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December 06, 2011

Cost increases squeeze South African commercial farmers

by Hennie Duvenhage

South Africa's commercial farmers' income has hardly been great, especially for those planting crops. Stock farmers have suffered heavily from stock theft and job opportunities dried up.

Gross farm income in the year to end-February last year amounted to R121.766bn, 2.2% more than the previous year. Current revenue was 3.1% up at R89.286bn, according to the latest figures from Statistics South Africa (SSA).

Revenue from crops fell 4.3%, but the other branches of farming computed by SSA grew, even if in some instances very little.

Income from animal products rose 4.4%, that from horticultural products 2.1% and that from animals 1.2%. The contribution of crops to total gross farm revenue declined from 23.4% to 21.9%.

Horticultural products still make up 24.5% of the total, animals 40.4% and animal products 11.5%.

Electricity costs shot up – from R2.1bn to R2.8bn. There was also a considerable increase in expenditure on maintenance and repairs (from R6.5bn to R7.4bn).

But the cost of fertiliser was down (R7.8bn compared with R8.3bn).

Capital expenditure on new assets was lower, but more was spent on land and construction.

The agricultural sector suffered significantly larger losses – R316.5m compared with the previous year's R206.9m.

A farmer's most valued possessions are his land and buildings. Their combined value is estimated at R81bn. The book value of agricultural assets in 2009 was R118.3bn. In 2010 there was a reduction in the book value of vehicles and tractors, in particular, as well as that of other assets. Almost half of farmers' R64bn debt is short term. Of this, 44.4% is owed to commercial banks, 32% to private individuals and only 2.9% to the Land Bank.

Although the number of jobs in the agricultural sector fell from 874,877 to 866,417, the wages account rose from R13.5bn to R15.2bn.

Fin24

Key:

1 South African Rand = 0.124584 U.S. dollars (Dec 7 2011)

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