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A Portrayal of Corn Farming in South Africaqrcode

Sep. 7, 2017

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Sep. 7, 2017
Agriculture in South Africa is largely characterized by its technologically well-equipped and well-maintained commercial farms, while a large number of farmers exist in severely poor rural areas endure primarily as small-scale subsistence farmers. The size of the country along with its various climatic zones results in highly diverse agricultural production capabilities with intensive production of important field and food crops, livestock and wool production.

The agricultural sector contributed to only 2.4% of the national GDP in 2015, yet remains one of the major employment sectors in the country. According to official sources, 897,000 South Africans are employed in agriculture, while unofficial sources claim this figure is between 8 and 9 mil., including those that are either directly or indirectly dependent on agriculture to make their living. This figure, in relation to the 15.8 mil. officially employed in the country emphasizes the importance of agriculture within the economy, as well as the society of South Africa.

The excellent infrastructure throughout South Africa allows commercial farmers to easily export a large number of crops and agricultural goods to various important markets, such as the European Union where high production standards are expected and controlled. The crops and agriculture goods typically exported are citrus, grapes, vine, sugar, pome fruits, stone fruits and corn, among others.

Corn production is essential for the South African economy; it is the “bread and butter” of thousands of commercial farmers and hundreds of thousands of small-scale subsistence farmers and their families throughout the country. Furthermore, corn serves as a staple food within the country and feeds the current population of 55 million; in addition to directly feeding the nation’s human population, it also contributes heavily to feeding livestock, ultimately serving human food demands. Figure 1 shows that South Africa predominantly utilizes corn in the manufacturing of animal feed (39.8%) and food products intended for human consumption (37.4%). The importance of corn extends beyond feeding the people of South Africa by substantially contributing to the economy as 17.9% of the total corn production is exported to various Southern African countries. The remaining 4.8% of corn is used in the production of starch and glucose.
Figure 2 indicates the stability of the cultivated corn area of corn (white vs. yellow) over the last 5 years, along with its annual production and average annual yields. Through 2015, the cultivated area of corn stabilized around 2.7 mil. ha, while declining heavily in 2016 (-27% from the previous year). This drop was a result of extreme drought conditions in the main corn producing areas, i.e., Free State and North West Province, causing extreme temperatures.
Corn production peaked in 2014, an exemplary year with favorable weather conditions leading to above-average corn yields; however, drought conditions in the following season led to rapid decline of corn production, negatively impacting the agro-industry.
Another important aspect highlighted in Figure 2 is the diminishing gap between white and yellow corn by cultivated area and production. In the past, an average of 60% of the total corn area was assigned to white corn varieties; since 2013, however, this percentage has been continuously declining and was around 52% in 2016. The high feed demand from the livestock industry is one significant reason behind this change, but another factor is the higher and more stable yields in yellow corn.

Despite having a cultivated corn area of 2.65 mil. in 2015, the drought and extreme temperatures dramatically impacted yields, forcing the net-exporting country to import corn in order to meet its domestic demand. These two seasons were characterized by tough times for farmers and the agro-industry in general, as well as for the population as a whole due to decreased corn production resulting in high domestic food prices. On a positive note, however, the agriculture sector is currently in a state of recovery, yet obstacles such as water shortage still needs to be managed. During recent drought seasons, dam levels also suffered due to the rain shortage, but the current season has had plentiful rain and is allowing a move towards recovery. It is expected that the current suitable weather conditions will turn South Africa back into a net-exporter.

When considering commercial farms where corn is a key crop, it is important to pay attention to the size of the farms and the area of corn farmers are planting on average. The Kleffmann Group has been conducting its farmer-based panel surveys in South Africa since 2011, while interviewing an average of 500–600 corn farmers annually. Figure 3 displays the aggregated results of all surveys to highlight the average farm size vs. the average corn crop size. In general, it can be concluded that the majority of corn farmers plant between 500 and 2,500 ha of corn, while the farm size in 40% of these cases is between 1,000 and 2,500 ha in total.
The average commercial farmer in South Africa is between 41 and 50 years of age; in general, 60% of the South African corn farmers are under 50 years of age, showing a strong group of young and middle- aged farmers carrying South African corn production into the future. Regarding the legal status of surveyed farms, more than half of the commercial farms are privately owned, while the remaining are divided between “Trust company” and “Limited Company (Co. Ltd.)”.

Corn farming in South Africa is very traditional, thus the majority of farmers have been passing their operations on from one generation to the next. This is an important aspect to address, when considering the agricultural education level of corn producers, as an average of 60% of the surveyed farmers mentioned having no agricultural training, while the majority of the remaining 40% have an agricultural diploma or an agriculturally-focused academic degree. 

