The Marketing of South African Maize¶
R. N. Brits (1969). The Marketing of South African Maize. The South African Journal of Economics.
| Type | journal article |
| Scope | Economics and economic history of apartheid |
| Method | policy analysis |
| Period studied | 1840–1969 |
| Regions | South Africa, Transvaal, Orange Free State, maize triangle (Vryburg-Smithfield-Nelspruit) |
| Themes | agriculture land, business and state, politics ideology elections, inequality poverty unemployment |
| Citation key | brits1969 |
Argument¶
Brits traces maize marketing from unorganised sales to middlemen, through co-operative marketing (1908-37), to the producer-controlled one-channel scheme under the 1937 Marketing Act and the Maize Board (from 1944/45). He argues the scheme has secured producers high, state-sanctioned prices at the consumer's and taxpayer's expense. Cost-of-production pricing, subsidies and producer majorities on the Board keep small, uneconomic farmers on marginal land. He criticises the scheme's rigidity and says the Marketing Act lets producers 'legally exploit' the rest of the community. The argument rests on description of institutions and legislation plus the author's own judgements.
Evidence and method¶
Government reports (National Marketing Council, Commission on co-operation and agricultural credit, Distribution Costs Commission), Mealie Industry Control Board annual reports, Department of Agriculture bulletins, statutes, Division of Economics and Markets cost-of-production surveys (about 300 farmers per survey), Union year books, and one 1966 interview with farmers in Lichtenburg. This is a summary of the author's Rhodes University PhD thesis.
Place in the debates¶
- Producer-controlled statutory marketing vs. market pricing in agriculture (see Agricultural policy, productivity, farm size and land reform). Critical of the one-channel scheme: prices are set too high, consumers subsidise producers, and the scheme is rigid. He favours more flexibility, such as a floor-price/surplus-removal scheme like the one used for kaffircorn.
- Small vs. large farms and the efficiency of cost-based pricing (see Agricultural policy, productivity, farm size and land reform). Argues that small farmers inflate the average cost of production and that the price should not sustain them. He wants small producers to leave farming and large farms to produce at lower unit cost.
- Political power of organised agriculture (see Agricultural policy, productivity, farm size and land reform). Holds that producers dominate the Board and Cabinet and that no political party can ignore organised agriculture, so the Minister rarely overrides it.
Findings¶
-
Maize output and planted area rose sharply, and yields more than doubled, but South African yields lag major producers. (p. 2)
the area planted increased from less than 2 million morgen in 1910 to over 6 million morgen per season for the 19166169 seasons; secondly, the yield per morgen was more than doubled
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Co-operative marketing only became widespread in the Depression, when it reached 60 per cent of sales. (p. 6)
by the 30th June 1932 maize co-operative societies had 18,214 members, and 60 per cent of all maize sold that season was marketed through the co-~peratives.
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The 1931 Mealie Control Act forced exports so as to create an artificial domestic shortage and lift the internal price. (p. 13)
The immediate objective of the Act was to bring about a higher internal price for maize by creating an artificial shortage
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The 1931 Act was the first direct state intervention in maize export marketing. (p. 13)
This Act constitutes the first step of direct state intervention in the export marketing of maize
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Under the one-channel scheme all Area A maize must be sold through the Board's agents, giving the Board monopsony control. (p. 8)
Producers in Area A are compelled to deliver at fixed prices to these agents the maize they wish to sell. Through its agents the Board is, therefore, the sole buyer of maize from producers in Area A.
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The National Marketing Council doubted that the scheme would raise producers' prices, yet it was adopted. (p. 8)
the scheme would not be able to raise producers' prices above those already achieved with Government assistance
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Consumers have always subsidised producers, since the local price is set high to offset poor export returns. (p. 10)
the consumer has always been called on to subsidise the producer
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Exports made losses for nine consecutive seasons from 1955/56, cushioned by the Stabilisation Fund. (p. 14)
as from the 1955156 season for nine consecutive seasons maize exports resulted in losses
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Rapid maize land price rises and expansion onto marginal land are used as evidence that the producer price is too high. (p. 18)
if the price of maize land can more than double in a short period of five years, the price the producer gets for his maize must be, from his point of view, very 'fair' indeed.
