Summary of gross margins

Figures 4.1-4.4 provide a summary of the gross margin performance of dryland and irrigated crops over the period from 2018 (adjusted to account for actual yields and crop prices) to 2024 (2023 and 2024 are projected).

Across the 24 dryland crops in 7 agro-ecological regions, an average gross margin of R9,106 per hectare is projected for the 2022/23 production season, approximately 35% lower compared to the 2021/22 realised production season, however still higher than in the 2017/18 and 2018/19 production seasons. The decrease from 2021/22 is mainly due to significant increases in input costs. Important to note is that the gross margins only consider direct costs and exclude overhead costs. Assuming trend yields, the dryland maize gross margin is expected to decrease overall by 34% and sunflower by 30% from 2021/22 to 2022/23. The dry beans gross margin is the only crop expected to increase due to a significant price increase and higher expected yield than last season.

For the 2022/23 production season, it is projected that on average soybean gross margins will decrease from 2021/22 levels by approximately 41%, with the western production region experiencing a higher decrease of 52% compared to 32% in the east. The wet season resulted in dryland soybeans obtaining above-average yields in 2021/22, which are projected to return to normal in the coming season. The return to trend yields is the main contributor to the high dryland soybean gross margin decrease for the 2022/23 season, compared to irrigation (which achieved average yields). Soybean gross margins under irrigation are expected to only decrease by 13% in 2022/23. The lower fertiliser application rate for soybeans is giving them an advantage, as the gross margin under irrigation for maize and sunflower are expected to decrease at higher levels of 45% and 41% respectively. Overall, crops under irrigation are expected to perform poorer than last year.