Summary on gross margins
Figures 4.1, 4.2 and 4.3 provide a summary on gross margins for dryland and irrigated summer crops for the 2019/20 production season. It further compares its performance against 2017/18 and 2018/19 deterministic gross margin levels.
Across the 24 dryland crops in 7 agro-ecological regions, an average gross margin of R4 506 per hectare is projected for the 2019/20 production season, approximately 10% lower compared to the same report from October 2018. The average production cost inflation over the same spectrum is calculated at 4.85% from the 2018/19 production season. From the recent analysis for the 2019/20 production season, the gross margin for soybean production in the Middelburg/Trichard region has ranked the highest across the 24 dryland crops followed by ground nuts in the Northern Free State and soybean in KwaZulu-Natal. However, as weather events in recent years proofed, it should be acknowledged that the environment can change rapidly and that the financial performance of each crop should be monitored on a continuous basis.
Figure 4.1 indicates the average dryland gross margin for maize, soybeans and sunflower for the 7 agro-ecological regions for 2017/18, 2018/19 and 2019/20. Under normal weather conditions in 2019/20, the gross margin for soybeans is projected to outperform maize where sunflower is projected marginally higher than soybeans. Figure 4.2 disseminates the gross margins into regions where Figure 4.3 represents the performance of irrigated crops.
In Figure 4.4 an attempt was made to change the deterministic (targeted) yields to actual yields for the 2017/18 and 2018/19 season where 2018 regional yields were considered and for 2019, the yield deviation as is stipulated in the 8th production forecast by the crop estimates committee. The "actual or estimated" gross margins are compared to the projections for the 2019/20 production season under normal weather conditions, hence achieving targeted yields. For maize, a relative sideways gross margin is projected for the 2019/20 production season when compared to the 2018/19 season. Soybeans is projected 37% higher where sunflower is projected to increase by 29%.