PR - FINANCIAL IMPACT OF WHEAT QUALITY STANDARDS ON SOUTH AFRICAN WHEAT PRODUCERS: A DLP APPROACH

Abstract:
The South African wheat industry has been under pressure in recent years from global economic instability and a fast-changing domestic policy environment. This has manifested in declining wheat production and profitability at farm level. Wheat quality plays a key role in wheat-buying decisions, with quality improvements correlating negatively with yield and, ultimately, productivity. However, any new wheat cultivar released for commercial production must still meet the standards of the country’s wheat-classification system, which has led to wheat sometimes being imported in the face of a domestic shortfall. This has inevitably led to tension within the industry and affected both performance and pricing. Using a Dynamic Linear Programming model, this paper takes an in-depth look at the financial impact that resulted from this classification system that affected the performance and pricing of primary producers.
Keywords: Financial impact, South African wheat industry, wheat quality, dynamic linear programming