As a vital contributor to the country’s economy, agriculture is especially susceptible to economic downturns due to its dependence on financing, exports, and market stability. During Grain SA’s Congress in March, industry leaders engaged in a panel discussion themed ‘Surviving to thriving’, exploring strategies for South African producers to navigate challenging economic cycles.
Corné Louw (head: Applied Economics and Member Services at Grain SA) and Dr Dirk Strydom (managing director, NAMPO) facilitated the discussions with Paul Temple (vice chairperson of the Global Farmer Network and a producer in the United Kingdom [UK]), Prof Johan Willemse (independent agricultural economist), Dr Ferdi Meyer (producer and managing director of the Bureau for Food and Agricultural Policy [BFAP] and extraordinary professor of Stellenbosch University) and Pieter de Jager (2023 Grain Producer of the Year). From the panel discussion a few very pertinent issues emerged:
Adopt a market-first approach
Temple, the keynote speaker at Congress, emphasised the importance of understanding the current economic cycle. ‘As producers, we must shift our approach to prioritise the market,’ he stated. ‘In the past, we focused on production first and then sold what we produced. In today’s economic climate, having a marketing plan from the outset is essential. Unfortunately, 70% of producers in the UK are unaware of their cost of production. However, the current economic situation will change this, compelling more producers to rely on their calculators,’ he added.
Have a five-year plan
Prof Willemse advised producers to prioritise budgeting for advanced technology. ‘With the economy and local demand growing too slowly, greater investment in technology is essential to enable producers to expand into export markets,’ he explained. He also stressed that disease management and risk mitigation should be top priorities during a recession. ‘Producers must plan for at least the next five years, rather than focusing solely on surviving the next season. A key outcome of this long-term planning should be maintaining a healthy cash flow,’ he added.
Manage your emotions
Dr Meyer emphasised the significant role of a producer’s attitude and emotional management during economic downturns. ‘I remember facing my first drought when I started farming alongside my father, with my own investment at stake. The uncertainty was overwhelming – wondering how it would impact our business, our farmworkers and their families, and even the surrounding community,’ he recalled.
He offered practical advice, stressing the importance of decision-making during prosperous times. ‘The choices you make in good years will determine how well you navigate the tough ones. Strategic investment in technology during good times is crucial, followed by a strong focus on producing every ton or kilogram at the lowest possible cost,’ he advised.
Dr Meyer also highlighted the importance of relying on accurate information. ‘Always ask: What are the facts? How much do I know, and how much can I control? Base your decisions on those facts. This approach connects directly to your farm’s potential and how technology can unlock greater efficiency and higher returns on investment,’ he concluded.
Focus on what you can control
For De Jager, making smart investment choices is crucial. ‘Focus your investments on what you can control. I strongly support technology that enhances efficiency because it allows for greater accuracy in measurement and planning. Investing in this type of technology can help you reduce your next budget by at least 10%. By making strategic investments at the right time, you can better shield yourself from economic downturns,’ he explained.
Following the panel discussion, outgoing Grain SA chairperson Derek Mathews succinctly summarised the advice for producers: ‘When times are tough, keep going. Don’t get distracted by the noise around you and manage your emotions. Take responsibility for your own business, plan wisely during prosperous years, and base your decisions on measured facts.’
