(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.
GRAIN SA URGES FARMERS TO CUT PRODUCTION: STATEMENT
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