Wheat, Bread, and the Role of the State in Twentieth Century South Africa

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Author not named in text (MSc candidate, Oxford) (2012). Wheat, Bread, and the Role of the State in Twentieth Century South Africa. MSc in Economic and Social History, Trinity Term 2012, University of Oxford. University of Oxford.

Type	thesis
Scope	Economics and economic history of apartheid
Method	mixed
Period studied	1930–2010
Regions	South Africa, Western Cape (Swartland), Orange Free State
Themes	agriculture land, business and state, macro fiscal finance debt, politics ideology elections, inequality poverty unemployment, transition post apartheid
Citation key	authornotnamedintextmsccandidate2012

Argument

The thesis traces the wheat-to-bread commodity chain under the Wheat Board (set up 1935, empowered by the 1937 Marketing Act) and argues that tight state control encouraged monopolisation among grain co-operatives, millers and bakers. Deregulation in 1991 and 1996 then entrenched that power instead of breaking it, and the 2007 bread price-fixing cartel is the evidence. Bread rationing in the 1940s and the National Party's promise of white bread are presented as a neglected factor in the 1948 election result. The bread subsidy and price controls are argued to have been a large, little-noticed, racially redistributive transfer to black consumers, funded by a largely white tax base. The state withdrew the subsidy in the 1980s and ended it in 1991 as fiscal and political pressures mounted.

Evidence and method

Wheat Board annual reports (Rhodes House), Abstracts of Agricultural Statistics, agricultural censuses, SAGIS grain data, Hansard debates, commissions of inquiry (1976 Marketing Act, 1985 bread subsidy, 1992 Kassier), NP pamphlets and manifestos, newspapers (Rand Daily Mail, The Star, Landbouweekblad), political cartoons, Competition Commission material, Pioneer company histories, Broederbond membership lists checked against Wheat Board members, and interviews with a Swartland wheat farmer and former Wheat Board members.

Place in the debates

• Who benefited from organised agricultural marketing (farmers vs consumers vs intermediaries) (see Agricultural policy, productivity, farm size and land reform). Rejects the view that white farmers were simply favoured at consumers' expense. Domestic wheat prices were not far above import prices until the mid-1970s, and the main long-run beneficiaries were the grain co-operatives, millers and bakers.
• Causes of the National Party's 1948 election victory (see Origins, coherence and ideology of apartheid and Afrikaner nationalism). Adds wartime and postwar bread rationing and the white bread promise to explanations that stress farmers and the Afrikaner working class (O'Meara). The evidence is acknowledged to be largely anecdotal.
• Apartheid state and black nutrition (see Living standards, health and social policy). Challenges Wylie's account of NP neglect by showing a costly bread subsidy and the enriched loaf that in effect favoured black consumers. The subsidy is framed as a by-product of serving white consumers and farmers, not a pro-poor aim.
• Agricultural deregulation in the 1990s (see Agricultural policy, productivity, farm size and land reform). Sides with the sceptics (ANC 1992, Kassier, Lipton) who warned of monopoly. Deregulation transferred control from the state to a few agribusinesses, and the losers were small farmers and working-class consumers.

Findings

• Domestic wheat prices were not above import prices for most of the regulated period, which weakens the claim that farmers were simply favoured at consumers' expense. (p. 9)

  Domestic wheat prices only rose above the imported wheat price after 1966

• The subsidy's burden fell on white taxpayers, so spending on bread was redistributive towards poor black consumers. (p. 9)

  the vast subsidy payments were funded by taxes from a largely white tax base

• The 1937 Marketing Act produced very wide state control over agricultural output. (p. 13)

  By 1976 23 marketing boards presided over more than 90%

• The government introduced consumption rationing of bread during the war even though the country was almost self-sufficient in wheat. (p. 15)

  the government also began to introduce consumption rationing to avoid possible bread shortages

• Lifting the restrictions in 1948 sharply raised wheat consumption and therefore the subsidy bill. (p. 21)

  consumption of wheat rose to over 600 000 tons in 1948/9, and continued to grow

• The bread subsidy was a significant item in the national budget in the 1950s. (p. 23)

  Moll (1983) calculates that between 1947 and 1960 the bread subsidy amounted to 3.5% of the national budget.

