This report focuses on the manufacture of flour and grain mill products, including the milling of maize and wheat. The report describes the state of the industry and the performance of the major players. There are profiles of 18 companies including the largest vertically-integrated maize and wheat milling companies, Premier, Tiger Brands, Pioneer and Pride and several other millers including Carolina, Godrich and VKB.
Manufacture of Flour and Grain Mill Products
The grain milling sector plays a vital role in food security as its products are the primary ingredients of South Africa’s staple foods, and the sector is a major determinant of the price of maize meal and bread. Pest infestation, droughts and other effects of climate change pose a threat to grain production and in the 2018/19 production season, most summer crop harvests fell due to dry weather conditions at the start of the season.
The cost of food manufacturing is influenced by the price of raw commodities and by non-food inputs such electricity, labour, packaging material and fuel. Transport and logistics can account for almost 35% of the final cost of maize products, and almost all freight in South Africa is transported by road, which is 30% more costly than rail. Many farmers have had to buy more pesticides as the fall armyworm has caused significant damage to maize and potato crops in some areas. These factors have contributed to the cost of bread increasing above inflation in 2019.
About half of the flour used by the bread industry is milled from imported wheat. Imports increased due to the severe drought in 2017/18 in the Western Cape, which affected wheat production. The wheat industry has embarked on a revival strategy to encourage farmers to plant more wheat.