The arrival of the free
market and the dissolution of
The arrival of the free market and the dissolution of governing bodies resulted in the lib-
eralisation of markets and ushered in a new era for agricultural marketing in South Africa.
It resulted in more transparency in respect of price formation and producers had to learn
marketing skills. A short overview of the process is provided below.
By Johan du Toit
Manager: Senwes Agricultural
FROM THE 1930’s
• The agri-sector functioned as a single
channel market system from the early
1930's and decisions regarding prices
were made by the government and the
governing bodies involved.
• The Marketing Act came into being in
1937, in terms of which government
interference and control over the eco
nomy of the country increased.
• However, there were shortcomings
which contributed to controversial
opinions regarding a single channel
• One of the biggest shortcomings was
price movements between agricultural
and non-agricultural products, which
had a direct impact on the buying
power of producers.
• Slack economic circumstances and
challenges such as droughts, demo
cratisation of South Africa in 1994, land
appropriation, land issues and interna-
tional competition resulted in
the necessity for change in the
• The regulated system in which the
agri-sector functioned, was seen as
exclusive and a system in which pro-
ducers merely had to accept prices.
SENWES SCENARIO | WINTER 2019
• Liberalisation of the agri-sector by the
government was the first step to over-
come the shortcomings in the industry.
• The regulated market in which agricul-
ture functioned, changed to a free mar-
ket system in 1995.
• The change to a free market system
where prices are determined by supply
and demand, was motivated by the
need to allow all citizens access to the
• The arrival of the free market resulted
in governing bodies being terminated,
one after the other.
• Amongst others, the free market system
replaced the Maize Board in 1995 and
the Wheat Board in 1997.
• The South African Futures Exchange
(SAFEX) took over the role of grain
• Market participants resulted in govern-
ment no longer being the only price
determining body and supply and
demand (SAFEX) now determined the
price of negotiable commodities.
• The first grain contracts were listed on
SAFEX in 1996, followed by wheat con-
tracts in 1997, sunflower contracts in
1999 and soybean contracts in 2002.
• The conversion to a free market system
required new skills and adjustments.
• It was essential for Senwes to think and
• Senwes converted from an agricultural
co-operative to a profit-making compa-
ny competing in the free market on 10
• This change resulted in restructuring
and expansion, as well as a stricter
• Senwes’ grain storage business man-
aged to remain profitable, despite the
1998 UNTIL AFTER THE 2000's
• Further transformation would be
required from Senwes for the period
between 1998 and 2009 in order to
function profitably within the free mar-
ket system, such as including different
racial groups, black economic empow-
erment and the accommodation of
different language groups.
• Irrespective of the transformation
and adjustments required by the new
market system, Senwes achieved an
exceptional financial milestone in 2009.
The agricultural sector has thus far
managed to adjust to and function within
the framework of a free market system,
where supply and demand determine
Tyd kweek wenners. Senwes – ’n Eeu van
landbou (Elize S van Eeden)
Kort en Lank van Termynkontrakte.
SAFEX, Graanverskansing, Spekulasie
The Agricultural Marketing Act: A Post-
Mortem. The South African Journal of
Economics Vol. 68:3 2000 September (JA