Water research commission

Wheat

The major product of the baking industry is bread. 70 to 80 percent of all flour milled is used for bread baking. After maize meal, the bread industry is the second most important supplier of kilojoules in the national diet. Annual consumer expenditure on bread is, however, higher than on maize products. The wheat value chain is thus dominated by products made from flour, such as bread and associated products, biscuits or pasta (durum wheat). Other uses include animal feed (bran and wheat germ), alcohol manufacture, starch and straw (using mostly waste).

Input suppliers provide seeds, fertilizer, pesticides fuel, etc. to wheat farmers. The wheat is harvested and stored in silos, together with imported wheat. This is then delivered to milling companies where the wheat is ground into wheat flour, meal and bran. The wheat flour is then sold to the manufacturing industry to produce perishable products such as bread, rolls, buns, cakes and other products such as frozen dough. Wheat based products such as biscuits, pasta, crackers and breakfast cereals form a smaller, but valuable component to the industry. The animal feed manufacturing industry uses meal and bran in the manufacture of farm feeds and pet foods. (DAFF, 2012d)

Wheat farming provides jobs for about 28 000 people, on a permanent or semi-permanent basis. Harvesting is highly mechanised (DAFF, 2012d).

Wheat production is decreasing slightly in SA on the whole, but imports are increasing to maintain total domestic requirements (see figure 44).

Figure 44. Wheat Planting, Production and Imports (Wallace 2013)

The climate projections for this region reflect:

• 
  a possible decrease in rainfall over the autumn and winter periods
  
• 
  increased variability of rainfall
  
• 
  delayed/later start to the rain season
  

From Oosthuizen’s report, the following impacts were identified:

• 
  The modelling results indicate that intermediate climate scenarios from five different Global Circulation Models (GCM’s) posed a marginal threat to wheat production in the Moorreesburg area.
  
• 
  The modelling results project a marginal decrease in yield.
  
• 
  A decrease in the production volume can lead to a price increase in wheat products. The production of wheat in Moorreesburg can however not be looked at in isolation, because wheat price in South Africa is derived from import parity price. Production in other parts of the country and internationally impacts on price as a result of free trade and the supply and demand principle.
  
• 
  Adaptation strategies to mitigate the possible negative impact of climate change include:
  

• 
  Cropping systems
  
• 
  Production practices
  
• 
  The successful application of adaptation strategies will largely eliminate the negative effects of climate change on the food value chain of wheat for the Moorreesburg area.
  

Other literature, including Wallace (2013) suggest that increasing CO₂ may increase yields due to fertilisation effects but it is thought that at a certain point increasing temperatures will outweigh these benefits.

7.1.1 Actors in the wheat value chain and their exposure to CC impacts:

1. 
   Producers
   

• 
  High input cost/land value ratio as a result of sharp increases in variable costs of production resulting in greater production risks.
  
• 
  Slow and inadequate input/product price adjustment to external factors e.g. sluggish input price downward adjustment to exchange rate strength.
  
• 
  Expensive crop insurance and limited insurance capacity.
  

2. 
   Traders
   

• 
  High dependency on transport infrastructure – delays and exposure to elements may cause losses
  
• 
  Storage risks – risks of quality losses
  

3. 
   Millers
   

• 
  Competition from cheaper/subsidized imports where CC impacts are less
  

4. 
   Bakers
   
   • 
     High dependence on quality, which may be affected, and increase prices
     
   • 
     Competition from cheaper/subsidized imports where CC impacts are less
     
5. 
   External input providers (non-wheat raw material, transport, packaging etc)
   
   • 
     Risks to power supply ( and knock on risk to transport), due to increased temperature and more intense rainfall in electricity production areas
     
   • 
     Access and availability of water (for small % of irrigated wheat production, and for manufacturing) leading to price increases
     
   • 
     Increased temperatures and moisture increase demand for pesticides and thus costs
     
6. 
   Wholesalers/Retailers
   
   • 
     Distribution risks due to transport cost and threats, and increased risk of spoilage due to increased temperatures and variable, possibly more intense, rainfall
     
   • 
     Increased costs of raw materials leads to higher selling prices, opening up competition to cheaper imported goods.
     
7. 
   Socio-economic issues
   
   • 
     Any risks carried through to retailers will be reflected in the price and supply of bread, biscuits and pasta. Since bread is increasingly becoming a staple food, any increases in price pose a serious threat to food security.
     

In general, the most significant linkage between the impacts of climate change at the farm level to the rest of the value chain is reflected in the variable price of the raw material, i.e. wheat flour. When climate change causes loss of yield and/or quality in the production of wheat, this will affect the price of the wheat, which in turn will impact on the activities of all the other actors in the value chain. While inputs costs promise to increase making it more difficult to farm wheat, and leading to smaller areas being planted (though increasing yields are evident) the number of individual farms is decreasing, leading to a reduction in employment numbers. This will have a knock-on effect for food security.

Quality is an aspect which can be carried through many of the components of the value chain as increased temperature leads to a higher risk of spoilage, which can be mitigated against by increased air-conditioning and shorter transport periods.

The indirect linkages of climate risk, which can be ascribed to the impacts of increased temperature and more variable rainfall, are reflected in increased costs of non-wheat inputs such as electricity and transport.

Power

Water

Yeast

Oil

Sugars

Dairy

Meat

Fruit/Veg.

Preservatives Vitamins

Value System — Wheat, Milling and Baking

Grading & Quality control

Education

Health

Prisons

Hotels

Supermarkets

OTC and In store bakeries

Cafes and spazas

Rural plant bakery stores

SADC

Non SADC
Related & Supporting*

Distribution

Marketing

Wheat

Biscuits

Pasta

Crackers

Breakfast Cereals

Other

Farm Feeds
Pet Food

Other

Land

Seed

Fertiliser

Lime

Water

Fuel

Pesticides

Institutions

Irrigation

Farming Equipment
Related & Supporting*
Related & Supporting*

Road & Rail Infrastructure

Transport

Process Control

Traders

Chemicals Power

Power

Water

Packaging

Transport

Training

Standards/ Quality Control

Packaging

Training

Related &

Supporting*

Poultry & Red Meat Farming

Finance

Imported wheat

Imported Wheat

Land

Power

Water

Oil

Sugars

Dairy

Meat

Fruit/Veg.

Preservatives

Vitamins

Imported Flour

Imported Flour

Export Distribution

Rural & Urban Retail

Imported Goods

Perishable Products

Pan Loaves

Speciality breads

Rolls/Buns

Confectionery products

Other

Other Products

Frozen dough

Par baked products

Milling

Wheat Based Goods Mfg.

Animal Feed
Manufacture

Wheat
Farming

Storage

Wholesalers

Baking

Flour
Meal
Bran

Traders

Figure 45: The Wheat Value matrix diagram (after Moloisane, 2003)

2.