Figure 4.1 shows what margins look like under different yield levels at a price point of R4 100 per ton and clearly shows that a yield reduction of 20% moves margins below break-even levels. If yield reductions of 50% materialised, this would have resulted in substantial negative margins.
At prices of R4 100 for SAFEX WMAZ, break-even yield is between 12 and 13 tons
Yield reduction of 50%
Yield reduction of 20%
Average yield for the area
Break-even
7 ton 8 ton 9 ton
10 ton 11 ton 12 ton 13 ton 14 ton 15 ton 16 ton 17 ton
Source: Absa AgriBusiness, 2023
The ability to break even is affected by yield reduction and higher cost
The issues highlighted and illustrated above are, however, not only a problem for irrigated maize produced in the Northern Cape but affect multiple crops throughout South Africa. Figure 4.2 shares a heat map of the geographical dispersion of irrigation operations. For high-value export crops, such as table grapes produced in the Western Cape, electricity
problems stretch beyond irrigation to cooling which producers cannot go without. This has resulted in large costs of running generators for which the associated costs would have pushed some producers above the break-even point for the season.
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