2nd Aug 2023
SA Canegrowers welcomed the disbursement of R60 million in transformation intervention funding to black and small-scale canegrowers through the South African Sugar Association, said chairman of SA Canegrowers, Andrew Russell.
This funding is critical as the industry continues to face the crisis in the milling sector and growers try to recover from the financial shocks of the last season, he continued.
The industry has budgeted R125 million for black and small-scale growers delivering less than 1,800 tons of cane in the 2023/2024 season. R60 million will be paid out at the end of July 2023, together with the payments for cane delivered in June 2023. A further R50 million will be paid out in November 2023, with the balance to be paid out in January 2024.
R51 million has also been budgeted for black growers and joint ventures delivering more than 1,800 tons of cane. These are predominantly land reform growers.
“SA Canegrowers is committed to the survival of the industry and to supporting the industry’s most vulnerable small-scale and black growers. We will continue to work with our industry partners through the South African Sugar Association to protect the one million livelihoods the industry supports,” said Russell.
Small-scale growers were particularly hard hit by the decisions of the Business Rescue Practitioners at the Tongaat Hulett and Gledhow sugar mills to default on financial obligations to the industry totalling R1,5 billion. This reduced the final RV price of sugar for the season by more than R400 per ton. The legal action brought in this regard is ongoing.
Notwithstanding the unresolved matter of the 2022/2023 financial obligations, the business rescue processes at both mills appear to be progressing. Last week, the business rescue practitioners at Tongaat Hulett announced the selection of a strategic equity partner to help save the milling giant’s South African operations. While SA Canegrowers has welcomed this announcement, it remains to be seen what the final arrangements for Tongaat Hulett will be, and whether these can save the sugarcane operations that are so vital to local economies on the North Coast of KwaZulu-Natal.
Russell said that, in light of these challenges, the funding disbursed this month is vital to sustain growers in the interim. It will provide critical support in an environment marked by rising debt servicing costs and high input costs. This is especially important for small-scale growers, who face the greatest challenge in accessing operating and capital finance.
Credit Original Source: KZN Industrial & Business News (kznindustrialnews.co.za)
Despite the drop in South Africa’s diesel price in April, macadamia farmers say the cost of fuel to run generators during Eskom’s rolling blackouts is crippling operations.
Against the backdrop of a bumper harvest, hundreds of farmers who expected to cash in on the growing popularity of macadamia nuts and had planted vast acreages of macadamia trees since 2018 – mainly in KwaZulu-Natal – are under the cosh.
Industry body SAMAC has revised its 2023 crop estimations to 81 556 tons, which is 18.5% higher than the 2022 crop of 68 840 tons. And production has increased by 12 716 tons this year compared with the previous harvest.
But these numbers come at a time when the world is over-supplied and nut prices are at rock-bottom.
Power crisis
The government’s failure to avert the ongoing collapse of the country’s power utility and to introduce an integrated power supply programme that includes wind and solar has not only flatlined economic growth, but the production of food, adequate for domestic and export demand, is under severe threat.
Because of the electricity crisis, South Africa is now deemed to have entered a technical recession, as economic activity contracted by 1.7% in the first quarter for this year, while Bloomberg analysts peg growth at just 0.2% for the remainder of the year.
William Davidson, who farms macadamias near Empangeni in Northern Zululand, said the Eskom crisis coupled with the diesel price increase from about R17 a litre in February 2022 to about R21 a litre a year later has seen the cost of maintaining the integrity of his macadamia crop rise beyond sustainable levels.
“Stage 6 load shedding means our power is off for ten hours a day, on week days and weekends.”
His generator, he added, consumed eight litres an hour at R21 per litre an hour, totalling R168 an hour or R1 680 per day. Service costs are at R4 200 every 250 hours, “which we are doing roughly every 30 days”.
“Three years ago, it took six to eight months before servicing was required. It’s crazy,” he said.
The biggest issue for macadamia farmers was the power required to keep air blowing through the bins in which nuts were stored and dried. While it might be acceptable to have the fans off for 10 to 20 minutes at a time, to shut them off for anything up to four hours or more was problematic.
Installing solar energy would require an exponential capital investment to handle the power required to get the fans up and running for each bin. “Most farmers have between 15 and 20 drying bins, with fans dedicated to each bin. One fan requires about 55kw to run but at least three times that amount of energy is required to start it up. To invest capex now and install solar power when the global macadamia market has crashed is not the best thing to do,” he said.
The cost of inputs like fertiliser had also increased exponentially, particularly in 2022, and while the price had dropped slightly, it was still very expensive.
Further, as banks are using interest rate hikes to target high inflation in the face of an international cost of living crisis, the cost of borrowing money was exponentially higher that before the pandemic, Davidson added.
“Banks are cranking up their rates as the Reserve Bank increases its rates, so the cost of borrowing money is huge right now.”
Banking support
Abrie Rautenbach, head of AgriBusiness at the Absa Group agreed the power crisis and its impact on farming was of concern. “This comes as large parts of the sector are already under pressure due to increasing input costs. Producers therefore have limited capacity to invest in alternative energy.”
