RESTRICTED
WORLD TRADE G/STR/N/1/ZAF
22August 1995
ORGANIZATION(95-2460)
Original: English
STATE TRADING
Notification Pursuant toArticle XVII:4(a) oftheGATT 1994 and
Paragraph 1oftheUnderstanding ontheInterpretation ofArticle XVII
SOUTH AFRICA
Thefollowing communication, dated 2August 1995, hasbeenreceived from thePermanent
Mission ofSouth Africa.
_______________
I. ENUMERATION OFSTATE TRADING ENTERPRISES
Atpresent theSouth African agricultural enterprises which canberegarded ascovered bythe
provisions ofArticle XVII, arecontrol boards concerned withthemarketing arrangements ofcertain
agricultural products.
Control boards existforthefollowing products:
1. Citrus fruitdestined fortheexport market
2. Fresh milk
3. Deciduous fruit, i.e.apples, apricots, grapes, peaches, pears andplums destined for
theexport market
4. Dried fruit, i.e.prunes anddried vinefruits
5. Livestock andmeat
6. Lucerne seed
7. Maize
8. Oilseeds, i.e.groundnuts, sunflower seedandsoyabeans
9. Leaftobacco
10. Winter cereals, i.e.wheat, oatsandbarley
11. Canning pears, peaches andapricots
12. Wool
13. Cotton
14. Sorghum
15. MohairG/STR/N/1/ZAF
Page2
Since South Africa 'sprevious notification, theEggScheme andtheEggBoard established in
theterms oftheMarketing Acttoadminister theschemes, havebeenabolished.
II. REASON AND PURPOSE FORINTRODUCING AND MAINTAINING STATE TRADING
ENTERPRISES
South Africa, withitserratic rainfall conditions andthepoorquality ofitssoils, isfarfrom
ideally suited toagricultural production.
Thesystem ofregulated marketing ofagricultural products wasoriginally introduced under
theMarketing Act,1937 (No.26of1937). TheAct,which wasrepromulgated in1968, putinplace
asystem ofcontrol ofthemovement, pricing, quality standards, selling andsupply ofamajor portion
offarmproduction inSouth Africa. TheMarketing Actalsoprovides fortheintroduction ofvarious
marketing schemes fordifferent agricultural products. Theprincipal objectives oftheMarketing Act
are,firstly, tosecure agreater measure ofstability inprices offarmproducts, andsecondly, tonarrow
theprice gapbetween theproducer andconsumer.
Following theinternational trend towards liberalization ofintervention aswellasother factors
suchasthegrowing gapbetween producer andconsumer prices ofagricultural products andtherapid
riseinfoodprices, anumber ofcommittees havebeenappointed since1992toinvestigate themarketing
ofagricultural products inSouth Africa.
Inorder toimplement thesuggestions made bythedifferent committees aswellastheprinciples
setoutintheReconstruction andDevelopment Programme andtheagricultural policy document of
theAfrican National Congress drawn upbytheLand andPolicy Centre, theMinister ofAgriculture
appointed aworking group todraftanewMarketing Bill.
AnewMarketing Actispresently under review. Theendresult ofwhich willimpact onthe
existence andfunctions oftheexisting statetrading enterprises.
III. DESCRIPTION OFTHE FUNCTIONING OFTHE STATE TRADING ENTERPRISES
A. THE SPECIFIC SCHEMES
1. Outspan International onbehalf oftheCitrus Board ,exports oranges, lemons andgrapefruit
onbehalf ofproducers onapoolbasis. Producers areresponsible forthesaleoftheirfruitonthe
domestic market, astheBoard onlycontrols citrus fruitdestined fortheexport market. TheCitrus
Board doesnotexercise control overimports interms ofitsScheme.
2. Milk Board :AnewMilkScheme andMilkBoard wasestablished on1January 1994. The
Milk Scheme relates tofresh milkproduced orimported intotheRSAandtheScheme applies toall
producers offresh milkandallpersons dealing inthecourse oftrade withfresh milk. Interms of
theMilk Scheme, theproduction ofmilkandmilkproducts isnotrestricted; prices arenotfixed;
milkbuyers andproducers maynegotiate freely; andlevies aresetatarelatively lowrate. Themain
functions oftheMilkBoard aretoprovide aninformation system; undertake generic advertising, and
provide assistance forresearch.
