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Producers must plant 500,000 hectares less maize to improve profitability

17 Nov 2017

According to independent economist Fanie Brink, "maize producers must plant at least 500,000 hectares less maize this year." The basic priniciple for deciding to plant maize depends firstly on whether a producer can recover his variable costs - seed, fertiliser, crop protection, fuel, etc. - because the producer will still have fixed costs whether he plants or not, said Brink.

sarangib via pixabay

If he cannot recover his total variable costs, it means that he will only increase his total loss. If he can recover more than his variable costs, he will be able to pay part of his fixed costs and thus reduce his overall loss. Of course, it's the goal of producers to recover both their variable and fixed costs and realise a profit.

Maize farmers have produced themselves out of the market

Maize farmers have again produced themselves out of the market over the past few years because of their increase in production efficiency. If all maize farmers would plant only 100 hectares less this season, they can reduce the total area planted to maize last season of approximately 2.6 million hectares by 500,000 hectares. This will not only reduce the total variable costs for the industry but will in any case not have a material impact on the total fixed costs.

If the production areas still receive good rain this season, good yields per hectare will be the only way to reduce production costs per ton. Fewer plantings will also result in a better price, subject to the demand and supply situation of maize in the country, which will largely be determined by the market demand, the size of the crop and the transfer stocks.

Producers should rather leave these hectares to be planted next season or they could plant crops for grazing on them. They will not really be worse off in either a good or a bad season if they plant 500,000 hectares less maize because their total costs will be lower and they are likely to realise a better price. "If producers want to improve the profitability of maize production over the long term, they will now have to reduce the plantings of maize permanently by 500,000 hectares."

Food security can only be sustainable if food production is profitable

No producer in the world can produce food at prices that poor people can afford. It is purely the government's responsibility to take care and look after these people. Food security can only be sustainable if food production is profitable.

Profitability the prerequisite for sustainable agricultural production

17 Aug 2017

The government determines the country's agricultural and economic policy but does not seem to have a plan for the long-term commercial production of food.