Product information
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MONEYMATTERSANDMARKETING
Nampo 2014
Efficiency is key to
producer prosperity
–StandardBank
S
tandardBankbelieves that thenatureof farminghaschanged
irrevocably and, therefore, that sustainableprimaryproduc-
tion is onlypossiblewith a new approach.
“Some people say that a farm should be run as a business,” says
Standard Bank’s head of Agribusiness, Mr Nico Groenewald. “I’d
rather say that, while a business-like approach is essential, produc-
ers need to shift from a product to a process perspective.”
The rise in input costs is outpacing increases inproduct prices. This
isevident in theDAF’sEconomicReview forAgriculture in2012/2013,
where the terms of trade in agriculture further decreased by 1,1%,
from 0,87 in 2011/2012 to 0,86 in 2012/2013. The terms of trade indi-
cate theextent towhichproducer prices receivedbyproducers kept
pacewith theprices paid for farming requisites.
One way of countering the imbalance is to increase the volume of
product output, using economies of scale. Most producers try to
achieve this by increasing the sizeof their operations.
Groenewald says a less riskyand less costlywayof achievinghigher
output is simply tobecomemore efficient.
“You should aim to produce more with the same land, input, and
labour. Only once you have squeezed the last drop of productivity
from what you already have, should you consider extending your
energy andmoney into acquisition. Gobetter beforeyougobigger.”
Becoming more efficient is easier today than for previous genera-
tions of producers.
“Technology is advancing very quickly, giving producers more and
better operational options all the time,” says Groenewald. “This is
not just in the form of tractors and implements, but also in terms of
enhanced collection and analysis of data, enabling better decision-
making and riskmanagement.”
By making precision farming possible, technology reduces the re-
sources needed to increase production and improve products. For
instance, it enablesproducers to reduce and improve theirwater us-
age, cutting costs andpositioning them tomeet their environmental
responsibilities.
Technology also gives producers the means to reduce their con-
sumptionof electricity from thenational gridandgenerate their own
power. Again, this cuts operational costs, reduces risk, andprotects
the environment.
“All these innovations and advancements make producers more
profitablewhich, in turn, positions them to pay better wages,” says
Groenewald. “There is a tendency to think that technology replaces
employees. In fact, it provides the impetus for improving workers’
skills. No producer would put millions of rands worth of equipment
in thehandsof someonewhodoesnot knowhow tooperate it safely
andproductively.
“The continuous process of workers’ skills improvement that we
see as being inevitable, will deepen the agricultural resource base
in general. We also believe technology will directly assist with job
creation. Because technologymakes producersmore productive, it
triggers growth upstream, among suppliers, downstream, in terms
of beneficiation, and in logistics throughout the supply chain. This
automatically creates jobopportunities across the value chain.”
Groenewald cites the grain industry as a case in point. “Grain farm-
ing is inherently less labour intensive than some other agricultural
sectors and, because of recent good prices coupled with ongoing
improvements ingenetics, the industry can afford to take advantage
of the latest technology.
“It is likely, therefore, that the grain sector will set an example of
how taking a process-based approach – that uses themost relevant
combinationof skills and technology to increaseone’s output – ena-
bles producers to convert today’s challenges into opportunities for
growth andprofit that simplydidn’t exist in thepast.”
Groenewaldbelieves thatGrainSA’sNAMPOHarvestDay, thesouth-
ernhemisphere’s largest agricultural and tradeexhibition, is the ide-
al place for primary producers to get to grips with a process-based
approach. “All the latest technologies can be examined first hand.
Further to this, producersarehappy toshare their experienceof inte-
grating technology and their people intomuchmore effectiveways
ofmaking farming sustainable.”
RUTHMOMBERG,
for StandardBank
NicoGroenewald
“
Today’s criteria for
sustainable farming include
riskmanagement, precision
farming, workforce training
and integration up- and
downstream
“
