Impact of Imported Wheat on the Production Costs of a S.A. Company

South Africa is a net wheat importer as domestic production is insufficient to meet domestic demand. This study investigates the impact of imported wheat on the production costs of a South African milling company. The difference in cost price, per ton, of locally produced wheat is compared with imported cultivars. Composition of the wheat sales market is analyzed to assess the market share of each company, the regions of trade, sale per product type and sale per pack size. The components which make-up the production costs are studied to assess the major cost drivers. Correlation analysis and simple linear regression (OLS) of data gathered through the case study indicates a substantial and significant relationship between the variable producer cost per ton and the end selling price to the customer. Wheat milling firms can incur significant cost savings through the use of imported wheat in the production process.