GSCI should be adopted by JSE

Published: 30/11/2021

The Grain Storage Cost Index (GSCI) developed by the Bureau for Economic Research (BER) can potentially meet the requirements to update the annual change in the JSE storage rates. However, the GSCI is published only once a year. An understanding is needed of how the annual publication of the GSCI will compare with the storage rate adjustments of the JSE which are done at the start of each marketing year. 
Agbiz Grain is of the opinion that the producer price index (PPI) is not a true representation of the costs incurred, and hence secured the services of the BER to determine whether there is another method or better index to use. Following a submission of their findings by the BER economist, Nicolaas van der Wath, it was concluded that the difference in values, when using PPI or the customised GSCI from BER, is statistically less significant over the long term, rendering the adoption of the GSCI by industry participants likely. 
The greatest benefit of using the GSCI is that it is less volatile from year to year as opposed to the PPI, which is a cumulative monthly figure. Therefore, Agbiz Grain is promoting the adoption of the GSCI among the JSE and industry participants. The GSCI will reflect the year-on-year change in the storage costs which will be less volatile, and to the benefit of the total value chain. – Wessel Lemmer, Agbiz Grain