But, he added, the bank was well aware of the cyclical nature of agriculture and there was a good understanding at Absa that farmers were going through a difficult time. “As such we are seeing some clients who are unable to meet debt repayments and/or carrying over debt from the previous season. Based on the track record and risk profile of each of these producers, the bank will provide bridging finance or restructure their debt,” Rautenbach said.
Nico Groenewald who is the head of AgriBusiness at Standard Bank agreed that banks could not apply a blanket approach to their clients.
“The macadamia industry has been experiencing difficulties particularly around the commodity price and carryover stock levels. The impact thereof is finding its way in different layers of intensity into the industry depending on where in the value chain a client finds himself. Having said that, the unique composition of each client’s financial standing, size of his macadamia operation within his broader farming operation and also the age composition of the mac trees, among other result in each business operation’s experience of the market pressures being different.”
Groenewald added that large-scale expansion in such conditions would therefore be difficult to fund with large portions of debt. The focus should now be on cost containment and where possible balance sheet and debt restructuring, he said.
He warned farmers to increase their focus on financial planning, cashflow management and consultation with financiers and suppliers to reach solutions before the impact of the adverse conditions got to a point where they could not recover.
Agriculture information and marketing head at First National Bank Dawie Maree urged farmers who were in trouble to speak to their bankers sooner rather than later. He said the bank was more concerned about the sustainability of processors rather than that of macadamia farmers.
“When processors need to run back-up generators at huge cost to process the macs, that is where there will be impact,” he said.
All three pointed to “clever funding solutions” around alternative energy solutions provided by financiers. They said farmers and processors were making use of these solutions on an ever-growing scale.
Price crash
Karen Carlton-Shields, who with her husband Robert farms macadamias on the KwaZulu-Natal South Coast, said they were “battening down the hatches”.
“We saw the power crisis coming so started investing in alternative power about five years ago. That means we can manage the load shedding, but the prices are so low for our crop, and because of the glut in the market, processors are only prepared to take nuts of very low unsound kernel. We are in for very, very tough times,” she said.
She urged the industry to develop the domestic market as a back-up, saying South Africans seldom had a chance to experience the taste of the high-quality nuts produced by local growers, as at least 98% of the crop was exported.
“Another problem is because many will become desperate to sell their crop, the possibility exists for dumping of poor-quality product on the South African market and that is not good for the industry at all,” she said.
In 2022 farmers were realising on average about R190 a kilogram for kernel and R188 per kg in 2121. This season they will be lucky if they get R160 a kg.
Allen Duncan, chief executive at the Green Farms Nut Company, said most “destinations” were well stocked with product, and retail sales had yet to adjust to the significant drop in kernel prices since 2022. While demand for nut-in-shell from China was “buoyant”, the quality specs were high and prices low, he added.
Russia’s war
While Carlton-Shields said she believed questionable strategies used by some marketers post the pandemic were partly responsible for the world glut and rock-bottom prices, Duncan put the blame for the crisis squarely at the feet of Russia’s invasion of Ukraine. “The Ukraine issue has affected the whole world and the man in the street is dealing with higher interest rates, high energy costs, and high inflation resulting in less discretional spending money available. Most tree nut types are seeing lower prices and the demand for cheaper snacking options has increased.”
The collapse of Eskom, he added, was an additional pressure. “The high load shedding schedules are putting pressure on growers, processors and the country. Costs are increasing where the industry can ill afford it.”
The weak local currency will offer some assistance in the short term but in time, will increase costs through the whole value chain, he added.
Tessenderlo Kerley’s flagship SOP (sulfate of potash) fertilizer, branded SoluPotasse®, is celebrating its 30th birthday this year. For three decades, SoluPotasse® has been providing farmers with the highest quality and sustainable water-soluble grade of SOP. In 1993, when SoluPotasse® was introduced into the market, Tessenderlo Kerley was the first SOP manufacturer worldwide to develop a fully soluble grade of SOP. This was launched in response to an increasing demand from growers wishing to use SOP in fertigation systems. Since its introduction, SoluPotasse®, which is produced in Belgium, has become the leading global brand of soluble SOP, with sales in more than 100 countries around the world and over 3 million tons have been sold since its launch. This makes ‘the pink bag’ the most-sold water-soluble SOP globally.
SoluPotasse® is the original and best-in-class, water-soluble grade of SOP. It provides a highly soluble form of potassium and sulfur in the sulfate form and can be used for fertigation in a wide variety of crops. Developed and subsequently enhanced by a team of expert scientists and agronomists, SoluPotasse® has set new standards. Its unique formulation ensures efficient nutrient uptake by plants, delivering superior results compared to traditional potassium fertilizers. This high-grade product continues to be valued by professional growers throughout the world and is considered a versatile and sustainable water-soluble fertilizer, especially for use in chloride sensitive crops and areas at risk from salinity to boost crop yield and quality.