During October 1994tariffs wereintroduced fordairyproducts andquantitative import control
abolished.G/STR/N/1/ZAF
Page3
3. TheDeciduousFruitBoardfunctionslargelyinthesamemannerastheCitrusBoardconcerning
theexport offreshdeciduous fruit. TheBoard 'sagent, Unifruco, exports freshapples, apricots, grapes,
peaches, nectarines, pears, plums andprunes onapoolbasis onbehalf ofproducers. Producers are
responsible forthesaleoftheirfruitonthedomestic market, buttheBoard isresponsible formarket
research, development andadvertising. TheBoard doesnotexercise control overimports interms
ofitsScheme.
4. TheDried Fruit Board isthesolebuyer fromproducers ofdried prunes anddried vinefruits -
asingle-channel poolscheme isinoperation. After providing fortherequirements ofthedomestic
market, theBoard exports anysurpluses. Producers receive advance payments anddeferred payments
aremade from thepools afterthecrops havebeensold.
5. EggBoard: Themarketing scheme foreggswasabolished andtheBoard disbanded on
29April 1994. Free-market principles apply inthemarketing ofeggs.
6. TheMeat Board ,withtheapproval oftheMinister, fixesfloorprices atwhich itisprepared
tobuydressed carcasses ofcattle, sheep, goats andpigsattheauctions ofclassified abattoirs inthe
main urban centres. TheBoard purchases allcarcasses which failtoreach thefloor prices atthese
auctions.
Presently, theMeat Board isonlyresponsible fortheclassification ofmeat, grading ofhides
andskins atcertain abattoirs andthemaintenance ofanauction system aswellasthefloor price at
classified abattoirs inthemain urban centres.
7. TheLucerne SeedBoard 'ssingle-channel poolscheme forlucerne seed(alfalfa) wasrepealed
andreplaced withasurplus removal scheme which came intooperation inSeptember 1994. According
tothisscheme theBoard will,when soindicated byitsagents, determine whether infactanysubstantial
surpluses existandthenecessity fortheirremoval. TheBoard willthendetermine theproportion
ofthesurplus toberetained asstock andtheproportion tobeexported.
8. Maize Board: From 1May1995thecurrent Scheme wasamended whereby thesingle-channel
marketing arrangements formaize were abolished. Interms oftheamended Scheme selling prices
willbedetermined inthemarket place anddirect transactions between producers andbuyers willtake
place freely. Inorder toprovide acertain measure ofprice stability forproducers, theMaize Bard
willoperate afloorpricesystem andexport pool. Storage remuneration willalsohavetobenegotiated
inthemarket place.
Regarding theimport andexport ofmaize, quantitative import control interms ofsection 87
oftheMarketing Acthasbeenabolished andreplaced withimport tariffs. TheBoard will,however,
remain thesoleexporter ofmaize.
9. TheOilseeds Board isthesolebuyer from producers ofsunflower seedandsoyabeans and
appoints agents tohandle thecrops. Direct salesbetween registered producers andbuyers, subject
tothepayment oftherelevant levies arealsopermitted. Depending upon thedomestic selling prices
tothetrade, (fixed bytheBoard withtheapproval oftheMinister ofAgriculture), theBoard makes
advance payments toproducers according tograde andsubsequently makes oneormore deferred
payments from itspools depending upon whatitrealizes onaverage from thesaleofthecrops.
Inthecaseofgroundnuts, theBoard replaced itssingle-channel poolsystem inoperation on
thedomestic market withasurplus removal system incorporating voluntary pools during 1994.
According tothenewsystem, onlythose producers whoarenotabletonegotiate abetter pricedirectly
from thebuyers, willdeliver theirproducts totheBoard forsalethrough voluntary pools. AsingleG/STR/N/1/ZAF
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deskisapplied fortheexportation ofgroundnuts. Permits toexport areissued toallpersons whomeet
therequirements oftheBoard.
Although theBoard undertakes exports ofsunflower seeditself, italsosellsaportion thereof
tolocal traders forexport. Apermit issued bytheDirector-General ofAgriculture isrequired for
theimportationofsoyabeans,whileinthecaseofgroundnutsandsunflowerseedonlyarecommendation
fromtheDepartment ofAgriculture isrequired fromtheDepartment ofTrade andIndustry toenable
them toissue acurrency permit.
10. TheTobacco Board fixestheminimum selling prices ofleaftobacco tomanufacturers while
thetobacco crops arehandled bycooperatives. TheTobacco Exchange handles theexport ofleaftobacco
onbehalf oftheTobacco Board. According tothepreferential trade agreement withMalawi and
Zimbabwe, apermit interms oftheagreement isnecessary when importing from these countries.
11. TheWheat Board ,through appointed agents, isthesolebuyer ofwheat andbarley from
producers. Inthecaseofoats,producers havebeenexempted bypermit toselldirect toconsumers.
