Agrilogics
  • These are challenging times for SA farmers, whether viewed from the perspective of rising input costs or the weather outlook. In a few weeks the 2018-2019 summer crop production season will start on a negative note, partly due to rising costs of agricultural inputs such as fertiliser and fuel.

  • Agri SA is displeased with President Cyril Ramaphosa's statement that there is “no killings of farmers" in South Africa. He said this in an interview at the United Nations in New York in response to US President, Donald Trump's controversial tweet in August. 

  • As Ben Cousins recently argued in Business Day, agriculture can be an important contributor to the creation of jobs in SA through a well-executed land reform programme. But then we need to do it right and learn from SA's history, which has a lot to offer.

  • 1. MORE CORN, FEWER BEANS
    About 3 million acres of crop production in the U.S. will shift to corn in 2019, with a 15-billion-bushel corn crop and record-setting corn production worldwide. “This big-crop phenomena is set for years, and it's not just here in the U.S.,” says Chad Hart, crop marketing specialist at Iowa State University. While the U.S. continues to be number one in corn worldwide, we will lose our number one position in soybeans to Brazil in 2019, due to tariffs. “We're going to pull back in acreage, and they're going to add, so they will be the dominant producer for the world,” says Hart. “It's a pattern that has been building for some time. The trade dispute just reinforces it.”

     
    2. MORE SPRING WHEAT
    Nearly 7 million acres will come out of soybean production in 2019. That loss will happen mainly in the Dakotas, Nebraska, and Minnesota. Some land will switch to corn, but expect a jump in spring wheat and a return to fallow in parts of the Dakotas. Overall, the USDA is projecting we'll have 1 million less acres in row-crop production. North Dakota will transform, says Hart. The state expanded in soybeans rapidly the past 10 years, but all those beans were going to China. “They could catch a train west and find that great big market. Now, that great big market is shut down,” he explains. “We're going back to what is more traditionally grown in the Great Plains after an incredible run in the soybean market.”


    3. CORN PRICES TICKING UP
    Corn prices should improve in 2019 to around $3.90 a bushel due to three years in a row of strong international demand, says Hart. “What’s driving this is the meat side of the equation. You import corn when you have something to feed. The light at the end of the tunnel is the global demand for meat.” On the domestic side, the demand for corn is not growing as fast. “Livestock producers are very efficient now,” says Hart. “I'd love for them to use a bit more corn. Same thing with ethanol plants. They're getting more efficient.” We are starting to put in a few new ethanol plants due to international demand, he says. “India is a player now for our ethanol exports. We're finding those new markets.”


    4. MORE STORAGE
    Two years ago, a pie chart of our soybean exports looked like Pac-Man, with China gobbling up everyone else. Since then, we've seen a half-billion-bushel drop to China due to retaliatory tariffs. We have found a new home for about 45% of those beans, says Hart. “Eventually, we'll find a home for almost all of them, but it takes time. Until then, it's hard for prices to move much. That's why we're seeing soybean stock levels build dramatically.” Producers are storing soybeans and waiting for a seasonal rally. “Traditionally, we do get one,” says Hart, “but I'm worried about the quality of the crop. 2018 was a slow year getting the crop out. Rain makes grain until that grain is made.”


    5. TRADING PARTNERS SHIFTING
    We've doubled sales to Mexico and the European Union in the past year, and they are now our top two soybean export markets. Number three is Argentina, which used to import zero. “When the tariffs went into place, China turned to South American and bought beans as fast as and as hard as it could,” explains Hart. “That caught the soybean crushing industry in Argentina off guard. It went out on the world market and said, ‘Who's got some cheap beans for sale?’ We did.”

     

     6. TRADE WARS GET WORSE. OR BETTER.
    Who's our customer in agriculture? The world. “Everybody on this planet is our potential customer,” says Hart. “If you're going to feed them, you've got to trade with them. Half of our soybean crop and 21% of our corn leaves the country. The tariff’s impact will overhang the market until we get an agreement.” There is good news. “Just as quickly as we got into this mess, it's possible to get out again,” he says. “That’s what farmers are waiting on."


