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Februarie 2019
60
GROWING
world grain market
can benefit local industry
S
outh 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 pro-
ducers are the most productive in the world under current circum-
stances, 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 Af-
rican 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 re-
search and development. But the most important step is the crea-
tion 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) pro-
duction 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 de-
mand for food, feed and industrial uses, global total grains consump-
tion 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 mil-
lion) 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 be-
fore at 1,074 million (+3%), mainly based on upgraded figures for the
USA, the EU, Ukraine and Paraguay, as well as reductions for Rus-
sia 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:
Transformation to market-driven economy
Freedom of production
Freedom of trade
Possession of private land
Reasonable regulations
Low state interference
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.
RELEVANT
MARIËTTA CRONJÉ,
SA Graan/Grain
contributor
“
“
...in countries that
grow and move forward,
the main driver is
development.