Thedomestic prices ofthese cereals aredetermined annually bytheBoard withtheapproval
oftheMinister ofAgriculture. Theprices atwhich theBoard buysandsellsthese cereals arefixed,
butnottheresale prices bythetrade orprices oftheproducts manufactured therefrom. TheBoard
oranyperson itauthorizes thereto byapermit, isresponsible forbothimports andexports ofwheat.
Itisenvisaged thatquantitative import control interms ofsection 87oftheMarketing Actwillbe
abolished andreplaced withimport tariffs on1November 1995.
12. TheCanning Fruit Scheme isprimarily aimed atthepromotion oforderly marketing ofcanned
pears, peaches andapricots andcontains provisions forproper grading andpayment according toquality.
TheScheme provides forseasonal contracts between canners andproducers inrespect ofthebuying
andselling ofpears, peaches andapricots. Minimum prices arefixed annually between buyers and
sellers offruitforcanning purposes onaconsensus basis. Anyperson soauthorized byapermit issued
bytheBoard, mayexport canned fruit.
13. Mohair Board :TheMohair Board administers afloor price scheme. TheBoard doesnot
intervene inanywayinthemarket during aseason. Attheendofaseason theBoard takes inunsold
mohair atpredetermined prices pertypeaftertheBoard hassatisfied itself astothetypeofeachlot
ofunsold mohair. Floor prices arefixed conservatively withdueallowance formarketing conditions
andareannounced atthestartofeachmarketing season.
14. TheSouth African Wool Board 'sfunctions arepresently limited toproduction development,
quality control, market development, advertising andaninformation system fortheindustry.
TheWool Board, incooperation withtheInternational Wool Secretariat, promotes thewool
industry, andtakes oraidssuchsteps asmaybedeemed necessary tostimulate theuseofwool and
woollen fabrics.
15. TheCotton Board operates asupervisory scheme. Theproducer prices forseedcotton depend
ontheprices atwhich ginners sellcotton linttospinners. Thelatter prices arenegotiated annually
onavoluntary basis between thevarious interested parties, i.e.ginners, spinners andproducers, and
aretosome extent related toworld prices. Apermit issued bytheDirector-General ofAgriculture
isrequired forimporting andexporting cotton lint.
16. TheSorghum Board operates avoluntary floorprice scheme. Supplies which producers are
unable tosellathigher price levels ontheopen market canbedelivered tothevoluntary poolsG/STR/N/1/ZAF
Page5
administered bytheBoard. Floor prices arefixed annually forthedifferent grades. Sorghum inthe
voluntary pools isresold bytheBoard totheprivate trade mainly foruseasstock feed. TheBoard,
oranyperson itauthorizes thereto byapermit, isresponsible forbothimports andexports ofgrain
sorghum.
B. HANDLING OFIMPORTS
(a) Thefollowing boards, withtheapproval oftheMinister ofAgriculture, havethesoleright
toissue permits tothetrade fortheimportation ofthecommodities listed below:
- Wheat Board -wheat, barley, oatsandthemain products derived fromthese cereals;
- Maize Board -maize andmaize products;
- Lucerne SeedBoards -lucerne seed; and
- Sorghum Board -sorghum andsorghum products.
(b) Apermit, issued bytheDirector-General ofAgriculture isrequired fortheimportation ofdried
prunes, dried sultanas, raisins, seedless raisins, loose raisins, dried currants, potatoes (except seed
potatoes), chicory (including ground chicory), soyabeans andcotton lint.
(c) Byvirtue ofthefactthattheDried FruitBoard operates asingle-channel poolscheme fordried
vinefruits anddried prunes, importers ofthese products areobliged tomarket imports through the
Board. Interms oftheScheme, theimporter oftheregulated product isalsoregarded astheproducer
thereof.
(d) Thefollowing control boards donotexercise control overimports interms oftheirschemes:
1. Meat Board
2. Tobacco Board
3. Citrus Board
4. Canning Fruit Board
5. Deciduous Fruit Board
6. Cotton Board
7. Oilseeds Board
8. Dried Fruit Board (alldried fruitexcept those listed under paragraph (c)above)
C. HANDLING OFEXPORTS
(a) Thefollowing boards undertake exports fortheirownaccount:
1. Oilseeds Board -soyabeans andsunflower seed. (This Board alsosellstocommercial
firms which export fortheirownaccount andmaytherefore alsobeclassed under
paragraph (c)).
2. Maize Board -maize andmaize products. (This Board alsosellstocommercial firms
which export fortheir ownaccount andmaytherefore alsobeclassified under
paragraph (c)).