    7. COSTS FLAT, PROFITS FLAT
    What do we expect on the production cost side compared with 2018? Fuel and fertilizer prices will be a little higher, says Hart, but cash rents will be down a little. “In the end, the 2018 number of $3.60 production costs for corn is not a bad number to use for 2019. That’s positive news. For soybeans, it is more like $9.50.” As for profits, “It looks like 2019 will be a replay of 2018, which was a replay of 2017, which was a replay of 2016, which was a replay of 2015,” says Hart.     

    8. MORE MEAT
    Livestock production has been growing in the U.S. for five years and won’t stop this year. “We expect continued expansion,” says livestock economist Lee Schulz, Iowa State University. He predicts record production of beef in 2019. Beef exports are the primary reason why prices are as strong as they are, he says. We export almost 12% of our beef and about 23% of our pork on a carcass weight basis.


    Schulz predicts hog prices to be about $7/cwt higher than 2018. “We’re at record hog inventory, so it's pretty remarkable that prices are where they are,” he says. “That is a bullish sign for the hog industry.” He is projecting about $5 above breakeven for 2019 compared with $5 below breakeven in 2018. “Some producers lost a significant amount of money in 2018, but it won’t alter many expansion plans already in place.” There's been incredible investment in coordinated ownership throughout the supply chain, he explains. The pork industry has increased slaughter capacity almost 10% over the last four years. “They’re going to keep investing in this system. This is a well-oiled machine.” The demand for hog manure as fertilizer and the desire to diversify row-crop operations has helped fuel the expansion, says Schulz.


    Tariffs are troublesome, but not a game changer, he says. “We're picking fights with the major market for pork variety meats – China. South Korea is our best friend right now. We have increasing exports to that country.” The diverse portfolio of markets and our competitive cost of production have helped insulate the pork industry from a much larger impact from the retaliatory tariffs, he says. “It's difficult for competitors to overcome our cost-of-production advantage. On the world market, we're going to remain very competitive even with some of these tariff rates that have been invoked.”

    As for sheep and lamb, 2019 looks to be a rebound from the much softer prices we saw in 2018, says Schulz.


    9. DAIRY MARKETS IMPROVE
    Because they can’t get worse, says Schulz. “Prices can't go much lower, so we're likely to see an improvement in 2019. Unfortunately, a 5% gain does not offset the large losses we've seen over the last several years. The dairy industry has been in tremendously tough times.”

    10. MORE FARMERS SELLING ASSETS, RETIRING, FILING BANKRUPTCY
    Charles Brown, farm management specialist with Iowa State University, gives this example of a crop farmer he has worked with for four years: In 2015, Joe had a net worth of $2.6 million and $272,000 in working capital. “Any lender would have liked to have Joe as a client,” says Brown. By the end of 2017, Joe’s working capital had dropped to $56,000; today, it is zero. “This is common for many farmers. It’s not a net worth problem,” says Brown. “Working capital is disappearing.” Many farmers are refinancing their debt to lengthen out loans and to improve cash flow, but Joe decided to sell assets and retire.


    Sullivan Auctioneers in Hamilton, Illinois, has 76 farm auctions the last two months of 2018. “It’s not as much fun farming today as it was in 2012,” says Brown. “For some farmers, it’s better to sell out, take the money, cash-rent the farm out, and look forward to winter.”

    If you have to improve your cash flow and you don’t have the ability to refinance, sell assets. Check the back of your machine shed, make a list of nonproductive assets, and sell those first.

    One key tip: Before you sell assets, contact your accountant about the tax consequences. Make arrangements to withhold enough money to pay your taxes. “Don’t be stuck giving all the proceeds to the lender with no money left to pay the taxes,” says Brown. If you are going to need to file Chapter 7 bankruptcy, do not sell the assets before you take the bankruptcy. “If you sell it before, you are going to incur the income tax liability. If you sell them in the bankruptcy estate, you may pay little or no taxes on the sale of those assets.”

  • Many people are worried about the uncertainty surrounding the discussion about land reform policy in SA. However, some allow the fear to get ahead of themselves. I have heard folks saying “farmers stopped planting” in SA, possibly due to uncertainty caused by land reform.

