The value of
commercial agricultural production in South Africa was R67
billion in 2005. Despite its relatively small share of the
total GDP (2.6% in 2004), agriculture is still an important
sector in the South African economy as a provider of employment
in the rural areas. For the year ended 31 December 2005, income
from field crops decreased by 9.8% and was mainly the result of
lower-priced commodities.
The
predictions for the 2005/06 agricultural season were confirmed
by this past years results. The total imbalance of supply and
demand, created by the overproduction of the 2004/05 maize crop,
made it necessary for Grain SA, Cooperatives and Financial
Institutions to urge farmers to reduce their maize plantings, as
it would not have been viable to produce maize at the low prices
caused by surplus stock.
Net farm
income was reduced for the third consecutive year and dropped by
20.9% (R11 667 million) for the 12 months up to 31 December 2005
and this again created pressure on the cash flow of farmers.
Farmer’s debts increased to an estimated R34 733 million from
R33 000 million in 2004.
FARMING DEBT POSITION
The total farming debt at the end
of December 2005 is estimated at R34 733 million (R33 286
million)—an increase of 4,3 %
CASH FLOW OF FARMERS
The cash
flow of farmers amounted to R16 210 million (R18 426 million) for the
year ended 31 December 2005—a decrease of 12,0 %. The decrease in the
prices received by farmers, particularly from field crops, had the
largest influence on the weakening of the cash flow position of farmers.
Reference: ABSA AgriBusiness
During the 2005/06
season a total of 1567200 hectares were planted with maize, which meant
a reduction of 44% from the ± 2.8 million hectares planted in 2004/05
(which yielded 11.45 million tons) compared with the expected 6.04
million tons for 2005/06. Naturally, this had a negative effect on the
sales of tractors and implements.
Tractor sales closed
for the year 2005 at 4677 units compared with the 5280 units for 2004,
which represents an 11.4% decline. Combine Harvester sales closed for
2005 at 180 units compared with the 277 units for 2004, a 35% decline.
Baler sales continue to look good with 417 units for 2005, which is
marginally down by 0.7%, compared with 2004 sales.
The tractor sales
performance over the past 12 months:
|
|
CURRENT |
PREVIOUS |
% CHANGE
|
|
JUNE 2006 |
483 |
399 |
21.1% |
|
LAST 3
MONTHS |
1 250 |
1 124 |
11.2% |
|
LAST 6
MONTHS |
2 607 |
2 260 |
15.4% |
|
LAST 12
MONTHS |
5 024 |
4 976 |
0.98% |
It must be mentioned
that during the last 6-month period a very good February sales figure of
624 units was realised as a result of tax purchases. In the last
12-month period (October 05) an exceptional export transaction was done
with one of the SACU countries, which inflated the figure of 5024 units
by approximately 4% (refer to RGT).
Despite the strong
Rand, which to a great extent absorbed price increases for new
technology, raw materials, freight costs and various other things, the
only sales stimulated were the lower technology kw tractors. In the
last 4 months we have seen a steady increase in sales of these lower kw
tractors countrywide. The sales of other implements like planters and
ground-engaging equipment were badly affected during the last planting
season.
COMBINE HARVESTERS:
Sales only started
improving in May and June but are still down by 91 units compared with
the 102 units year to date June 2005.
BALERS:
Sales of haymaking equipment have been very positive
mainly as a result of many farmers diverting to beef. Baler sales are
up by 30%, with 260 units, compared with the 200 units for the same
period June 2005.
SUMMARY:
Without exception the
agricultural machinery companies had to adjust to the circumstances of
the 2005/06 season.
-
Lower inventory
levels were maintained.
-
Many companies
diversified their range of equipment.
-
Local
manufacturers reduced staff or diversified into non-agricultural
equipment.
Consumers took the
opportunity of replacing ageing equipment with more advanced and
attractively-prices machinery as a result of the favourable exchange
rate. Government’s initiative on projects for the emerging farmers
contributed to increased sales. The increase in commodity prices over
the last few months has contributed to a more optimistic attitude
towards agriculture.
DIESEL AND BIO FUEL
STANDARDS:
Diesel:
Both fuels include
a “lubricity” standard. The particulate matter requirement has recently
been reduced from 100 to 50 ppm. A meeting of the Technical Committee
for the SANS 342 Diesel standard will take place in September 2006 and a
request will be made to improve the particulate matter requirement
further. SANS 342 contains a provision for the blending of BioDiesel to
a maximum of 5%.
BioDiesel:
A BioDiesel standard (SANS 1935) exists. BioDiesel for blending with
mineral or synthetic Diesel must meet this standard. The blended fuel,
up to a 5% blend, must then meet the SANS 342 standard. There is no
provision in the standards for any Diesel fuel with more than 5%
BioDiesel. SAAMA should encourage the incorporation of BioDiesel into
Diesel fuel.