3. Wheat Board -wheat andwheaten products. (This Board alsosellstocommercial
firms which export fortheirownaccount andmaytherefore alsobeclassified under
paragraph (c)).G/STR/N/1/ZAF
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(b) Thefollowing boards undertake exports onbehalf ofproducers:
1. Citrus Board -citrus fruit;
2. Deciduous Fruit Board -fresh deciduous fruit(apricots, prunes, peaches, nectarines,
plums, pears, grapes andapples); and
3. Dried Fruit Board -dried prunes anddried vinefruits.
(c) Thefollowing boards selltocommercial firms which export fortheirownaccount:
1. Maize Board -maize;
2. Oilseeds Board -soyabeans andsunflower seed;
3. Lucerne SeedBoard -lucerne seed;
4. Wheat Board -wheat, barley andoats;
5. Meat Board -chilled andfrozen beefandpork; and
6. Sorghum Board -sorghum.
(d) Thefollowing boards arenotdirectly involved inexports:
1. Tobacco Board;
2. Cotton Board;
3. Canning Fruit Board.
Buying andselling ofcommodities areregulated onlyuptoacertain point (e.g.inrespect
ofwheat theBoard determines selling prices; inthecaseofleaftobacco ,merely theminimum selling
prices ofcooperatives areregulated andbeyond thatthetrade isinthehands ofcommercial firms).
Even when thecontrol board isthesolefirst-hand buyer ofthecommodity concerned, e.g.wheat ,
thephysical handling andstorage areeffected byprivate concerns acting asagents oftheboard.
D. DETERMINATION OFQUANTITIES EXPORTED ORIMPORTED
Thequantities aredetermined bythevolume ofproduction andmarket forces. Thevarieties
offresh fruitmentioned areproduced mainly forexport. Forother commodities suchasmaize,
groundnuts, certain types ofleaftobacco andthedried fruits, production isalsonormally inexcess
ofdomestic requirements. Occasional surpluses ofproducts suchaswheat arealsoexported.
Where imports tariffs arenotyetinplace, theimports oftheregulated commodities are
determined onthebasis ofestimated domestic requirements.
Following thecompletion ofthetariffication exercise interms oftheFinal ActoftheUruguay
Round allquantitative export control willbeabolished andimport quantities willbedetermined solely
byeconomic factors.
E. EXPORT PRICES
Anyproducts exported aresoldatprices ruling ontheexport markets.G/STR/N/1/ZAF
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F. MARK-UP ONIMPORTED PRODUCTS
There isnogeneral mark-up onimported supplies handled bytheboards concerned. Thelevies
paidbydomestic producers alsoapply toimported supplies butotherwise suchsupplies aresoldat
costoratthefixed domestic price, e.g.wheat.
G. CONTRACTS
Control Boards donotnormally negotiate longtermcontracts andthere arenocontractual
arrangements between thecontrol boards andtheGovernment. Private firms tender forallsupplies
required bytheGovernment forinstitutions, hospitals, etc.Control boards arenotcalled upontofulfil
contractual obligations which maybeentered intobytheGovernment.
IV. STATISTICAL INFORMATION
Therequired statistical information isfurnished intheannexure tothisnotification.
Lesotho, Botswana, Swaziland andNamibia formacustoms union withSouth Africa. Trade
ofthese states withthirdcountries is,therefore, included intheinformation furnished inthetables,
while trade between South Africa anditscustoms union partners isexcluded.
V. REASONS WHY NOFOREIGN TRADE HAS TAKEN PLACE (IFTHIS ISTHE CASE)
INPRODUCTS AFFECTED
Local supplies aremostly sufficient. Anyshortages which mayoccur aremade goodthrough
imports while surpluses areexported.