  • In the spirit of our meat guide, we at The New Food Economy are here to share insights that will help you better understand—and savor—the chocolate you spend money and calories on.

  • Migration, both to urban areas and abroad, risks depriving African countries of the young people they need to modernize their agriculture sectors, which are key to achieving growth and prosperity, FAO Director-General José Graziano da Silva, said today.

  • A surge of South Africans seeking protection in Australia have been disappointed as no visas have yet been approved.  

    Rejection letters to the families applying for protection and humanitarian visas have said they are not refugees because the violence in South Africa is widespread, random and opportunistic. 'The risk of murder and serious physical/sexual assaults is one faced by the population of the country generally and not by the applicants personally,' said the letter, quoted in The Australian newspaper.

     

    South Africa's minority white farmers say there has been a concerted campaign to drive them off their land, and violent murders - some involving horrific rape and torture - have been forcing them to leave. Liberal National Party member Savanna Labuschagne, herself a migrant from South Africa, said some people had their skin ironed off and holes drilled through their knee caps.

     

    'An elderly couple had boiling water poured down their throats. I could go on for days. How do we help our people?' she told The Australian. Ms Labuschagne said both blacks and whites had suffered from the South African government's 'corruption'.

    She also shared some of the racial hatred that has been directed at the white minority by black South Africans on Facebook.

    One black South African man had posted to social media that it was his duty and the duty of others to 'eliminate every white person in South Africa'. 

     'The only way to end racism and the oppression of my people is to destroy the white race. This must be done as quickly as possible,' his post read.

    Ms Labuschagne along with fellow LNP member Patti Maher, also a South African migrant, said they were feeling frustrated as South Africans were prevented from receiving assistance by the bureaucracy.  

     South Africa has been divided by deep racial grievances since the apartheid system of racial segregation ended in 1994, and this has been worsened by an economic gulf between rich and poor.

     White people, who are less than 9 percent of the population, own most of the farmland in South Africa.

    They are vastly outnumbered by black people who make up 80 per cent of the country's 57.7 million population, but who have the least amount of land ownership.

    A plea to stop the racist killing of whites in South Africa, pictured on a ute in 2017 in Brisbane. South Africa has a high crime rate however many of the attacks on white farmers have included brutal tortures that suggest racial vitriol was part of the violence

    South Africa's ruling party the African National Congress, led by Cyril Ramaphosa, plans to take land without compensation from minority white farmers, who own most of the farmland, and redistribute it to black South Africans.

     South Africa's parliament voted in 2018 to amend the constitution to allow land seizures, and has issued a proposed land expropriation bill on which the public comment period is open until 29 February, Business Tech reported.

     In March 2018, Mr Dutton suggested white farmers were being persecuted and deserved special attention under Australia's humanitarian program.

     He instructed his department to consider claims from persecuted South African farmers, alongside people from Asia, the Middle East and other African countries.

     Liberal politicians pushed for up to 10,000 South Africans to come to Australia.

     South Africans responded with a surge of 220 claims for humanitarian visas made in the last two years, almost triple the previous rate.

     South Africans had previously made just 350 applications for humanitarian visas from 2008 to 2010, an average of 35 per year. 

     However most of the visa applications have so far been denied leaving South Africans disappointed.

     Of the 570 humanitarian visa applications since 2008, only 41 were granted and 340 are still to be finalised, The Australian reported.

     Protection visa applications have also failed with 97 rejected in the past three months.

     Of 33 protection visa applications lodged since November, none have been approved.

     A Home Affairs spokesperson told Daily Mail Australia on Monday that anyone who makes a claim for protection will be considered under the humanitarian program, and that there are many other visas available to South Africans such as the skilled, temporary and family visas.

     'Almost 80,000 visas have been granted to South Africans since July 2018, allowing them to come to Australia,' the spokesperson said.

     'South Africa is the 9th largest source country of permanent migrants in Australia.'

     To be considered a refugee, a person must have a well-founded fear they will be seriously harmed because of their race, religion, nationality, political opinion or membership of a social group, the Home Affairs Department says on its website.