Corn in South Africa is a commercialized crop in which multinational breeders play a significant role due to farmers’ preference for certified seed varieties. Furthermore, GMO utilization in South Africa is substantial due to the dependence of corn production on GM technology. The survey results clearly state that on average, BT+RR are part of an increasing trend (40% share), while the area with BT+LL has been increasing at a slower pace since its introduction with a share close to 1%. Overall 60% of the cultivated corn in South Africa are identified as BT-varieties. The shares of GM technology by area are summarized in Figure 4, which shows that 28% on average are assigned to ‘not identified’ technology. Here, it is important to understand that during surveying, farmers sometimes do not recall the exact names of the seed varieties they used, but only the breeder or seed company producing the seed; in this case, these varieties are assigned to ‘not identified’ technology. When looking deeper into this category, it can easily be determined that the majority of the breeder or seed companies associated with these varieties are multinational companies; thus, 28% may appear high at first glance. However, being aware that a sizable portion of this percentage is associated with multinationals emphasizes the significant role and contribution of GM technology in South African corn production. Hence the GM technology adoption will be higher than the results presented in Figure 4.

Another point of interest regarding corn production in South Africa, is that despite the typically large size of commercial farms, most farmers are only cultivating 2-3 varieties in a season. This further implicates the high level of trust in technology and the available seed brands in the country.

From the farmer’s perspective, the average input cost for seeds is approximately $100/ha (farmer-level) in South Africa, with an average seed rate of 0.4 units/ha (80k) or 10 kg/ha.

The total commercial seed market in Africa/Middle-East (AME) is estimated by Kleffmanns’ AgriGlobe division to be approximately 2.7 billion US$ (ex-factory level), with the greatest share definitively being assigned to corn seed. The trend of the AME seed market, along with the corn seed market in South Africa and in other AME countries is depicted in Figure 5. The total seed market for commercialized seed in AME has been increasing since 2011, but is doing so at a relatively slow pace, while the share of corn seed by value remained stable over the 5 year period. The South African Corn Seed market during the period from 2011-2015 was consistently around 200 mil US$ (ex-factory level).
Similar to the South African seed industry, the crop protection industry is also contributing substantially to the agro-industry as a result of heavy presence from the multinational, as well as international and local generic producers. Regarding usage of crop protection products, the majority of corn varieties utilized in the country are equipped with glyphosate tolerant traits, leading to widespread usage of herbicides, glyphosate is essential for farmers. While glyphosate is important for combating weeds in corn production, selective herbicides are becoming increasingly important as a result of weeds clearly showing resistance to glyphosate products; thus, the availability of other active ingredients are also vital to farmers. Ultimately, a good mix of agrochemicals is necessary for farmers to protect their plants.

The value of the crop protection market for the AME region has been increasing at a slower pace however. Figure 6 presents the trend of the crop protection market in the AME region, along with the trend for South Africa (ZA) from 2011–2015 at the ex-factory level. The pie charts along the market trends in Figure 6 show the market share of corn. It is clearly visible that the value of the crop protection market for AME, as well as for South Africa, increased through 2014 and then dropped in 2015. This drop is primarily related to the drought experienced in Southern African countries, leading to a decline in crop protection product usage.
Within the context of AME as a whole, South Africa is a relatively large contributor to the crop protection market. According to Kleffmanns’ amis®AgriGlobe® database, one-fifth of the continent’s crop protection market value is coming from South Africa. The corn market share in South Africa is significantly higher, as a result of its importance for the country, than for the total AME region. Over the period of 2011 until 2015 the corn crop protection market share for South Africa has been usually between 20 to 25% while it remained below 10% for the AME region. When looking at the different crop protection segments, herbicides in AME, as well as in South Africa, are the dominant market followed by insecticides and fungicides, respectively. For South African agriculture, specifically for corn production, herbicides are the main crop protection segment.

Farmers in South Africa invest around $35/ha (farmer-level, excl. VAT) on average in herbicide products to protect their corn; for fungicides, this amount increases (in years with good growing conditions) to above $40/ha. Insecticide usage in South African corn production is not as prevalent due to the widespread usage of GM technology. While the usage of fungicides is limited to specific regions of the country and is relatively small with respect to the treated area, herbicides are dominant throughout the country.

Finally, to produce corn and to ensure that reliable seeds have been obtained, as well as to properly protect their crop, a commercial farmer in South Africa needs to invest between $150 and $200/ha, depending on their usage of fungicides.

Although the capabilities for South Africa corn are somewhat limited in comparison to larger corn producing countries, its affordability and the role corn plays in the economy and society make it a “profitable” crop. Overall corn farming will remain for South Africa essential and of high potential for all players.

Tasleem Ahmed

Regional Manager AME (Africa/Middle-East) from Kleffmann

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