AGRI-PULSE – LICHTENBURG - Although summer grain areas in large parts of the country are currently showing reasonable to good standing, Grain SA warns that the real crisis this season lies not only in the fields, but in the harsh economic reality of grain production. Producers are experiencing increasing stress due to a combination of low grain prices, sharply rising input costs, excessive mechanisation expenditure and the extra cost of transplants after waterlogging and stand damage.
In large parts of the country, cereal crops currently look fairly to good, and planting work is well advanced in many areas. Yet the predominant message from the field is that the financial pressure is now the biggest threat to sustainable production.
In several summer grain regions, persistent rainfall and full water tables have led to extremely wet lands. Among other things, it delayed planting work or stopped it completely in patches, made access for weed control and follow-up spraying difficult, caused waterlogging damage in lower-lying areas, and forced farmers in cases to plant a second time in a second attempt to obtain adequate plant population.
Across all areas of production, one message emerges repeatedly: profit margins are under pressure to breaking point. In several areas, it is indicated that producers need above-average harvests just to break even. Where long-term average returns are lower, this makes the risk even greater.
The biggest cost drivers that keep producers awake include:
• MechaniSation costs (replacement with more effective machinery, parts and repairs that increase disproportionately),
• Chemistry and availability (where alternative products are often significantly more expensive),
• Seeds and fertilizers, which increase annually above inflation,
• and energy (diesel and electricity) which makes production less and less feasible in certain regions.
For the irrigation areas, the big red light is the affordability of energy. In many of these regions, production conditions remain relatively stable, but producers indicate that irrigation is becoming less and less economically feasible. Increasingly, it is no longer about the availability of electricity, but about its price, along with diesel, fertiliser, seeds and other inputs. In other irrigation areas, input costs for high-input crops are unusually high, while power outages force producers to deploy additional solutions such as solar power and generators – at even greater costs.
Grain SA emphasises that local grain production is a core pillar of food security and rural economic stability. When producers cannot produce profitably, it affects not only farming, but also jobs in rural areas, service providers, and value chains throughout the economy. Producers cannot only hope for a good season – they must also be able to survive the season financially. Without a more realistic relationship between prices and costs, even good production conditions become inadequate.
