Bumper year ahead for agriculture,

...but farmers still need to plan for tough times

JOHANNESBURG - Favourable weather conditions and more robust international demand is expected to set up the South African agricultural industry for further growth, but producers must use these good times to plan for the future, says an analyst.

The industry expanded by 13.1 percent during 2020, while eight other industries, such as mining, trade and finance, suffered setbacks in economic activity.

Notably, the country experienced a record citrus crop with growth up 35 percent from 2019. According to the Citrus Growers Association, the industry exported 146 million cartons which, if lined up, could nearly cover the earth's circumference, Fin24 previously reported.

"We have good maize and oilseed crops in the ground with excellent prices," said Dawie Maree, head of information and marketing at FNB Agriculture.

He explained that it was not common to have a large crop and good prices in one year. Usually, prices are driven down when there is sufficient market supply.

Commercial maize in 2019/20 increased by 36 percent year-on-year, to 15.3 million tons. The potential maize crop for the 2020/21 production season is expected to expand to more than 16 million tons.

Maree said producers might have room to settle debt and even consider expansion, given a better agricultural season.

He explained that producers needed to use the "good times" to work on good production and financial management for the future.

This included working on succession planning for when farmers retire and investing in productive assets.

Farmers should also consider diversification - to move operations beyond farming and into processing. Investing in pack houses could be a starting point, an extreme step would be to move out of agriculture and into manufacturing.

Maree emphasised that farmers needed to consider measures to ensure survival for tough times. – FIN24.