Dr. André van der Vyver is a distinguished South African agricultural economist with extensive experience in the grain and oilseed sector. He currently serves as the Executive Director of the South African Cereals and Oilseeds Trade Association (SACOTA), where he plays a pivotal role in advocating for market-based agricultural policies and improving trade efficiency in the sector.

With a career spanning decades, Dr. van der Vyver has been at the forefront of agricultural policy reform, particularly during South Africa’s transition from a government-controlled agricultural economy to a deregulated, market-driven system. In the mid-1990s, he was a founding member of the South African Commodity Exchange while working at Standard Bank, where he helped shape the country’s commodity trading infrastructure. His expertise lies in commodity exchanges, warehouse receipt systems, trade finance, and supply chain optimization.

Dr. van der Vyver is recognized for his deep insights into international trade, market linkages, and agricultural financing structures. He has worked on initiatives to enhance the efficiency of electronic warehouse receipt (EWR) systems and has provided strategic guidance on developing resilient agricultural markets. His work emphasizes the importance of reliable warehousing, standardized grading systems, and a well-regulated exchange to drive agricultural sector growth.

His contributions extend beyond South Africa, as he has advised on commodity exchange development in emerging markets, including Pakistan. He is a strong advocate for integrating international commodities into local exchanges to enhance price discovery, liquidity, and competitiveness.

Last month, Dr. van der Vyver visited Pakistan to participate in the Pakistan Banking Summit 2025, organized by the Pakistan Banks Association (PBA). BR Research interviewed Dr. André on the sidelines of the event to discuss South Africa’s agricultural market reforms, the role of electronic warehouse receipts, and lessons that Pakistan can learn in developing its own commodity exchange ecosystem.

Below are the edited excerpts from the conversation:

BR Research (BRR): To set the context, can you explain how the agriculture marketing framework in South Africa has evolved in recent decades? Has it always been market-based, or has there been significant government intervention?

Dr. André van der Vyver (AVV): South Africa followed a different route in developing its grain and oilseed sector. In the 1970s, 80s, and early 1990s, it was a heavily controlled environment where the government regulated pricing, warehousing, transport, and quality. However, this system became financially unsustainable for the government. Around 1994–1996, we underwent deregulation. Government controls were abolished, and we moved toward a free-market model, creating a Commodity Exchange. I was a founding member at the time, representing Standard Bank of South Africa. The Commodity Exchange played a crucial role in facilitating sales and deliveries and providing transparency.

BRR: You mentioned the deregulation process. How did the industry and farmers adjust to this transition?

AVV: Initially, there was some resistance. Farmers were not accustomed to price cycles dictated by supply and demand. Some preferred fixed prices throughout the season. Over time, they adapted, particularly when they saw the opportunities in hedging and risk management through the exchange. Processors also adjusted because they needed access to consistent quality, which became possible through standardized contracts on the exchange.

BRR: In Pakistan, electronic warehouse receipts (EWRs) have struggled to gain traction. What specific challenges do you see in their implementation?

AVV: Warehousing infrastructure is critical. In South Africa, warehouses were already well-established, with high-quality management and control, making it easy to integrate them into the exchange system. A key challenge in Pakistan is the poor condition of many warehouses, particularly state-run facilities, where there is little incentive for proper storage. Effective warehousing is the foundation—without it, proper collateralization and trade mechanisms cannot function. There also needs to be an understanding that warehousing is a business, not just a storage facility. In South Africa, warehouses actively manage blending, quality control, and financing, making them integral to the agricultural value chain.

BRR: Should market participants in Pakistan start with strict quality control, or should the aim be to first bring in liquidity so that trading volumes become viable for investment, before enforcing high standards?

AVV: I believe you can start by trading what already exists in the market and then gradually improve standards. In South Africa, we implemented a multi-grade system where different qualities of wheat were recognized. Grade 1 was the highest, but Grades 2 and 3 could also be delivered with predetermined discounts. This approach attracted volume while allowing for quality differentiation over time. Quality control should evolve naturally as market participants recognize its value and as warehousing standards improve.

While significant focus—deservedly—is placed on output losses due to poor farm management in developing economies, quality losses are just as critical to ensuring farmer profitability.

BRR: In many emerging markets, including Pakistan, commodity exchanges struggle to gain traction due to concerns over liquidity, credibility, and price discovery. Some argue that prioritizing cash settlement can help improve trading volumes, while others emphasize the need for physical delivery to ensure market integrity. Based on South Africa’s experience, what is the best approach?

AVV: The foundation of any successful commodity exchange—especially in an emerging market—is physical delivery. If you don’t have a strong physical framework with reliable warehouse receipts and enforceable contracts, the exchange risks becoming detached from actual market conditions. South Africa’s exchange is a physical delivery market, meaning that unless a contract is closed before the delivery period, the commodity must be delivered.

That said, most participants use the exchange for hedging and risk management, so only about 1.4 percent of contracts result in actual delivery, similar to the Chicago Board of Trade, where about 1 percent of contracts go to physical settlement. However, physical delivery remains critical because it ensures price convergence with the real market, prevents excessive speculation, and reinforces trust in the system.

For Pakistan and other emerging markets, I would not recommend starting with a cash settlement. The first priority should be building trust in warehouse receipts, improving grading and standardization, and ensuring buyers and sellers have confidence that deliveries will be honored.

BRR: How can imports be integrated into the exchange to help with price stability and standardization?

AVV: The ability to trade imported commodities is critical for maintaining global price alignment and competitiveness. If imports are included, they ensure that local prices do not stray too far from international benchmarks. In South Africa, imported products must be stored separately, and if their quality differs, a discount is applied. This allows the exchange to handle both domestic and imported commodities while maintaining transparency and price fairness.

BRR: Many emerging markets have struggled to sustain commodity exchanges. What are the key structural or policy mistakes that lead to failure?

AVV: The biggest issues often stem from poor warehousing infrastructure and a lack of trust in the system. If warehouses are unreliable, if the quality is inconsistent, or if there are no guarantees behind warehouse receipts, the market will not develop. Additionally, the perception that warehousing is merely storage rather than an integral business within the agricultural economy leads to inefficiencies. For an exchange to succeed, the entire ecosystem—warehousing, grading, financing, and trust in delivery—must function seamlessly.

BRR: In your view, what should Pakistan prioritize in developing its commodity exchange and EWR system?

AVV: The foundation must be solid warehousing with proper management and oversight. Without reliable storage, nothing else works. Once warehousing is standardized, an exchange can function properly. Financing mechanisms can follow later, but first, the physical infrastructure and confidence in receipts must be built. Without that, the rest of the system will struggle to gain credibility and traction.