Agri News

Grain South Africa
Press release

Grain SA and Standard Bank address crisis in grain industry

Grain SA and the Agricultural Division of Standard Bank have had penetrating talks about the current crisis in the grain industry last week.

Mr Bully Botma, chairperson of Grain SA, says that the current crisis can be blamed mainly on an expected big maize surplus and the resultant low maize prices of less than R500 a ton in the producer's pocket. The average production cost per ton in the main production areas, however, will be at least twice this amount this year. For this reason, it is much cheaper physically to buy maize than to produce it yourself at the moment.

"It is expected that record yields will be achieved this season, thanks to favourable climatic conditions but also thanks to grain producers having increased their efficiency considerably over time. Producers have managed, thanks to improved production systems, such as crop rotation and fallow systems, as well as the application of the latest technologies, to a large extent to minimise their production risks and maximise their yields."

Consequent upon the discussion with Standard Bank, Grain SA wants to advise producers directly to contact the business managers of the Bank in this connection as soon as possible. The Agricultural Division of Standard Bank has also undertaken to communicate more information on its alternative financing plans to its business managers this week already.

These plans offer producers various options, which must be taken into favourable consideration when marketing the coming harvest and planting the new harvest later this year. Some aspects of these plans include, for instance, financing for the cultivation of fallow lands, payment of wages, obligations regarding leases and buying back maize. Qualifying clients' maize may serve as security, subject to specific conditions determined by the Bank. Consideration will also be given to producers' immediate cash-flow position and, where feasible, to possible bridging measures in a bid to assist producers in this connection.

Both Grain SA and Standard Bank, however, accept and agree that a blanket approach to the alternative financing options is not possible and that the financial circumstances of each producer will be evaluated and dealt with on an individual-merit basis.

"Grain SA is in the process already actively to develop a policy framework for the establishment of a renewable-fuel industry in South Africa with various state departments and other role players, such as the fuel industry. The manufacturing of renewable fuel will serve not only to stabilise and make the grain industry economically viable again but will also serve to benefit new entrants to the grain industry, rural development and the country as a whole," Mr Botma said.

4 APRIL 2005
Mr Fanie Brink, Deputy General Manager, Grain SA.
Telephone: (056) 515 2145 or 082 783 3213.
Mr Bertie Smith, Director: Agricultural Banking, Standard Bank.
Telephone: (011) 636 5412 or 083 307 5698.

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