Commodity prices in general are known to have a high volatility. This is in fact what attracts speculators. The South African futures exchange (SAFEX) is not immune to this volatility. Volatility increases the risk of paying higher prices for a specific commodity, and it also makes the use of derivative instruments to hedge against price risk more expensive. Given the importance of South Africa as a regional supplier of maize and price discovery mechanism, investigations into the volatility of the maize price are not only important, but also indispensable if all parties involved are to manage this risk. The question therefore is whether the SAFEX maize price volatility can be explained by using fundamental factors or whether this volatility is unexplainably high.

Recent innovations in energy markets suggest the possibility of addressing agricultural risk factors by issuing derivatives on weather elements. Such instruments appear particularly attractive, as asymmetric information and loss adjustment issues do not affect them. This article first describes the concept, functioning and application of weather derivatives. It then examines the feasibility of rainfall derivatives to manage agricultural production risk in South Africa by evaluating the merits of rainfall options, and suggesting an option strategy, as a yield risk management tool. The use of rainfall derivatives in South Africa is likely to increase in future as capital markets, financial institutions, insurance companies, crop insurance companies and hedge funds collectively organize themselves to share and distribute weather risks.

According to the Food Price Monitoring Committee (FPMC) (2003), milling and baking industries are highly concentrated, and most of the major millers are vertically integrated with bakeries. The Committee found that the baking industry is also characterised by a high level of market power, with six baking groups being responsible for 80 per cent of South Africa's bread production. Hence, this study aimed to identify the factors that restrict the development of agro-processing in the small wheat-milling and baking industries in the rural areas of South Africa. Data was collected by means of a structured questionnaire and by conducting 15 interviews with various small wheat-milling and baking firms in the supply chain as well as with major roleplayers. The study found that the small wheat-milling and baking industries have relatively high barriers to entry, including the ability to acquire the required capital to start operations; to establish a market; to acquire knowledge of the wheat-milling and baking industries; to uphold a well maintained infrastructure; to acquire marketing-management knowledge; and to have the necessary cash flow. The only barrier to exit deemed to prevail in the wheat-milling and baking industries is the ability to sell machinery at book value. The study also found that small-scale wheat millers and bakers felt exposed to wheat price volatility, as they had neither the cash flow nor the knowledge to counteract these price risks by way of risk-mitigating strategies available through derivative markets. The study therefore concluded that large-scale wheat millers and bakers have a competitive advantage over their smaller counterparts, in that they have the economies of scale, necessary skills, knowledge and cash flow to overcome obstacles in a short period. Moreover, smaller wheat millers and bakers can take several months to recover from setbacks, which sometimes prove to be detrimental. The study further made some recommendations concerning these factors, in order to facilitate small-scale wheat millers’ and bakers’ development and expansion of production.

Long-term shareholder wealth is equally important for all profit seeking organizations, regardless of their size. This paper examines introducing Economic Value Added (EVA) as a performance measure for agribusinesses and co-ops in South Africa. EVA is an effective measure of the quality of managerial decisions as well as a reliable indicator of an enterprise's value growth in future. The question posed is whether South African agribusinesses and cooperatives are capable of creating shareholder and member value after the deregulation of the agricultural markets.

Orientation: Agricultural plays a key role in South Africa’s economy, but its exports are constrained by inadequate transport infrastructure, logistical bottlenecks and high production costs. Therefore, most agricultural products are transported to ports by road instead of the more economical rail. Product prices fluctuate with erratic domestic and international supply and demand, which affects competitiveness. Research purpose: The study investigates how transport cost and logistical shortcomings have impacted South African maize exports and competitiveness. Motivation for the study: Little prior research focused on the impact of transport and logistics on the competitiveness of agricultural exports in Africa. Maize, one of South Africa’s leading agricultural products with still-to-be-tapped export potential, was used as an example. Research approach/design and method: Trends in global maize exports and logistics performance are described, as well as South Africa’s share and rankings. Domestic trends in rail and road transport are investigated together with historic costs. Regression analysis investigates determinants of South African maize export volumes. Main findings: South Africa’s logistics-related competitiveness is declining. Rising domestic transport cost has a statistically significant negative effect on maize export volumes while international prices show the expected positive effect. Separate equations for exports through harbours and border posts rendered different results. Practical/managerial implications: Valuable insights are provided into the critical role of logistics efficiency in maize export competitiveness. Contribution/value-add: Empirical findings provide a starting point for more in-depth studies in this area and more informed policy discussions on how the competitiveness of South Africa’s agricultural exports can be enhanced.