Profitable summer grain production under present market and production conditions seem an impossible task, the Grain South Africa said on Friday.
Chairman of Grain SA, Neels Ferreira, said current SA Futures Exchange (SAFEX) contracts for maize, soybeans and sunflower seed for delivery in May and July next year and price expectations meant production costs would not be recouped.
"Given the sharp year-on-year increase in input costs, it costs almost 80 percent more than last year to plant summer grain crops."
Ferreira said the price of fertilizer (up 141 to 244 percent), agricultural chemicals (on average up 65 percent), diesel (up 50 percent) and agricultural implements and machinery (on average up by 20 percent) were contributing to the cost increases.
On the output side the price of maize for delivery in July 2009fell to below the level of 1925 rand (SAFEX) on Tuesday, October 7.
This was lower than prices of approximately 2000 rand per ton (SAFEX) achieved in July 2008.
Ferreira said at the same time the price of soybeans and sunflower seed for delivery in May 2009, decreased by approximately 700 rand (down 17 percent) and 1200 rand (down 21 percent) per ton respectively.
Given these price ratios, Grain South Africa's calculations indicate a negative margin above total costs of approximately 110 rand per ton for maize at an average yield of four ton per hectare.
Ferreira said the result of this was that grain producers could be forced to scale down plantings.
"In a normal year, climate wise, this should not result in a food security crisis.
"However, should weather conditions fall below normal, it could have a negative impact on the availability of grain in the coming season," Ferreira said.
He said the negative trend of the grain input - output ratio would call for increased focus on effective production and marketing by grain farmers.
Source: Xinhua
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