Competition body has farmers on edge |
| Nov 11 2010 |
The future of many commercial farmers still hangs in the balance as the competition authorities consider an exemption application from GrainSA for a plan to dispose of the 4-million ton maize surplus.
The inability of farmers to sell their maize has led to dire warnings that more than 10 000 commercial farmers are facing bankruptcy or a lack of finance for next year’s crop. The surplus has also raised fears that farmers who do survive will turn to other crops and so possibly create a shortage of the African staple.
Yesterday Molebogeng Taunyane, external communications co-ordinator of the Competition Commission, could say only there was an application for exemption from the collusion aspects of South African competition law and that the investigation into the application was continuing.
Department of Agriculture spokesman Steve Galane said the application had the backing of Agriculture Minister Tina Joemat- Pettersson and there was hope for “a reprieve”. He said that as yet there had been no response from the commission.
Ms Joemat-Pettersson led a delegation to China in September hoping to establish a market for the maize surplus, but this was apparently unsuccessful. Many of SA’s neighbours will not import its maize because of their fears of genetically modified grain.
An informal legal opinion from the commission in June found that the plan to export the surplus, which included farmers pooling their maize, was anticompetitive and illegal, and advised GrainSA to apply for an exemption.
Chairman of GrainSA Neels Ferreira said there was to be no pooling as was first suggested, as farmers have had to make other arrangements for their maize. He stressed that GrainSA was not “in the market” but was playing a co-ordinating role that would be to the benefit of farmers and others in the “value chain”.
In its original justification GrainSA said “normal free market export activities, conducted under the free market regime whereby producers operate as individuals and are responsible for the marketing and trading of their own produce, cannot remove the surplus sufficiently to allow producers a large enough scope for production in order to operate profitably in the coming seasons.
“The current competition laws prohibit class action which disadvantage producers and agribusiness from coming together to achieve scale and drive down costs in order to compete in the global maize market environment.”
Mr Ferreira said farmers were getting about R1 200 a ton for yellow maize, R300 less than prices in the US.
In addition, the cost of seed, while depressed, had not come down at the same rate as the overall maize price.
Source:Business Day, 8 November 2010
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