• Wheat farming consolidated into fewer, larger farms while the farmland area stayed constant. (p. 27)

  the number of farming units, which fell from over 120 000 in 1950 to 61 000 in 1983

• Milling was highly concentrated by the mid-1980s, with six milling groups dominating output. (p. 27)

  By 1985 there were only 50 registered wheat mills in South Africa, 31 of these belonging to six milling groups that together milled 98% of all wheat

• Broederbond members came to make up over half of Wheat Board members and advisors by 1980. (p. 29)

  By 1980 the number had increased to over half of all members and advisors.

• Per capita bread consumption rose strongly under subsidy, and the poor black majority was the main consumer. (p. 30)

  Total per capita consumption grew from 23,2kg in 1948 to 47kg in 1980, a compound growth rate of 2.5% per annum

• Black households accounted for most bread consumption by the late 1970s. (p. 30)

  By 1978 approximately 1 850 million loaves of bread were being consumed annually, and 72% of this consumption was by black households

• Farm indebtedness rose steeply in the 1980s, adding to pressure on farmers and the state. (p. 37)

  total agricultural debt grew from R3.5 billion in 1980 to R16 billion in 1990

• Wheat production collapsed and imports rose after deregulation. (p. 38)

  In 2007 farmers planted 632 000 hectares of wheat, down from 1 550 000 hectares in 1991, and over half of the wheat consumed for that year was imported.

• Baking stayed concentrated after 1991 despite many new small bakeries. (p. 39)

  over 80% of bread production remained in the hands of six groups

Evidence ledger

Sources used

Source	Kind	Period	How used
Annual Reports of the Wheat Board (1939-1996), Rhodes House Archive (610.441s.22), Oxford	company records or reports	1938-1996	Provides prices, subsidies, loaf sales, bread consumption shares and Board membership lists used for the price series, subsidy figures and Broederbond tracking.
SAGIS (South African Grain Information Services) wheat database (2012)	official statistical series	1936-2011	Source of wheat consumption, production, imports and area harvested used for surplus/shortfall calculations and import trends.
Agricultural Census (1958, 1992, 1998)	agricultural census	1936-1998	Provides numbers of farms and farm area, wheat prices and total agricultural debt; the 1958 census also cited for rationing context.
Commission of Inquiry into the Bread Subsidy (SA, 1985)	commission or official report	1985 (data 1951-1985)	Source for mill and baker concentration figures, loaf consumption in 1978 and black share of consumption, and the recommendation to remove the subsidy.
Report of the Commission of Inquiry into the Marketing Act (SA, 1976)	commission or official report	1976	Documents official concern about restrictive registration and concentration in milling and baking, including bakery numbers 1941-1971.
Kassier Committee of Inquiry into the Marketing Act (1992)	commission or official report	1992	Used for its warning that deregulation could create monopoly positions in bread.
Board of Trade and Industries reports (1926 wheat inquiry; 1939 report No. 255 on baking and prices)	commission or official report	1926, 1939	Show official rationales for protection and criticism of the pre-1939 baking industry.
Report on the Distribution of Food (SA, 1946, U.G. 31), Sir Henry French	commission or official report	1946	Source of post-war rationing recommendations by British Ministry of Food experts.
House of Assembly Debates (Hansard), 1947, 1948, 1951, 1953, 1955, 1959, 1976, 1991	parliamentary debates	1947-1991	Quoted for the white bread promise, bread subsidy debates, the 1953 price increase fight, monopoly complaints and enriched bread assessments.
National Assembly Members' Statements, Unrevised Hansard (SA, 2008)	parliamentary debates	2008	Evidence on the post-cartel parliamentary debate and calls for reregulation and wheat production.
National Party election manifesto (1938) and pamphlet 'Die Werker's se Ware Vriend' (1948)	union or movement records	1938, 1948	Show NP appeals to consumers and the bread subsidy in election campaigns.
Malan (1953), 'Fruits of the National Regime', NP Inligtingsdiens	union or movement records	1953	Quoted to show NP priority on consumer nutrition and cheap food.
Newspapers: Rand Daily Mail (1979, 1980), The Star (1978), Cape Times (1952/53), Landbouweekblad (1976), The Guardian (1946), Mail and Guardian	newspapers periodicals	1946-2008	Provide public reaction to bread price increases, the international price comparison and the enriched bread's reception.
Author interviews with Western Cape wheat farmer and former Wheat Board members (2012)	interviews oral history	2012	Illustrate views on deregulation and the opinion that the free-market move was inevitable.
Wilkins and Strydom (1980) list of Broederbond members	secondary literature compilation	1940s-1980	Names matched against Wheat Board members and advisors to count Broederbond presence.
McGrath (1979), Racial Distribution of Taxes and State Expenditure	secondary literature compilation	c.1979	Estimates of tax shares by racial group underpin the claim that the bread subsidy was redistributive.
Moll (1983), A history and an analysis of the bread subsidy in South Africa	secondary literature compilation	1947-1960	Source of the figure that the bread subsidy was 3.5% of the national budget 1947-1960.
Smit (1950) survey of wheat and maize consumption among 2,561 black urban families; NNRI survey (Fox 1954); Eiselen 1956 survey	household or labour survey microdata	1950-1956	Evidence on black bread consumption levels and the take-up of enriched bread by race.
Competition Commission records and press statements (2008, 2010, 2012); Motsoeneng reports	commission or official report	2007-2012	Establish the bread price-fixing cartel, fines and the collusion meetings.
National Agricultural Marketing Council reports (1999, 2006), Cock (2009), GrainSA (2004)	commission or official report	1999-2009	Supply post-deregulation concentration in storage, milling and baking and margin shares.
Pioneer Foods company history and Annual Report 2008	company records or reports	1912-2008	Trace the merger of Sasko and Bokomo and the consolidation of the chain.
Journal of the Department of Agriculture (SA, 1920); Carnegie Commission (1932)	commission or official report	1920, 1932	Provide context on co-operative promotion and poor whiteism.
Government Marketing Act 1937 and related legislation (1930 wheat import Act, 1931 meal and flour Act, Co-operatives Amendment Act 1993, Competition Act 1998, 1996 Marketing Act)	legislation gazette	1930-1998	Establish the regulatory framework and its dismantling.

