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February 2019
South Africa is well placed to take advantage of expected growth in world grain markets. But to achieve it, we will have to establish better co-operation within the value chain and between industry and government. South African producers are the most productive in the world under current circumstances, but to use the opportunities in future, important and even drastic steps have to be taken.
This is the gist of a report by representatives from the South African grain industry who attended the meeting and conference of the International Grains Council (IGC) held in London last year. The grain industry was represented by Dr Dirk Strydom (manager: Grain Economy and Marketing, Grain SA) and Mr Boikanyo Mokgatle (executive director, National Chamber of Milling). Dr Boitshoko Ntshabele from the National Department of Agriculture, Forestry and Fisheries also attended the meetings as part of the South African delegation.
In order to grasp the opportunities of the future, everyone involved in the grain industry in South Africa will have to switch from a status of crisis management to the search for opportunities, for the sake of the industry and the economy as a whole. ‘Investment in logistics is crucial, strategies focused on export markets are needed, boosting productivity with the help of research and development needs to be a priority,’ the report states.
The lessons learnt at the IGC meetings show that in countries that grow and move forward, the main driver is that governments are proactive, focused on investment and spend time and money on research and development. But the most important step is the creation and facilitation of an environment where investment and growth can take place.
In an interesting sidelight in the report, special mention is made of a presentation made at the meetings by the Australian government. The Australians have found that farms are getting bigger because smaller units are no longer profitable.
Grain market
According to the IGC’s Grain Market Report dated September 2018, the forecast for world total grains (wheat and coarse grains) production in 2018/2019 is 9 million tons higher month-on-month, at 2 072 million tons. After a difficult growing season in a number of regions, wheat production is expected to retreat by 41 million tons year-on-year, while the smallest barley harvest in six years is envisaged.
In the latest report it was stated that with projected increase in demand for food, feed and industrial uses, global total grains consumption is expected to reach a new high of 2,136 million tons (+29 million year-on-year). Increases in maize (+35 million) and sorghum (+2 million) were expected to be offset by reductions in other grains. World stocks were forecast to contract for a second season, by 64 million tons to a four-year low of 544 million, with China accounting for over half the total.
Wheat
The forecast on world wheat production was broadly in line with the average. Owing to a projected 1% decline in area and yields, total output was down by 2% year-on-year. Due to further area gains, Argentina’s crop was projected to be 31% larger than average. Despite an expected larger spring crop, USA all wheat production was expected to be unusually small following a drought across the southern plains.
The forecast for consumption is slightly lower year-on-year at 734 million tons, with higher food use offset by reduced feeding. Global stocks at the end of 2018/2019’s forecast is 2 million tons higher at 250 million tons, although this still equates to a 17 million year-on-year fall.
Maize
Global maize production is forecast at 10 million tons more than before at 1,074 million (+3%), mainly based on upgraded figures for the USA, the EU, Ukraine and Paraguay, as well as reductions for Russia and Canada. Predicted gains were linked entirely to a rebound in yields – seen averaging 5,8 t/ha (+3%), potentially the highest ever.
Led by expanding feed demand, world consumption in 2018/2019 is projected to rise by 3%, to a new high of 1,113 million tons.
Russia’s growth
In an interesting overview of the Russian grain industry, reasons for strong growth in Russia’s production and trade included:
In Kazakhstan the state gives benefits such as interest rate subsidies and tax exemptions when large private sector companies invest in grain processing – in contrast to almost the opposite being done in South Africa.
World population projections
Another interesting sidelight at the conference was a forecast on world population. According to World Bank projections, the global population is set to rise from 7,6 billion in 2018 to more than 10 billion by 2050. Altogether 35% of the world’s population is concentrated in China and India. By 2050, 54% of the people will be in Asia, 26% in Africa, 8% in South America, 7% in Europe, 4% in North America and 1% in Oceania. The largest increase will be in Africa – rising from 17% of the total world population today to 26% in 2050.
Publication: February 2019
Section: Relevant
