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INPUT AND PRODUCTION OVERVIEW
Yield
Due to the uncertainty of climatic conditions, a difficult factor when compiling budgets is determin-
ing the yield of the crop for the upcoming year. When crop profitability is compared, questions arise
as to which yield scenarios should be used for each crop. In other words, if you were to harvest an
average yield of 4 t/ha for maize, what is the equal yield that you could achieve, for example, with
sunflower or soybeans in the same climate and soil? Agronomists and specialists in the industry
were consulted in determining the comparative yield scenarios of the different crops.
Input prices
Seed:
According to Grain SA’s calculations, maize seed prices for the more popular cultivars
increased by an average of 5,6% since last year, while the average of all the maize cultivars
increased by approximately 3,3%. Sunflower seed prices increased by an average of 2,5%
and soybean seed prices increased by 4,7%. An assumption made with the compilation of the
soybean budgets is that 50% of the seed had been retained by producers while the other 50%
was certified seed.
Fertiliser:
Local fertiliser prices are currently at record levels for nitrogen (N), phosphate (P)
and potassium (K). Fertiliser prices have risen sharply, especially in recent months. Different
assumptions are made when the budgets are compiled. In the case of fertiliser (the largest part
of a producer's variable costs), an average of all the fertiliser companies' price lists for N, P and
K was calculated and incorporated in the budgets.
Fuel:
When fuel costs are calculated, forecasts are determined using future rand/dollar exchange
rates and future crude oil prices (September 2022, December 2022 and June 2023). The future
price of fuel is very difficult to determine, but the expectation is that the total fuel cost per hectare
will increase by approximately 33% year-on-year.
Chemicals:
The increase in the price of chemical products depends on whether it is a herbicide,
an insecticide or a pesticide. From data received from various local companies, agrochemical
price increases seem high, but in line with other inputs. One active ingredient to keep an eye on
is glyphosate, whose price can increase at an average of 147% between the various companies.
The other products could increase by between 7% and 26% in the coming season.
No discounts
were taken into consideration when the budgets were compiled.
According to calculations, the total variable cost of maize is expected to increase on average
between ± 34% to 50% year-on-year (mostly depending on the region and time of the purchase
of inputs). This estimated increase will differ from producer to producer and from region to region
because each producer makes different purchases, has different production practices and so on.
We know that producers are price takers and that these higher input costs cannot be passed on to
consumers, and that producers must absorb price increases.
Cost structure of budgets
The cost structure of the budgets is composed of variable and fixed costs. In the budgets
variable costs are, for example, seed, fertiliser, herbicide and diesel. These costs differ as more or
less of the input is used. The fixed or overhead costs are expenses that must be incurred whether
they are produced or not. Although fixed costs differ drastically from producer to producer, an
x amount is provided for calculating an estimated total production cost. These costs must be
added to the variable costs per hectare to calculate the total production cost.