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Per-bag subsidies on local sales in 1966/67 differed between white maize (human food) and yellow maize (livestock feed). (p. 18)
the subsidy amounted to 49.5 cents per bag of 200 Ib. in the case of white maize and 70 cents per bag in the case of yellow.
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Producers are the majority on the Maize Board and hold substantial political power, allowing legal exploitation of the community. (p. 20)
the Marketing Act has, to some extent at any rate, placed the agricultural producer in a position where he can legally exploit the rest of the community.
Evidence ledger¶
Sources used¶
| Source | Kind | Period | How used |
|---|---|---|---|
| Mealie Industry Control Board Annual Report for the year ended 30th April 1968 (and statistics supplied by the Board for 1918/19-1923/24; Maize Board estimates) | official statistical series | 1918/19-1967/68 | Supplies five-year average maize production, area planted and yield per morgen in Table I. |
| Mealie Industry Control Board Annual Report for the year ended 30th April 1965 (area A share) and Report of the Maize Marketing Committee, 1965 | commission or official report | 1965 | Establishes the definition of Area A, its 95-99% share of national maize output and the planned extension of the area from 1968. |
| Report of the National Marketing Council on the Marketing Boards, 1938-46, U.G. 27-47 | commission or official report | 1938-1946 | Used for the aims of the 1937 Marketing Act and the origins of co-operative marketing. |
| Report No. 44A of the National Marketing Council (Unpublished), 1942 | state archives | c. 1942-44 | Documents the Council's scepticism that the one-channel scheme would raise producer prices. |
| Report of the National Marketing Council on the Control Boards under the Marketing Act, 1950/51 to 1963/64 | commission or official report | 1950/51-1963/64 | Cited on the kaffircorn surplus-removal scheme funded by a levy. |
| Report of the Commission to inquire into co-operation and agricultural credit, U.G. 16-34 | commission or official report | 1934 (covering to 1932) | Source for the Land Bank 60% advance limit and the 1932 co-operative membership and market share. |
| Report of the Distribution Costs Commission, U.G. 28-1947 (Richards and Penver reservations) | commission or official report | 1947 | Quoted for the claim that the Marketing Act created a new method of economic organisation and for criticism of producer majorities on boards. |
| Division of Economics and Markets cost of production surveys (Bulletin 359, 'Method of Calculation of Maize Production Cost'), Pretoria, 1958 | household or labour survey microdata | 1946 onward | Shows how the average cost of production per bag, the main price component, is determined from random farm samples. |
| W. J. Lamont, A review of the maize situation in the Union of South Africa, Bulletin 101, Department of Agriculture, 1931 | secondary literature compilation | 1922-1932 | Source for co-operative society numbers, membership and share of maize marketed in 1922 and 1929/30. |
| Co-operative Societies Act No. 28 of 1922; Transvaal Act No. 14 of 1908; Mealie Control Act No. 39 of 1931; Act No. 59 of 1935; Marketing Act of 1937 | legislation gazette | 1908-1937 | Establishes the legal framework of co-operative marketing, export quotas and the Mealie Industry Control Board. |
| First Annual Report of the Transvaal Agricultural Department, 1907-8 | official statistical series | 1907-08 | Cited for the 1908 Transvaal co-operative legislation. |
| Reports of the General Manager of Railways and Harbours, U.G. 40-23 (1923) and U.G. 62-37 (1937) | official statistical series | 1923, 1937 | Support the claims on the elevator system and its financial failure. |
| Union of South Africa year books (maize export figures) | official statistical series | 1910/11-1920/21 | Gives export quantities of maize in selected seasons. |
| Mealie Industry Control Board Annual Reports (1949/50, 1959/60, 1965/66) and Mielienuus articles on the Stabilisation Fund and export trade (1963, 1967) | company records or reports | 1949-1967 | Used for scheme objectives, merchants' price controls, the Stabilisation Fund and contributions to it. |
