Crop and beef farmer Neels Ferreira from Leandra in Mpumalanga wears many hats. He is not only Grain SA’s chairperson, but is also vice-president and chairperson of Agri SA’s commodity chamber. He talks to Peter Hittersay about current issues facing agriculture and farmers in South Africa.
What are the prospects for grain farmers this year, given the Reserve Bank’s 1,5 percentage points increase in the repo rate last year and steadily increasing input costs? Farmers have been under severe input cost pressure for the past 40 to 50 years. In a free market environment, where input cost structures are known to all while we have no insight into input suppliers’ cost structures, it is difficult to cope.
Secondary farming taxes, such as land taxes, have also risen by almost 200% over the last couple of years, and minimum wages have been introduced while interest rates have increased. These factors have had an enormous impact on the profitability and long-term sustainability of commercial farming.
Given the increased cost of production against the scenario I mentioned, food prices are expected to rise further if farmworkers’ minimum wage levels are increased, whether by political expediency or not. In spite of this, I expect that it will be a relatively good year, based on the anticipated higher grain prices, especially as the enormous demand for maize increases as more bioethanol plants are established in the US and elsewhere. With the expected high price of maize, how should the farmers deal with the inevitable fallout of high food prices contributing to inflation, and that farmers could be targeted as the culprits behind maize becoming unaffordable to the poor?
If farmers aren’t profitable in South Africa, food prices will be based on import parity with little that can be done about it in a free market environment – that is unless the government steps in with price controls and control boards are resuscitated, which we don’t support.
Other than the commercial farmers doing everything to remain profitable by cutting input costs, there is little they can do to escape being labelled as the culprit, and this is where organised agriculture must play its part by keeping abreast of, and disseminating relevant information about the free market economic challenges facing the industry. What is Grain SA’s official position on Safex following farmers’ complaints that traders were manipulating the market?
Grain SA believes the rules governing Safex should be changed to fulfil the needs of the grain industry. Last year Grain SA met with agribusinesses and traders who all expressed deep concern over some traders’ practices and the volatility of the maize market which, with the same fundamentals, fluctuated by R90/ton over two days. Safex responded that its members have never complained about traders’ practices. The below import parity prices for wheat have been laid at the door of various organisations or circumstances. To whom or what do you attribute this? I cannot explain why our wheat price is consistently R200 below the import parity of Argentinian wheat when ours is of a superior quality.
Safex needs to be a price determining and hedging mechanism that is beyond reproach. Farmers lose faith in grain production when grain markets don’t follow the fundamentals over a fair period of time. Will the production of biofuels threaten food security? To the contrary, it should be positively influenced as more grain, especially maize, soya and sunflower, will be planted. Look at a historical graph showing the number of hectares under maize and wheat, and tons produced to see that 20 years ago we cultivated considerably more hectares, but at much lower yield levels than today. Hectares of maize planted last year were the lowest since 1923. So, we could plant many more hectares having higher yield potential.
We are eagerly awaiting government’s policy framework on the establishment of a biofuels industry in South Africa, which is expected to be released in April or May this year. Creating a sustainable biofuels industry can certainly play a meaningful role and provide a great opportunity for the grain and oilseeds industries to grow. The socioeconomic benefits will be enormous for SA, especially in the rural areas. What is the role of women in agriculture? The minister has made remarks such as, ”Where are the women in agriculture?” and ”Why do I only see white men in agriculture?”
There is a small but ever-increasing number of black and white women who are actively engaged in agriculture. You can read this in stories of their endeavours, and the awards they receive for their achievements, that are published in the agricultural media. This trend will increase as women realise they live in a society with gender equality and they have access to the same instruments of development under the government’s empowerment programmes as men do, provided they have the will, love of the soil and commitment to succeed.
Do you believe government is giving the agricultural sector the attention it deserves? No. I believe the president generally realises the key role that agriculture plays in the economy of SA, but many in government, including the minister, have very little appreciation for the value of SA’s commercial agriculture sector. Many politicians seem to believe agriculture should pay for all that happened the past. They should look north of our border to realise the significant role agriculture plays in a country’s economy,