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GOSA 14 March 2012. SA GRAIN ECONOMIC PERSPECTIVE PRESENTATION TOPICS 1.AGRICULTURE IN PERSPECTIVE 3.OUTLOOK FOR 2012 / 13 2. TRENDS IN THE GRAIN INDUSTRY.

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Presentation on theme: "GOSA 14 March 2012. SA GRAIN ECONOMIC PERSPECTIVE PRESENTATION TOPICS 1.AGRICULTURE IN PERSPECTIVE 3.OUTLOOK FOR 2012 / 13 2. TRENDS IN THE GRAIN INDUSTRY."— Presentation transcript:

1 GOSA 14 March 2012

2 SA GRAIN ECONOMIC PERSPECTIVE PRESENTATION TOPICS 1.AGRICULTURE IN PERSPECTIVE 3.OUTLOOK FOR 2012 / 13 2. TRENDS IN THE GRAIN INDUSTRY

3 1.AGRICULTURE IN PERSPECTIVE 1.1 Contribution to GDP

4 1.AGRICULTURE IN PERSPECTIVE 1.2 Consumers spend on agricultural products

5 1.AGRICULTURE IN PERSPECTIVE 1.3 Per capita consumption of grains, vegetables and fruit

6 1.AGRICULTURE IN PERSPECTIVE 1.4 Per capita consumption of meat products in South Africa

7 2.AGRICULTURE IN PERSPECTIVE 2.1 Population growth in South Africa

8 2.AGRICULTURE IN PERSPECTIVE

9 2. TRENDS IN THE GRAIN INDUSTRY 2.1 Profitability  High prices – boom in agriculture  Income outstrip expenditure by far - 5 ton/hectare farm in central Free State o Gross income = R10 000/ha o Direct costs = R 4 000/ha

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11 o Nett income = R5 000/ha Overhead costs = R1 000/ha

12 2.2 Increased efficiency 2.2.1 Production efficiency

13 2.2.2 Operational efficiency  Export program

14 2. TRENDS IN THE GRAIN INDUSTRY 2.3 Alternative handling and storage  Growing Industry  Structural change o On farm storage 1.6 million tons – SIQ o Silo bags – 1.1 million tons – LBW 9 March 2012 o Producers have fewer and larger equipment o Harvest tempo o condition of roads o Transport costs o Convenience Challenge for the traditional silo industry

15 2. TRENDS IN THE GRAIN INDUSTRY 2.4 Compliance  Major sustainability issue Top 12 Act’s affecting Senwes 1.Competition Act, 89/1998 2.National Credit Act, 34/1998 3.Restitution of Land Rights Act, 22/1994 4.Occupational Health & Safety Act, 85/1993 5.Consumer Protection Act, 68 of 2008 6.FICA, 38/2001 7.Companies Act, 61/ 1973 and 71 of 2008 8.Securities Services Act, 36/2004 9.Taxation Laws Amendment Act, 3/08 10. Taxation laws Second Amendment Act, 4/08 11. Income Tax Act, 58/1962 12. Value- Added Tax Act, 89/1991

16 2. TRENDS IN THE GRAIN INDUSTRY 2.4 Compliance Then there are other Act’s that can have a material impact on a company, i.e. 13. Agricultural Pests Act; 14. Agricultural Products Standards Act; 15. Compensation for Occupational Injuries & Diseases Act; 16. National Railway Safety Regulator Act; 17. Environmental Act 18. Road Transportation Act; 19. Environment Conservation Act; 20. National Water Act 21. Foodstuffs, Cosmetics & Disinfectants Act; 22. Fertilizers, Farm Feeds, Agricultural Remedies & Stock Remedies Act;

17 2. TRENDS IN THE GRAIN INDUSTRY 2.4 Compliance Add to fixed costs Non Compliance can lead to huge fines Unfair competition between those who comply and those who don’t

18 > Food safety

19  Overloading of trucks o Out of 17 loads (4>45 tons; 6> 35 tons) o Average weight – 41.83 tons. Legal weight = 32 tons o Cost difference: 300km – 32 ton vs. 42 ton load = R51/ton 2. TRENDS IN THE GRAIN INDUSTRY  Unfair competitive behaviour Can expect actions to make sure everybody comply

20  The role of Africa o World demand outstrip consumption o China & India o Africa have the potential to be bread basket - Huge post harvest losses - storage - Logistic solutions 2. TRENDS IN THE GRAIN INDUSTRY

21 3. OUTLOOK 2012/12

22 4. OUTLOOK 2012/12 Local Maize Prices seen at export parity in during the harvest (May-July) and at coastal import parity end of the season  Thus SAFEX WM< prices are seen at R1 700-R2 100/ton during the harvest and R2 250-R2 450/ton at the end of the season  YM prices are expected to be around R100-R300/ton lower than that of WM Price Expectation – local maize

23 5. OUTLOOK 2012/12 International Maize Prices are expected to drop $40-$50/ton in the Northern Hemisphere’s new season, due to increased plantings. The harvest kicks off in September. Prices should remain high (around $250-00/ton) until then. Price Expectation - International market

24 THANK YOU QUESTIONS/ REMARKS ?

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