| Unpublished memorandum of the Maize Board of Conditions of Sale, applicable to maize for export | company records or reports | c. 1960s | Source for the tender procedure for export maize cargoes. |
| Burtt-Davy, Maize: Its history, cultivation, handling and uses (1914) - government export schemes A, B and C | secondary literature compilation | 1908-1914 | Source for the description of the pre-Union and post-1908 maize export schemes. |
| Farming in South Africa articles (1959-1964) | newspapers periodicals | 1959-1964 | Cited to explain the causes of rising yields (weed control, fertiliser, pests, harvesting, seed). |
| Interview with Dr. A. R. Saunders and local farmers, Lichtenburg district, September 1966 | interviews oral history | September 1966 | Anecdotal evidence of farm prices rising from under R100 to R240 per morgen as proof that maize prices are too high. |
Inference¶
Quantification: Descriptive tables.
Descriptive institutional history of maize marketing across three periods (pre-1908, co-operative era to 1937, Marketing Act and one-channel scheme), using official statistics and legislation. The critical appraisal rests on the author's reasoning and one interview anecdote, not on any statistical test.
Key claims¶
| Claim | Basis | Strength |
|---|---|---|
| Production rose because both area planted and yield per morgen increased, but SA yields remain far below US and Argentine yields. (p. 2) | Table I from Mealie Industry Control Board data and Table II comparing 1924/25 and 1963/64 yields. | Systematic data |
| Co-operative marketing grew modestly to 1922 and 1929/30, then jumped to 60% of maize sold by 1932 amid the depression. (p. 6) | Lamont Bulletin 101 and the 1934 Commission report (U.G. 16-34). | Partial data |
| The Mealie Control Act 1931 sought to raise domestic prices through compulsory export quotas, but succeeded only partially because crop estimates were inaccurate. (p. 13) | Act No. 39 of 1931 and the author's reasoning about estimation difficulties. | Asserted |
| Under the one-channel scheme the local price was set high so consumers subsidised producers, while exports made losses from 1955/56 for nine consecutive seasons. (p. 14) | Maize Board annual reports and the Stabilisation Fund article. | Partial data |
| The producer price is too high, shown by expansion onto marginal land and rapidly rising farm prices. (p. 18) | Author's inference from area trends and one interview anecdote (R100 to R240 per morgen). | Illustrative or anecdotal |
| Cost-of-production surveys over-weight small farmers, inflating the cost basis and sustaining uneconomic small producers. (p. 17) | Description of Division of Economics and Markets surveys plus the author's argument; no cost data by farm size. | Asserted |
| The Marketing Act replaced competitive private marketing with producer-controlled marketing, and producer majorities on the Board give farmers legal power to exploit the rest of the community. (p. 20) | The 1937 Marketing Act, Board composition (12 of 21 members) and the 1947 Distribution Costs Commission memorandum. | Partial data |
The author's caveats¶
The author notes that crop and consumption estimates were uncertain, that the cost surveys were hoped to be statistically large enough, and that the effects of the Marketing Act on costs and efficiency cannot be separated from inflation. A full evaluation is said to need a larger canvas than this précis allows.
Gaps in the evidence¶
The claim that producer prices are too high and consumers subsidise producers needs a time series of producer, consumer and world prices, subsidy and levy flows, and farm-size cost data. Farm land price series (deeds records) and distributional data on small versus large producers, including African consumers of white maize, would test the welfare claims better. Much of this existed in Board reports and Department of Agriculture surveys; the thesis behind this summary may contain it, but the summary does not present it.
Replicability: Data poorly documented.