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