South Africa’s agricultural sector remains important in the nation’s economy. Despite its small direct share — about 4% — of the total gross domestic product, agriculture and related industries support nearly a third of the country’s population.

Production is segmented into three categories, commercial, small and household farming.

Large-scale commercial farmers total about 50,000, most of whom are predominantly white. The commercial farming sector employs about 1 million workers, or 11% of the total agricultural labor force.

Small farmers number about 240,000 and supply local and regional markets. Finally, an estimated 3 million people are considered household farmers, located mainly in communal areas and producing mostly for family needs.

Early in 2001, President Thabo Mbeki asked different agricultural interests to come together to develop a strategic plan. The resulting sector plan for agriculture envisions sustained profitability. Specific goals include increasing production, building international competitiveness and addressing historical biases.

The plan’s developers sought to address the third issue by "fast tracking" land redistribution and empowerment for targeted groups. After the end of apartheid in 1994, the government pledged to transfer 30% of white-owned land to blacks in five years, but 10 years later, only 2% has been transferred.

Implementation of this part of the plan currently is creating a major controversy, as recent amendments to the land restitution law have empowered the Minister of Land Affairs to expropriate land without a court order and without landowners’ agreement.

Commercial farmers agree with the need for land reform but they fear the policy will create turmoil in the agriculture sector, as has occurred in Zimbabwe.

FOOD GRAINS AND MILLING

White maize meal is considered South Africa’s primary food staple, although wheat bread also is a major food product, particularly in urban areas. Of the total of slightly more than 7 million tonnes of maize and wheat consumed annually for food, about 64% is maize and 36% is wheat.

Both key crops are grown domestically and are subject to wide swings in production because of drought. In good years, South Africa exports its maize surplus, but during droughts, those exports are curbed and wheat imports jump.

Before 1996, maize, wheat, maize meal, wheat flour and their downstream products were heavily protected and/or regulated by government boards. Since the mid-1990s, these markets have undergone considerable deregulation and liberalization.

About 80% of the milling industry today is controlled by three major players, Pioneer (Sasko and Bokomo), Tiger Brands and Genfoods (BB Cereals and Premier Milling). In addition to producing numerous national and regional brands of maize meal and wheat flour, the three companies also are integrated into baking.

The National Chamber of Milling and the National Association of Maize Millers are trade associations representing the collective interests of South Africa’s commercial wheat flour and maize millers, respectively. Membership comprises large food conglomerates as well as small entrepreneurial operators and covers 97% of all wheat and 85% of all white maize milled in South Africa.

Another entity, the Grain Milling Federation, operates under the auspices of the two milling associations. The federation administers a number of industry-sponsored activities, including wheat and maize milling correspondence courses, advanced courses, technical consulting services and testing for would-be millers.

About 2.3 million to 2.4 million tonnes of wheat are ground annually in South Africa, equating to 1.84 million tonnes of flour. Of the flour total, approximately 55% is consumed by the bread industry.

Deregulation prompted facility consolidation, with the number of baking plants dropping to fewer than 70 as of 2001 from 250 before the mid-1990s. Even so, more players, including supermarkets and independent bakeries, have entered the market.

Current bread production in South Africa is about 7 million loaves per day, and of that total, 30% to 35% is produced by the independent bakery sector, up from a 3% market share in 1993. Indeed, in some metropolitan areas, independent market share is estimated to be closer to 50% of the total bread market.

Last year, the milling industry began adding micronutrients to its flour products, following a mandate from government health agencies. The effort, although welcomed, required a major financial contribution from the milling companies.

Another issue confronting South Africa’s millers centers on genetically modified organisms. In the 2002 harvest, the land under GM crop cultivation in South Africa increased by 50% to 300,000 ha. Although still negligible compared with overall crop area, the total ranks South Africa well ahead of all European countries and many other middle-income developing states.

South African GM use has focused on GM maize seeds resistant to insects, and the results have been successful. Small-scale farmers in a district in northern KwaZulu Natal who planted GM white maize for the first time in 2003 increased their yields by 220%.

Most other African countries have been reluctant to allow GM seeds, mostly for fear of having their food exports to the E.U. blocked. Last year Zambia turned away 50,000 tonnes of GM maize despite famine, and Zimbabwe and Mozambique also refused entry to GM crops.

Several South African environmental groups have launched a court challenge against issuance of GM licenses by the Department of Agriculture. But South Africa’s government remains cautiously in favor of GM technology, a stance reinforced by the positive results achieved by subsistence farmers.

In 2002, the National Chamber of Milling and the National Association of Maize Millers weighed in on the GMO issue through a position paper. The groups said they supported "the principle of consumer choice" as well as "the safe and responsible application of biotechnology" in providing nutritious, quality staple food at the best possible price in the interest of household food security.

The groups also indicated the milling industry would work to encourage identity preservation within the grain supply chain to enable clear labeling of milling products to the consumer market. Other efforts will be directed toward supporting research and influencing regulations for "the safe development of biotechnology in the South African society."

COARSE GRAINS AND FEED

South Africa’s feed industry in 1999 had a turnover of R7 billion (U.S.$978 million) generated by sales of nearly 7.2 million tonnes of feed. The commercial feed sector represents about 60% of estimated total sales, with the remainder mixed by the informal sector, including feedlots.

The estimates come from the Animal Feed Manufacturers Association, which represents the interests of 24 major feed manufacturers, 15 pre-mix manufacturers and 16 traders. In addition to working on behalf of members in education, policy and sanitary-health issues, the AFMA maintains detailed industry statistics.

Commercial manufacturers sold 4.1 million tonnes of feed in 2002-03, marking the fourth time in history sales exceeded 4 million tonnes. Yellow maize and maize products make up the primary ingredients, generally constituting between 50% and 60% of feed formulas.

High raw material prices tend to promote more business for commercial feed makers. Indeed, in 2002-03, several smaller feed mills closed down temporarily and bought feed from the larger mills.

Over the past 10 years, the commercial feed industry has expanded output by a cumulative total of only about 11%, according to AFMA. The rapid increase in imported animal products since 1994 has had a significant effect on local animal production as well as the amount of feed produced, the group notes.

AFMA takes a slightly more liberal view of GMOs than its milling industry counterpart. In its GMO position statement, the group states that because of the benefits of GM grains and oilseeds, "South Africa cannot afford not to produce and use (them) for human and animal consumption. The process should, however, be managed responsibly."