     The serious harm can be to their life and liberty, or the denial of a capacity to earn a livelihood to survive.

     Australia's Refugee Review Tribunal wrote in 2011 that despite concerns among white South Africans that they were being targeted for race, most evidence pointed to other motivations such as financial gain.

     Crime is widespread in South Africa where 14 million people live in extreme poverty, and farmers are isolated and thus can be seen as easy targets.

     In 2018, South Africa suffered almost 20,000 murders with most of the victims being black victims of black violence, while only 62 were farm murders - not all of them white, according to government figures quoted by investigative journalist James Pogue writing in Harper's Magazine. 

     Mr Pogue wrote that the brutality of the torture inflicted on some of the white victims does indicate a level of racial vitriol in the attacks.

     In May last year, South African activist Annette Kennealy, 51, who spoke out against attacks on white farmers was found stabbed and beaten to death on her own farm in Limpopo province.

     Kennealy was a public supporter of the white Afrikaner community and in her last Facebook post, she shared a link alleging that 10 farm attacks, including one murder, had been reported in just four days in 2019.

     She also routinely shared links and stories relating to politics in South Africa, and the government's plans to start expropriating farms from white land-owners.

     The South African Human Rights Commission has said black farmers have given evidence that farm safety isn't the preserve of any one racial group, although it does not dispute that there are attacks motivated by racial hatred.

  • We  will never forget how shocked my friends were when I boldly announced my intention to study Agricultural Economics at Stellenbosch University.

  • For decades, agriculture has been associated with the production of essential food crops. At present, agriculture above and beyond farming includes forestry, dairy, fruit cultivation, poultry, bee keeping, mushroom, arbitrary, etc. Today, processing, marketing, and distribution of crops and livestock products etc. are all acknowledged as part of current agriculture.Thus, agriculture could be referred to as the production, processing, promotion and distribution agricultural products.

  • Agri SA strongly condemns the continued violence that the farming community and fellow South Africans face daily. The Minister of Police, Bheki Cele announced the latest national crime statistics in parliament this morning. It is worrying that 62 farm murders occurred during 2017/2018. It is 15 murders more than what was announced in parliament earlier this year.  

  • The last time the Farm Aid hotline rang like this, Ronald Reagan was president and Willie Nelson was playing a huge concert to raise money for hundreds of thousands of farmers across the country who were facing financial ruin. By the autumn of 1985, America’s “farm crisis” was suddenly a thing.

  • The last time white Zimbabwean farmer Rob Smart left his land, it was at gunpoint, forced out in June by riot police armed with teargas and AK-47 assault rifles.

  • White farmers in Zimbabwe who were evicted from their properties years ago have been experiencing a drop in food production, and their hope to get government financial help to compensate any losses caused by land seizures is slowly dimming, according to some activists.

  • Colonialism brought large-scale farming to Africa, promising modernisation and jobs – but often dispossessing people and exploiting workers. Now, after several decades of independence, and with investor interest growing, African governments are once again promoting large plantations and estates. But the new corporate interest in African agriculture has been criticised as a “land grab(link is external)”.

  • Altria Group Inc., the U.S. maker of Marlboro cigarettes, made a $1.8 billion investment in Cronos Group Inc. on Friday amid pressure to find new growth avenues as U.S. smoking rates decline.

  • As the year draws to a close with poor prospects of rains, Namibian sheep farmers in the south have all their hopes pinned on a revised and improved sheep exporting scheme early next year.

  • Ten farmers have served notice they will claim R1.9 billion, and there are thousands more where they came from.
    A report in Afrikaans weekly Rapport today reveals that at least 10 farmers plan to put in a compensation claim for nearly R2 billion against the South African taxpayer over their losses in Zimbabwe.

  • The failure of the National Energy Regulator of South Africa (Nersa) to register small-scale solar photovoltaic installations in Eskom electricity distribution areas is costing farmers dearly, says Ig du Plessis, director of power consultancy Sonfin.

  • Experts say there’s no reason to fear eating meat now, and there may even be a positive spinoff for the consumer.

Agrilogics

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