A leader in sustainable SOP fertilizers
“SoluPotasse® has been recognized for many years as a leading product in sustainable agriculture. It contains virtually no chloride, which ensures that soil salinity can be avoided, and its superior soluble quality makes it ideal for fertigation and precision farming. Furthermore, SoluPotasse® has a carbon footprint across the full value chain that is 15 to 20% lower than the average for SOP production. We have dedicated considerable work and investments in our production processes over the last couple of years and our ambition is to decarbonize our production even more in the years to come,” explains Geert Gyselinck, Executive Vice President Tessenderlo Kerley International.
“By upcycling sulfur by-products from refineries into safe, non-hazardous fertilizers that become a valuable resource for growers, our SOP fertilizers are actively contributing to creating sustainable agriculture throughout the world. Moreover, the by-product hydrochloric acid from our SOP production process is, in turn, converted into coagulants that are used for the treatment of municipal and industrial wastewater, as well as for the purification of drinking water.”
Looking Ahead
As SoluPotasse® celebrates its remarkable 30-year journey, Tessenderlo Kerley remains dedicated to innovation and sustainable agriculture. As well as collaborating with researchers and farmers worldwide to make further advancements in the field of SOP fertilizers, Tessenderlo Kerley will continue to explore new technologies, refine its formulations, improve the energy mix of its production process, and further decarbonize its processes to ensure it is an even more sustainable company in the next 30 years and beyond.
“We have an undisputed strategy to remain at the forefront of the specialty SOP market. To this end, we will continue to consistently deliver high-quality products while simultaneously improving our focus on customer service. As we celebrate the legacy of SoluPotasse®, we must acknowledge its significant contribution to agricultural productivity and environmental preservation. Here’s to the 30 years of excellence realized so far and the many more years to come!”.
About Tessenderlo Kerley International
Tessenderlo Kerley International, which is part of Tessenderlo Group (Euronext: TESB), supplies value-added liquid, soluble and solid plant nutrition to support growers in realizing efficient and sustainable agriculture. Our global team of agronomists and commercial advisers is characterized by a dynamic local network, strong customer focus, and an outstanding heritage. This is because we are able to build on the 100+ years of expertise at Tessenderlo (in solid and soluble potassium-based fertilizers) and the 70+ years of expertise at Kerley (in liquid sulfur-based fertilizers). Our dedication to giving farmers the precise tools needed to optimize their crops is at the very heart of everything we do. Our portfolio consists of well-recognized specialty fertilizers such as SoluPotasse®, Thio-Sul®, KTS®, CaTs®, etc., and we continuously invest in these products in terms of innovation, product development, and support. This is how we can guarantee that all of our interactions – whether they involve our products, our experts, or our advisers – will create maximal benefits, i.e. a better yield for crops, more control for farmers, and a healthier planet for everyone. The Tessenderlo Kerley International business unit is focusing on markets outside the US and Canada. More information can be found on the website www.tessenderlokerley.com.
“For 50 years I stirred the spray tanks with my bare hands, and drove mist blowers with open tractors. These pesticides are the reason I am so strong and healthy today”
Every farmer today have heard this said by the generation before them. It’s no secret that farmers have taken lightly on farm safety and good practices for handling chemicals in their business. The hazards involved are rarely immediate, rather they increase with more exposure. It’s the kind of risk you forget about in the daily routines.
I am not an alarmist. I will not claim immediate death will follow if you handle a pesticide without gloves. But realistically, the world in general has become more diligent in managing such risks, and the farming industry needs to follow. In the future, HSE will be more and more important. As will be experienced through more attention from auditors.
In short, 4 simple rules will make you a HSE champion:
- Don’t violate application rate and volume limits
- Don’t violate re-entry and withholding periods
- Wear suitable personal protective equipment
- Have documentation to prove above 3 bullets
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South Africa’s 2015 Young Farmer of the Year Ant Goble, who was recently appointed as SAMAC vice-chairperson, says the nomination and election to the position means he now has an ideal opportunity to serve an industry which has become vitally important for the survival of so many sugarcane growers in KwaZulu-Natal.
Goble was elected to the position at the industry body’s Annual General Meeting in October last year.
“This gives me a real chance to serve other growers and to help them to move forward and improve or grow their operations. I want to give back to the macadamia industry as it is a sector on which we now depend so heavily,” he said.
As the country’s sugar industry continues to decline, macadamia nuts have become an increasingly important diversification option for many cane growers, particularly in KwaZulu-Natal.
Goble farms in the Upper Tongaat area in KwaZulu-Natal with 220ha under Beaumont, A4, 816, 814 and Nelmac2, all under drip irrigation and fertigation.
He also has 2 300ha under sugarcane and serves as the Local Grower Council chairman for the industry member-body SA Canegrowers.
Goble said he was expecting a good crop this year after what he termed “a long wait”. “I first planted 6ha of macadamias fourteen years ago. Our youngest trees have been in the ground for six months. We have just started harvesting and the nuts coming off our three-to five-year old trees are really looking good,” he said.
