South African farmer body Grain South African has recently met with banking group Absa to discuss the difficult position grain farmers face as a result of the expected huge maize surplus and the current low price of grain, most especially maize, GSA said on Thursday.
“As part of the process to find solutions to the current crisis in the grain industry, GSA is continuously in discussion with all the role-players in the industry and has already had discussions with various financial institutions and agri-businesses,” said GSA chairperson Bully Botma.
Botma said that due to favorable climatic conditions, improved production practices and better maize cultivars, record yields were expected this season.
The crop estimates committee has put South Africa’s commercial maize crop at 11,521-million tonnes, at a record yield of 3,93 tonnes per hectare.
GSA is also expecting the coming 2005/06 marketing year from May 1, 2005 to April 30, 2006, to end with maize stocks of almost six millions tonnes, which compares with South Africa’s annual maize consumption of between 7,6-million tonnes and 7,8-million tonnes.
The effect of the expected large maize surplus is that maize prices will decrease to such an extent that even farmers with exceptionally high yields will not be able to cover their variable production cost per tonne, GSA said.
Absa’s agri business division was very aware of the crisis in the grain industry, but was adamant that there are no instant solutions to the problem, GSA said.
Absa said there couldn’t be an umbrella approach to the current crisis, but that every client would be treated on merit, the farmer body added.
The banking group will give finance to farmers to keep fallow lands clean during the next season and for certain farmers finance and repayment of loans would be structured over the longer-term, GSA said.
Absa agri business agreed that the production of renewable fuels would be to great advantage to the grain industry. It was a long-term solution that would lead to greater stability and sustainability in the grain industry.
“GSA is currently, in conjunction with various state departments and other role players such as the fuel industry, developing a policy framework for the establishment of a renewable fuel industry in South Africa. Against this background, GSA is pleased with the positive stance of Absa regarding the creation of a renewable fuel industry,” Botma said. – I-Net Bridge