VI. ADDITIONAL INFORMATION
None.G/STR/N/1/ZAF
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PRODUCTION, TOTAL IMPORTS AND EXPORTS FOR WHICH
THERE ARE MARKETING SCHEMES
Calendar
YearProduction1Imports2Exports2
Quantity Gross value Quantity Gross value Quantity Value
Tons R'000 Tons R'000 Tons R'000
Citrus
1992 883,665 574,138 745 818 524,815 540,358
1993 837,344 626,338 1,566 1,470 434,686 540,056
1994 844,697 661,758 789 642 543,624 763,758
Fresh milk
1992 957,792 1,174,574 357 683 2,082 4,807
1993 971,084 1,231,825 1,440 2,086 2,737 6,120
1994 1,096,037 1,368,513 4,041 6,326 4,387 9,317
Deciduous fruit3
1992 1,084,513 1,407,061 2,944 4,382 472,952 877,572
1993 1,186,487 1,156,277 122 240 396,144 1,035,446
1994 1,112,559 1,645,711 114 557 465,086 944,538
Dried fruit4
1992 52,728 138,688 740 2,710 90,395 208,431
1993 40,038 155,039 258 1,651 32,417 130,505
1994 40,399 149,823 476 1,939 23,256 103,570
Eggs (1,000 dozen)
1992 379,861 1,032,742 27 280 1,224 5,620
1993 390,568 1,133,397 55 434 2,598 13,062
1994 385,060 1,221,458 201 7,218 3,800 11,127
Meat (beef, mutton, goat andpigmeat)
1992 1,010,000 4,198,241 19,169 99,084 34,846 194,942
1993 930,000 4,133,093 16,799 79,033 28,468 1,731,235
1994 791,000 4,709,763 54,326 229,096 542,187 194,308
Maize5
1992 3,277,000 1,489,980 3,594,890 1,176,158 523,750 261,438
1993 9,991,000 4,131,470 830,251 336,890 293,878 133,929
1994 12,994,000 4,254,815 29,750 41,122 3,760,078 1,617,368G/STR/N/1/ZAF
Page9
Calendar
YearProduction1Imports2Exports2
Quantity Gross value Quantity Gross value Quantity Value
Tons R'000 Tons R'000 Tons R'000
Grain sorghum
1992 118,005 56,052 231,830 70,404 1,414 2,718
1993 515,368 240,352 26,726 9,675 1,487 1,426
1994 520,185 208,121 6,446 2,946 1,350 966
Lucerne seed
1992 944 9,158 236 2,721 0.4 10
1993 298 2,425 222 2,152 0.1 2
1994 235 1,904 55 586 11 127
Oilseeds
(i)Groundnut
1992 88,739 122,060 3,611 8,588 15,816 36,759
1993 100,550 136,707 11,044 20,362 16,607 44,570
1994 100,117 145,237 7,641 17,339 49,439 103,528
(ii)Sunflower seed
1992 182,734 147,278 21,221 15,583 286 898
1993 349,500 291,833 15,949 13,313 1,503 1,176
1994 405,589 364,219 4,290 5,295 1,175 3,057
(iii)Soyabeans
1992 63,914 51,219 166,151 73,345 4 10
1993 68,631 57,650 184,163 130,626 21 62
1994 76,100 65,370 117,166 101,372 774 1,107
Winter cereals
(i)Wheat
1992 1,323,853 936,446 540,021 197,755 3,100 2,016
1993 1,983,771 1,370,250 1,172,380 474,514 868 262
1994 1,781,879 1,455,376 728,181 258,665 1,135 783
(ii)Oats
1992 45,000 13,731 21,392 7,019 3 18
1993 47,000 13,019 16,295 6,633 1 6
1994 37,000 10,811 18,586 4,767 4 24G/STR/N/1/ZAF
Page10
Calendar
YearProduction1Imports2Exports2
Quantity Gross value Quantity Gross value Quantity Value
Tons R'000 Tons R'000 Tons R'000
(iii)Barley
1992 265,000 150,160 92,475 40,087 1 2
1993 230,000 150,703 124 50 125 189
1994 275,000 195,542 200 87 0 0
(iv)Rye
1992 2,000 1,103 0 0 0 0
1993 3,000 1,650 0 0 0 0
1994 3,000 1,440 0 0 0 0
Wool
1992 88,083 408,488 35,977 140,984 4,758 9,916
1993 77,573 320,548 2,067 18,498 54,410 518,691
1994 77,763 488,832 2,760 29,856 52,543 757,858
Cotton
1992 50,545 66,526 35,977 140,984 4,758 9,916
1993 30,186 42,703 41,239 165,250 61 591
1994 68,832 104,311 44,274 222,762 3 209
Tobacco
1992 34,980 399,916 25,931 237,659 8,149 41,248
1993 30,390 251,153 13,590 133,422 11,090 42,753
1994 22,990 223,264 16,232 159,976 22,474 72,194
1South Africa (RSA)
2Thefigures represent thetrade oftheRSAandthecountries covered bytheCustoms Union Agreement
namelyBotswana,Lesotho,SwazilandandNamibia.Tradebetweenthesestatesisnotthereforeincluded.
Alltrade bymarketing boards, their agents andother private organizations, isincluded.
3Apples, apricots, grapes, pears, peaches andplums
4Including currants andsultanas
5Including hybridseed
SOURCES: DIRECTORATE AGRICULTURAL ECONOMIC TRENDS
DIRECTORATE OFCUSTOMS AND EXCISE