GRAIN SA URGES FARMERS TO CUT PRODUCTION: STATEMENT

     (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
 considerable pressure. 
 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
informed decisions. 
“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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