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INPUT AND PRODUCTION OVERVIEW
As with seed, the increasing trend in fertiliser costs per hectare can be seen clearly for the
different regions.
Budgeted income and production cost figures for maize (2022/2023 production season)
With the 2022/2023 season approaching, it is again time to make some calculations. The analysis of
gross margins is a common and popular way of comparing the relative profitability of grains on a farm.
This section provides a guideline in terms of the profitability of maize versus sunflower and soybeans.
The responsibility still lies with each producer to do his own gross margin calculations because pro-
duction costs radically differ from neighbour to neighbour. This is due to each grain producer's own
unique system, the type of farming unit and the production practices.
KEY POINTS FOR THE 2022/2023 SEASON
Expensive inputs:
In South Africa the focus is currently on fertiliser and energy prices (especially
fuel prices) due to the large effect these two factors have on input costs. The upcoming season is
one in which there are a lot of red lights. Concerns are expressed about local fertiliser prices, which
have steadily increased since October 2021 until they reached record levels mid-2022. However,
there is reason for this concern as fertiliser costs account for approximately 30% to 35% of a maize
producer's variable production costs. If the average increase in fertiliser prices
according to an N, P, K ratio is compared from August 2021 to August 2022,
fertiliser prices increased by a drastic 57%. Other challenges that
grain producers are faced with include that exceptional increases
are experienced in the price of glyphosate, which is grain
producers' main means of managing weed control.
Good commodity prices:
The Safex futures contract price
for the various commodities can be crowned ‘heroes’
when looking at the profitability of the upcoming season.
The local grain and oilseed market is strongly supported
by the international market.
Weather predictions:
With a view to the 2022/2023
production season, it is important to note what weather
forecasters predict in terms of rain for the upcoming
season. Weather forecasters are optimistic about the
upcoming season after it was announced that a La Niña
pattern is strengthening, which means the typical weather
conditions would be higher rainfall for southern Africa, and
drought for East Africa and South America. Therefore, extreme
weather events could mean excessive rains in southern Africa,
whereas other regions would remain dry. This remains a concern for us,
as South Africa experienced episodes of excessive rains at the start of the 2021/2022 summer
season, which proved disastrous for grain and oilseed plantings in some areas.
COMPILATION OF BUDGETS
Establishing production budgets prior to planting crops is becoming increasingly necessary and
should not be taken lightly when making production decisions. No one can accurately predict the future
with all its risks and uncertainties, and the budgets are compiled based on some forecasts, historical
data, assumptions and experience. Considering this, producers as budget users should be aware that
budgets, as well as the assumptions that they are based on, are constantly subject to change.
The cost structure of the budgets consists of variable and fixed costs. If you do not use certain variable
costs, you can deduct them from the total variable costs. Although fixed costs vary dramatically from
producer to producer, an x amount is provided to calculate an estimated total production cost.
Forecasting the commodity price for the coming year is extremely difficult. The Safex futures contract
price used in the calculations is as follows:
Maize for delivery in July 2023 = R4 100/ton
Sunflower for delivery in May 2023 = R10 000/ton
Soybeans for delivery in May 2023 = R8 500/ton
The 2023 futures prices were determined by calculating the average price since the beginning of
trading for that particular contract month. A producer price was calculated on the basis of the loca-
tion differential, handling costs and marketing commission.
OF RED LIGHTS
ONE IN WHICH
season
are a lot
IS
THERE
THE UPCOMING