in 1991 and fully in 1997, the number of wheat mills (initially) increased, but over time has decreased as these new entrants find it more and more difficult to meet the requirements of the market.
"The maize millers, however, have increased since the deregulation in 1997 and are still increasing. The market share of the informal maize milling sector has increased from 15% in the 1980s to 40% currently."
The estimated wheat milling capacity of South Africa is 3.3 million tonnes, while the maize milling capacity is 4.7 million tonnes.
"We estimate that the current utilization, on average, is 85%," de Villiers said. "The capacity utilization has decreased since deregulation occurred in 1997."
As for the greatest challenges facing the South African milling industry, de Villiers said the maintenance and investment in infrastructures such as rail, roads and ports are at the top of the list along with ensuring that adequate government services and an ample supply of electricity are made available.
"Other great challenges are South Africa’s reaction to climate change, dealing with volatility in raw material prices, and skills shortages following the huge transformation process in South Africa after democratization," de Villiers said.
In addition to supporting its core businesses (wheat milling and maize milling), the Chamber of Milling also supports the general agricultural processing sector through the South African Agricultural Processors Association, the animal feed industry and the baking industry.
After a long period of consolidation, which saw the number of baking plants decline from 250 to 70 from 1994-2000, consolidation in the baking sector has largely come to a halt. The big plant bakers are building on their role, and their share of the market has gradually risen, reaching 42.4% of wheat flour usage in 2007-08. According to de Villiers, the plant bakers need to expand, but the low level of profitability makes it hard to find the necessary funds for investment.
The Chamber of Milling lists eight "high priority" areas that it focuses on for its membership. These areas include:
- Value chain leadership and management. This includes coordinating and enhancing competition and service delivery levels of suppliers in the value chain, such as commercial storage, Transnet Freight Rail and Agricultural Research Council as well as enlarging the supply of raw material origins both domestically and internationally. The Chamber of Milling also "creates research capacity," de Villiers said, through its leadership and influence on matters such as climatic changes, alternative energy sources and savings as well as the impact of environmental policy on the industry.
- Government policies, regulations and monitoring. The promotion of free market principles, facilitating the process to develop a reliable crop estimate for South Africa and advising the government on policies (specifically on biofuels, energy and food security) that have an impact on the industry are just a few of the actions taken by the Chamber of Milling in this area. The organization assists the government with advice and information with regard to the monitoring of published government regulations relating to issues such as flour fortification, the importation of products and weights and measures, etc.
- Information. The Chamber of Milling provides accurate, timely and credible data on issues relating to its members, such as cost data and sales information, and communicates relevant trends based on economic research in the industry. The organization also shares information with the government and other organizations that support the milling industry to "enhance the best market decisions for our value chain." The Chamber of Milling has also organized an advertising campaign for maize meal produced by its members.
- International trade issues and tariffs. The Chamber of Milling has taken a number of steps in this area, including: positioning the industry through research, communication and negotiations with regard to all multilateral aspects of the World Trade Organization; enlarging South Africa’s proportion in food aid; and helping position the industry through negotiations and government assistance with regard to all free trade agreements.
- Serving as a media liaison. In its role as "industry spokesperson," the Chamber of Milling seeks to educate journalists and the general public regarding industry matters and promote the image of the industry through the media. It also tries to be proactive in disseminating information regarding economic factors that affect the industry such as interest rate changes, fuel prices, raw material prices, etc.
- Technical matters relating to raw materials. In this very important area, the Chamber of Milling works to facilitate the improvement of the quality of raw materials and establish the concept of end-user requirements within the wheat and maize value chains. Evaluation and improvement of grading regulations with regard to wheat and maize is also part of the organization’s agenda.
- Technical matters relating to food safety. Communicating and promoting the view of the milling industry with regard to genetically modified organisms has become an increasingly important part of the group’s work along with improving wheat and maize product regulations.
- Good corporate governance. Within this area, the organization attempts to provide efficient use of grain processing sector resources via synergies and cooperation agreements with related industries. The Chamber of Milling said it strives to upgrade staff skills in providing the best possible service needed in executing the focus area and to maintain the highest degree of confidentiality regarding sensitive member information.
Although listed as a "medium" priority, training is also an area that the organization emphasizes. The Chamber of Milling is administering a Grain Milling Federation correspondence course for technical wheat and maize millers in which 192 students are currently enrolled, according to de Villiers.
POSITION ON GM MAIZE
As in many parts of the world, South Africa is dealing with the issue of growing GM crops. The Chamber of Milling notes that 4.5 million hectares of GM maize have been grown in South Africa over the past nine years without any substantiated incidence of damage to human or animal health, or to the environment.
"This is evidence of a biosafety framework that helps to ensure assessment of safety of GM products prior to approval for commercial release, and compliance by biotech stakeholders with regulations," the Chamber of Milling said.
Regarding the GM issue, de Villiers said the Chamber of Milling:
- encourages identity preservation within the grain supply chain to enable clear labeling of its products to the consumer market;
- supports research into the safe use of biotechnology and the responsible use of GM products with due concern for the consumer’s health and environmental well being; and
- influences the various government departments and decision-makers concerned in efficiently and sensibly regulating the safe development of biotechnology in the South African society.
"The South African milling industry supports the principle of consumer choice and will thus service a consumer-led market for grain and grain products," de Villiers said. "To this end, it supports the safe and responsible application of biotechnology in providing nutritious, quality staple foods at the best possible price in the interest of household food security."
We want to hear from you — Send comments and inquiries to