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The recent weather conditions that prevailed in the winter grain regions and current conditions in the summer grain regions have a significant economic impact on grain producers. The winter grain production season faced several challenges with excessive rain in certain areas resulting in losses in yields and placing financial pressure on producers in affected areas.
In stark contrast to the winter grain production regions, the summer grain production regions are currently experiencing major challenges with drought conditions. The extreme heat and dry conditions caused the harvest to deteriorate much faster than initially expected. "We have seen large areas where the damage is already irreversible," stated Tobias Doyer, Grain SA CEO. "We have seen irrigated maize which is also experiencing challenges due to load shedding as well as the heat conditions.
These challenges are experienced at a time where margins on crops such as maize are already low due to international supplies and international price pressure. (https://sagrainmag.co.za/2023/01/25/winsgewendheid-barometers/). This makes the recovery period of individual producers very difficult in challenging production conditions. Grain SA is very concerned about the impact of the drought and market conditions on grain producers. International competitors enjoy the benefits of subsidized, affordable comprehensive insurance, providing them with a competitive advantage. Similar local systems could have substantially supported South African producers given the challenging production conditions.
Grain SA continuously monitors the production conditions and publishes a qualitative production overview (https://bit.ly/3SPjSGs). "The National Crop Estimate Committee's first estimate, which will be published at the end of February, will be important to evaluate the national situation, but the reality is that there are currently several individual producers who are facing significant losses due to the drought and markets", according to Derek Mathews chairman of Grain SA and producer in one of the areas experiencing significant challenges.
Grain SA sympathizes with grain producers on the current conditions and the damage being done to their crops. In addition, Grain SA will engage with the necessary role players and further suggest that producers who have already experienced significant challenges, contact their input financiers at an early stage to ensure that necessary changes can be made in time.