(The following press release from Grain SA was received by e-mail. The
sender verified the statement.)
Grain SA announces production guidelines
“The current supply and demand situation in the grain industry could be
described as extraordinary and is creating a lot of uncertainty,” says Mr.
Neels Ferreira, Chairman of Grain SA.
The market for summer grains is not in equilibrium and grain prices are at
very low levels. The sustainability of grain production is therefore under
Grain SA’s proposal for a surplus reduction scheme aimed at reducing
excessive stocks of maize was rejected by the Competition Commission, and
government policy is not doing anything to increase the demand for grain.
The supply and demand projections for maize, soybeans, groundnuts, and
sorghum indicate substantial increases in cary-over stocks, even after
provision for exports have been made.
In addition, everything seems to indicate that the production costs of
grains and oilseeds this coming season may be considerably higher than the
export parity price for next year. Given such a negative trading-base
situation, it would be better to buy grain at current prices and
drastically scale down planting during the coming season. This could lead
to a drastic rise in prices (closer to import parity) during the coming
season. These prices might even be high enough to allow the servicing of
the fixed costs on areas not planted with an accompanying positive margin
above total production cost.
In order to further explain this situation, Grain SA is once again
organising a series of information meetings in the production areas. At
these meetings, production guidelines for the coming summer grain
production season will be given. All producers are invited to attend these
meetings to empower themselves with the information required to make
“The production guidelines are based on expected profitability and
individual producers may use the information to make production
decisions,” says Mr Ferreira.
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