New data

The author compiled a series of Wheat Board members and advisors, matched against a published Broederbond list, and assembled real-price series for wheat and bread, a National Rate of Assistance (producer vs import price), and per capita bread consumption from Wheat Board and agricultural statistics, plus a handful of interviews. No large standalone dataset.

Inference

Quantification: Descriptive tables.

Historical case study of a single commodity chain, built on time-series trends (consumption, subsidies, real prices, concentration counts), simple price-ratio calculations (NRA), parliamentary and press quotations, and interviews. The argument for 1948 is inferential and circumstantial. No statistical testing.

Key claims

Claim	Basis	Strength
The apartheid bread subsidy and price controls produced a hidden redistributive transfer to black consumers funded by a mainly white tax base. (p. 18)	Wheat Board subsidy figures, McGrath tax shares by race, Moll, consumption shares (SA 1985), Smit survey.	Partial data
State regulation fostered concentration in milling and baking, with a few groups controlling nearly all production by 1985. (p. 22)	1976 Marketing Act commission and 1985 bread subsidy commission counts of mills and bakeries; Hansard complaints.	Systematic data
Broederbond representation on the Wheat Board rose from at most three in the 1940s to over half by 1980. (p. 24)	Names from Wheat Board annual reports matched against the Wilkins and Strydom list.	Partial data
Per capita bread consumption rose from 23.2kg in 1948 to 47kg in 1980, with a shift from white to brown loaves in the 1970s after price changes. (p. 25)	Table 3 from Wheat Board 1949 and SA 1985; real bread prices from Wheat Board reports.	Systematic data

The author's caveats

The author notes that the choice of sources shapes the questions asked, that the account is necessarily compressed over a long period, and that groups are treated as unitary actors despite internal differences. The author also notes that only anecdotal evidence exists on the NP's bread appeal to consumers.

Gaps in the evidence

The 1948 election argument lacks constituency-level election returns or voter surveys linking rationing to NP gains, which exist for the 1943 and 1948 elections. The redistribution claim needs household expenditure and incidence data (e.g. income and expenditure surveys) to show who actually received the subsidy. The concentration and cartel claims would be stronger with firm-level market share, margin and Competition Commission case data, much of which is public now.

Replicability: Data described but not public.