Grain SA protests JSE’s soybean pricing decision
Grain SA and partners marched on Thursday to the Johannesburg Stock Exchange (JSE) to oppose the bourse’s decision to return to a single soybean reference point system, a decision that would put more strain on farmers with a ripple on effect as soybeans is used for feed for farmers in the livestock industry.
Grain SA said that they were disappointed with the decision to abandon the Multiple Reference Point (MRP) model for calculating soybean location differentials.
Grain SA said that they want a fair and transparent soybean price discovery. “Leadership, board members and producers participated in a peaceful march through Sandton before the documents were handed over to JSE representatives at its offices in Gwen Lane. The petition, supported by 965 signatures and 511 supporting comments, calls on the JSE to reconsider its decision, conduct a transparent and evidence-based review, and adopt a price-discovery system that better reflects actual grain movements and physical market realities.”
Richard Krige, Chairperson of Grain SA, said that producers made their position clear in a peaceful but firm manner.
“This is not simply about one reference point. It is about whether the system reflects the realities of the physical market and whether producers can have confidence that decisions affecting their businesses are based on transparent evidence.”
Grain SA added that they remain concerned that the decision to reject the Multiple Reference Point model was not supported by sufficient quantitative evidence and that the agreed evaluation criteria were not adequately addressed.
Grain SA said a return to a single reference point could lead to transport-related deductions primarily based on distance from that point, rather than adequately accounting for regional supply, demand, and the actual movement of soybeans. Public protest marches about financial market regulatory changes are very rare in South Africa.
“The organisation is continuing with its technical submissions, engagement and proceeding with legal action, including an urgent application aimed at preventing implementation of the decision while the matter is challenged through appropriate processes aimed at protecting producer interests and securing a more efficient and transparent outcome.”
Wandile Sihlobo, Chief Economist, Agricultural Business Chamber of South Africa, said that Grain SA’s call for a fair approach to soybean price discovery is an important matter that the JSE should consider. “The farmers must have confidence in the price discovery method, and it must also be a fair and credible approach that considers the various regional points of soybean production, processing, and consumption.”
Sihlobo added that the farmers’ demonstration to the JSE, underscores the importance of this matter to the sustainability of the soybean industry, which is crucial to the growth of our farming sector. “The methodology they propose must be taken seriously.”
Professor Simphiwe Madikizela, senior lecturer in economics at UNISA’s School of Graduate Business and Leadership, said that he would take a balanced but fairly critical view of the JSE’s decision.
“The key issue is not whether the JSE has the authority to change the methodology—it clearly does—but whether reverting to a single reference point produces better, more accurate and more transparent price discovery for the soybean market. The JSE’s own documentation confirms that the two-year MRP pilot was specifically assessed against trading activity, market participation, stock management, redelivery, and stakeholder feedback.”
Madikizela added that his view is that the JSE should not simply ask whether the MRP model was easier or more convenient to operate.
“The more important question is whether it produced better price discovery and a fairer reflection of the actual economics of moving soybeans from production areas to processing and consumption centres. Agricultural commodities are fundamentally different from financial assets because location matters enormously.”
Madikizela said that a farmer can produce an excellent crop, but the value of that crop depends not only on the commodity price but also on where it is produced, where demand is located, and what it costs to transport the product between those points.
“I view Grain SA’s peaceful march as a legitimate form of stakeholder engagement. Farmers are directly affected by the pricing and location-differential methodology, so they have every right to challenge a decision that they believe could materially affect their margins. What is particularly important is that this remains a peaceful, evidence-based protest. Grain SA has indicated that it is also submitting technical documentation and comments to the JSE.”
Dawie Maree, head of FNB Agriculture Marketing and Information, said that he does not agree with the JSE’s decision. “It clearly ignored market dynamics. Grain SA’s protest – it is everyone’s right to protest peacefully, and from what I saw, that is exactly what Grain SA did. Way different from what is happening in European countries when their farmers are unhappy.”
The JSE had in its notice about the reversion to a single point reference system said the deicsion was taken to provide greater consistency, simplicity, and predictability for market participants, and it had also stressed that the JSE had conducted consultations with stakeholders on the matter.
