The demise of the Maize Board in South Africa in 1997 placed responsibility for maize
marketing in the hands of individual producers. Given the inelastic nature of maize supply
and demand, these farmers now face considerable price risk. In the absence of the Maize
Board, price risk management mechanisms have evolved to serve maize farmers. Results of a
postal survey of commercial maize producers in 1998 indicate that maize farmers are making
increased use of the forward contracting market relative to the spot market. The percentage of
respondents using SAFEX increased markedly over a three-year period, the hedging ratio
rising from 27 percent in 1997/98 to reach 49 percent for 1998/99 and 1999/2000. Survey
respondents were divided into lower- and higher- level users of price risk management tools,
based on their scores for an index of price risk management. Higher-level users tended to
operate larger farms, and be younger, less experienced, but more educated, computeradopting
operators who were less likely to individually own their operations. Farmers
perceived their marketing management skills to be relatively weak. Maize marketing
education seminars and magazine articles explaining available marketing alternatives could
increase farmers’ use of price risk management tools. Further research opportunities lie in the
estimation of optimal hedging ratios in a South African context and the monitoring of
farmers’ marketing activities as the maize market matures