Aside from the obvious
agricultural and employment advantages to the country, the addition of
as little as 0.5% BioDiesel improves the quality of Diesel, specifically
in regard to lubricity and cetane number.
HAULAGE TRACTORS
LEGISLATION:
Legislation defining a new class of vehicle, the Haulage
Tractor, should be promulgated by Parliament either late this year or
early in 2007. This will legalise a vehicle type, which has been widely
used (illegally) in the sugar and timber industries for approximately 25
years.
Many agricultural tractors currently being used for
haulage on public roads are probably being used illegally. Serious
consideration must be given to discussing this matter at a high level
with the relevant parties.
PARALLEL AND GREY TRACTOR IMPORTS
This past year, SAAMA had various meetings with the SABS, The Department
of Trade and Industry, The Consumer council and The Pakistan Trade
Commissioner, to investigate the possibility of preventing parallel and
grey imports. It seems that the loophole in preventing the import of
these products cannot easily be closed. SAAMA published an article to
make consumers aware of the inferiority of grey products. The Consumer
Protection Bill will be legislated soon. It aims to protect consumers
from being exploited by unethical business and marketing practices, like
not disclosing counterfeit brands.
SAAMA MATTERS:
The past year has
certainly been a year where SAAMA members were willing to communicate,
share information and discuss common matters of interest; especially
during the sometimes-unpredictable abnormalities in the agricultural
arena. This proves that SAAMA, through its members, is a valuable body,
which can facilitate the discussions between its members and other
interested parties. SAAMA’s association with other decision-making
groups or institutions gives invaluable information to its members.
SAAMA has continued
discussions with Grain SA, Government Departments like SABS as well as
other parties and workgroups. The SAAMA/Nampo workgroup is currently in
discussions to make the Harvest Day a more economically viable and
commercial event for its members. A special accolade must go to the
Nampo work group, headed by our Vice-Chairman, Charles van Niekerk, and
his team, for convincing the Harvest Day Committee to introduce the
positive changes regarding the practical demonstrations.
At the same time, we would also like to sincerely
thank the Harvest Day Committee for accepting the suggestions made by
SAAMA. We hope that future discussions will be held in the same good
spirit of understanding.
A point of concern is the loss of individual
membership when two companies merge, which subsequently impacts on
membership contributions. It is therefore of paramount importance to
attract accredited companies to be members.
These companies will help make SAAMA an Agricultural
Machinery Association with a broad based membership, which in turn will
also take care of their interests. During the last year our quarterly
meetings were a great success as a result of the good attendance of
member companies, especially those coming from far. I must thank you
all for your participation and valuable contribution.
Also a word of thanks to Leon Pretorius for assisting
in drafting a comprehensive technical letter.
FINANCIAL SITUATION OF SAAMA ENDING 30 JUNE 2006
This matter will be
discussed at the AGM, 19 August 2006.
Generally, the
financial situation looks good as a result of the successful Golf Day
and we hope that the high standard will continue on an annual basis. I
would like to thank all members who participated and a special thank you
to UTI (Sun Couriers), Kuehne & Nagel, De Wet Vervoer, Agritrance,
Gedore Tools and various others for their generous sponsorship, this was
really fantastic!
RESPONSE GROUP
TRENDLINE (RGT)
The reporting of
retail sales in the defined geographic areas is of cardinal importance
to the correctness of the analyses. Changes have to be made to
differentiate between sales made to SACU countries, export sales and
sales in RSA, for more accurate figures and analyses. Our sincere
thanks to RGT for the valuable contribution you make to SAAMA; your
continued support on all fronts is highly appreciated.
AGFACTS
Our Secretary, Dr. Jim
Rankin, plays such a crucial role in the association and the
agricultural industry as a whole. Your appearance on AgriTV is a real
wake up call! You deserve an Oscar for everything you do for SAAMA!
From all SAAMA members a sincere thanks!
GENERAL
This past year we saw
the retirement of one of our long serving executive members, Mr. Poenie
van der Merwe. We thank you for your contributions and wish you
well.
FUTURE EXPECTATIONS
The prospects for the
coming season look more promising than last year. The scope of
production will give the opportunity to plant ± 3.25 million hectare of
summer crops, compared with the 2.36 million hectare of last season, and
thus will create more of a demand for agricultural machinery. The
fellow lands from last year already have enough moisture to encourage
early planting.
Important lessons were
learned during the 2004/05 and 2005/06 seasons; to keep a balance
between supply and demand, and to create normality in the
competitiveness and profitability of grain products. This will give us
the spin-offs required for sustainability, security and job creation.
However this cannot be done by the major role players in the
agricultural industry alone.
Government has to be
an active partner in achieving the 6% growth target set by The
Accelerated and Shared Growth Initiative of South Africa (ASGISA)! In
the year 2000 the question was asked: with whom do we hold hands to
secure the future
I wish to take this
opportunity to thank all members and the executives for their support
during my two terms and a special thanks once again to our Secretary,
Jim RankinKind regards,
Nick E. Sanders
Chairman
