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Cover of Oilseeds Focus Vol 5 No 1 March 2019
INCOME AND COST BUDGETS 2018/2019 SUMMER CROPS USER INFO User information
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 FOREWORD USER INFORMATION

2018/2019 Income and Cost Budgets for Summer Crops

Area coverage

Table 1.1 and Table 1.2 indicates the area of coverage and include the dryland and irrigated crops. The source of data and collaborators are also included.

Table 1.1 Area coverage – Dryland
Area Dryland crops Source and Collaborators
KwaZulu-Natal
Bloedrivier Maize and soybeans GSA / BFAP / Individual farmers
Mpumalanga
Middelburg / Trichardt Maize, soybeans and grain sorghum GSA / BFAP / Individual farmers
Ermelo Maize and soybeans GSA / BFAP / Individual farmers
Eastern Free State
Reitz region Maize, soybeans, sunflower and dry beans GSA / VKB / BFAP / Individual farmers
Western / Northern Free State
Wesselsbron (high potential) Maize GSA / Senwes / BFAP
Bothaville Maize GSA / Senwes / BFAP
Western / Northern Free State Maize, soybeans, sunflower, groundnuts and grain sorghum GSA / Senwes / BFAP
North West
Koster Maize, soybeans and sunflower GSA / NWK / BFAP / Individual farmers
Lichtenburg Maize, soybeans, sunflower and groundnuts GSA / NWK / BFAP / Individual farmers
Table 1.2 Area coverage – Irrigation
Area Irrigated crops Source and Collaborators
Northern Cape
GWK area Maize, soybeans, groundnuts and sunflower (oil) GWK / GSA / BFAP
KwaZulu-Natal
Bergville Maize and soybeans GSA / Individual farmers
North West
Britz / Northam / Koedoeskop Maize, soybeans, sunflower and sorghum GSA / NWK / Individual farmers
Limpopo
Loskop Irrigation Scheme Maize and soybeans GSA / Individual farmers

Yield assumptions

Figure 1.1 and Figure 1.2 present the yield assumptions for dryland and irrigated crops. The assumptions represent target yields and crop input allocation is based on achieving the stipulated target yields. The respective target yields were determined in a round table discussion with industry experts.

Figure 1.1: Dryland crops yield assumptions
Figure 1.1: Dryland crops yield assumptions
Figure 1.2: Irrigated crops yield assumptions
Figure 1.2: Irrigated crops yield assumptions

Crop price assumptions

Annually, the Bureau for Food and Agricultural Policy (BFAP) publishes an outlook on agricultural production, consumption, prices and trade in South Africa over a 10-year period. The information presented is based on assumptions about a range of economic, technological, environmental, political, institutional, and social factors. The outlook is generated by the BFAP system of models. A number of critical assumptions have to be made for baseline projections. One of the most important assumption is that normal weather conditions will prevail in Southern Africa and around the world; therefore, yields grow constantly over the baseline as technology improves. Assumptions regarding the outlook on macroeconomic conditions are based on a combination of projections developed by the International Monetary Fund (IMF), the World Bank and the Bureau for Economic Research (BER) at Stellenbosch University. Baseline projections for world commodity markets were generated by FAPRI at the University of Missouri. Once the critical assumptions are captured in the BFAP system of models, the Outlook for all commodities is simulated within a closed system of equations. This implies that, for example, any shocks in the grain sector are transmitted to the livestock sector and vice versa. Therefore, for each commodity, important components of supply and demand are identified, after which an equilibrium is established through balance sheet principles by equalling total demand to total supply.

Figure 1.3 illustrates the commodity price assumptions for white maize, yellow maize, sorghum, sunflower and soybeans that were used in the summer crop budgets for the 2018/19 production season. The sensitivity analysis in the respective crop budgets makes provision for variation in price and yield and indicates the gross margin under each price and yield combination.

Figure 1.3: BFAP average annual commodity price projections: 2016-2018
Source: BFAP, 2018
Figure 1.3: BFAP average annual commodity price projections - 2017-2019

Input cost trends and assumptions

The firm depreciation in the Rand over the period from June to beginning September 2018 raises concerns on the cost for agricultural inputs for the 2018/19 production season. It is acknowledged that the depreciation provides support to domestic price levels, however it could be harmful in a scenario where the Rand appreciate towards the harvesting season. Figure 1.4 illustrates the recent increasing cost trends for key fertilisers and agricultural fuel in South Africa. Figure 1.5 presents a summary for input cost inflation assumptions for the period from 2017/18 to 2018/19 production seasons. It is important to note that intra-regional variation will occur, however, the estimates serve only as a guideline, based on trends observed in agricultural input markets.

Figure 1.4: Fertiliser and fuel cost trends: January 2017 to August 2018 and 2019 projections
Source: Grain SA and BFAP, 2018
Figure 1.4: Fertiliser and fuel cost trends - January 2017 to August 2018 and 2019 projections
Figure 1.5: Input cost inflation summary : 2017/2018 to 2018/2019 production seasons
Source: BFAP, 2018
Figure 1.5: Input cost inflation summary: 2017/2018 to 2018/2019 production seasons
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