Scan for Capital Harvest

August 2016This is a monthly environmental scanning document with extracts from a range of press

articles deemed to be of possible strategic importance to Capital Harvest. The articles arearranged according to a framework of topics. For each article its title, author (where

available) and source are stated.

Editorial

Agriculture

Researchers have made significant progress in reducing waste by developing different types of ediblefood packaging. The latest is an edible, biodegradable packaging film made from the milk proteincasein. It is 500 times better than plastic at keeping food fresh by keeping oxygen out, and it canprotect food that is sensitive to light. The aim is to replace plastic cling film, which is often usedinside the sturdier outer layer of food packaging. Unlike most packaging, plastic cling film is difficultto recycle and relatively unsuccessful at protecting food. An additional benefit of replacing cling filmwith casein-based film, is that additives such as flavours and vitamins can be added to the proteinpackaging.

US-based Replantable is an indoor agricultural firm that sells 'nanofarms' for use in city apartments.The farm consists of a wooden box fitted with LEDs and specially designed fabric pads that trapmoisture. It costs $350 and an extra $25 for a set of five plants. The nanofarm allows one to groworganic crops, including lettuce, arugula, beets and bok choy, in any limited indoor space withouthaving to take care of the crops. One simply adds water, turns on a timer, and waits for a notificationlight to show that the plants are ready. The nanofarm reduces food wastage in that people pick onlywhat they need right before a meal, while the rest keeps growing.

In the US, farm animals are increasingly joining the sharing economy. Many different types of animalsare for rent, and usually at a reasonable cost. In California wine estates rent sheep at $1 per sheepper day, to trim grass underneath and between rows of vines on rocky and uneven terrain. Insummer when grapes are small and too bitter to eat, the sheep eat leaves off the vine which allowsfor more air to reach the fruit and prevents mould. Chickens can be rented by families visiting theirsummer homes, at a cost of $300 for two chickens for six months. The chickens lay fresh organic eggsdaily, and are collected by their owner when the vacationing family leaves town. Falcons can be

rented to scare birds from orchards in harvest season. Four falcons will typically work for about amonth on a blueberry farm, at a cost of $65 per hour. Almond farmers rent bees to pollinateblossoms in January and February, and bee rental is a well-established and substantial business in thestate of California. Goats can be rented to control weeds in hard-to-reach places, and cost onlyaround 25% of the rate humans would charge for the same work.

Environmentally conscious investors are reportedly increasingly reluctant to invest in livestock,because of the harmful methane produced by cows. Methane and carbon are both greenhousegasses, but methane's global warming impact per molecule is 25 times that of carbon. In the US 22%of all methane emissions come from livestock's digestive processes, and the manure they produceaccounts for a further 8%. Companies are devising different plans to curb methane emissions inorder to satisfy reluctant investors. Cargill uses domed lagoons to capture some methane. Danoneadded Omega-3 fatty acids to their cows' diets and thereby reduced emissions by up to 30%, butunfortunately this also reduced milk production and the company is exploring alternatives.Researchers in Argentina have developed plastic backpacks for cows that capture methane, whichcan then be converted into energy.

New US laws governing the routine use of antibiotics in livestock come into effect in January. Farmanimals consume 80% of all antibiotics in the US, meaning these antibiotics end up in humans andover time become ineffective in fighting disease. To comply with the new legislation an alternative toroutine antibiotics is needed, so animals will increasingly be vaccinated against specific diseases.Pharmaceuticals companies have already registered vaccines against the most important diseases insalmon, cattle, chickens and pigs. Vaccines are not yet able to replace all antibiotics, as they are notavailable for all diseases. The aim is to mass-vaccinate herds against the most notable diseases, andto provide more expensive individual veterinary care only to those animals that still get sick.

As previously reported, many consumers are pressuring chicken farmers to produce slower-growing,more natural birds. US producers now predict that 2017 will see slower increases in the weights ofchickens. While bigger birds generate more revenue, they are also sometimes prone to have breastmeat with a hard texture. Slowing growth and producing smaller chickens should address the textureproblem, which is presently found in as much as 5% of large chickens. Restaurants in particular, havecomplained about the texture and asked for smaller chickens.

Around two-thirds of Japan's 2 million farmers are over the age of 65, and there is a rapid increase inproductive farmland being abandoned because the Japanese youth is unwilling to farm. Automationis generally pursued as Japan's solution to problem of ageing farmers. But some farmers are alsoturning to foreign workers for help, many of whom are entering the country illegally. Japan generallydoes not accept migrant workers, but some companies use a legal training programme as a loophole.Around 7 000 foreign agricultural workers entered Japan through this programme in 2013. There arealso 60 000 foreigners in the country illegally, many of whom may be working on farms. Japanachieved a record level of agricultural exports in 2015, partly due to a weakening in its currency.

A daisy-variety known in Germany as Silphie, is likely to become the country's main source of biofuel.Industry groups in Germany prefer Silphie over maize, because it comes up every year for twodecades without the need for replanting. The daisy can grow up to 10 feet high, needs no chemicaltreatment and is bee-friendly. However the industry expects the change to Silphie may initially beslow, due to risk-averse farmers being reluctant to give up maize. Maize presently contributes asmuch as two-thirds of Germany’s biogas power generation.

With more weeds growing resistant to Monsanto's controversial Roundup weed killer, the companyhas launched a new GM soybean called Xtend. Xtend is capable of surviving heavier applications of

glyphosate (so that more Roundup can be used), as well as a potent herbicide called dicamba. Thenew dicamba-based weed killer has not yet been approved by US regulators, but some farmers havealready started spraying it. Multiple complaints have since been filed in Missouri and Arkansas byfarmers alleging that their crops were killed by neighbours spraying dicamba. The fear is that – if thedicamba-based product is approved – farmers may have little choice but to switch to Monsanto'sdicamba-resistant seeds, as they will risk losing crops each time a neighbour sprays the chemical.

Japan and South Korea blocked certain US wheat imports in August after unapproved Monsanto GMseeds were found growing in Washington State. Japan halted US wheat imports for a similar reasonin 2013. Many wheat importers regularly test shipments of US wheat for biotech traits. The US isinvestigating how the 22 unapproved GMO wheat plants made their way to an unplanted state farmfield in Washington.

China is the world's biggest consumer and importer of soy, which is used in tofu, soy sauce andanimal feed. Its own non-GM soy is highly regarded by local consumers. But the country is nowspending lavishly on research into GM crops. Presently only GM cotton production is allowed insideChina, and the import of GM soy for use in animal feed is legal. Many Chinese consumers areopposed to GM food crops due to perceived health risks, but the government plans to develop GMsoybeans and maize for local planting. It is expected that GM maize will be met with less resistancethan GM soy, but to make crop rotation possible it will be necessary to approve GM-versions of bothcrops.

Scientists say the first 15 new hybrid rice varieties tested in sub-Saharan Africa (in Kenya andTanzania), are yielding up to four times more than Africa's existing hybrid varieties. Africa presentlyimports 12 million tonnes of rice, mostly from Asia. Each of the 15 new promising varieties yields 7 to10 tonnes per hectare, while existing hybrids in Africa yield around 2.3 tonnes per hectare. Todevelop the hybrids, two different parent varieties are cross-bred, and their offspring are selectedthrough several cycles of self-pollination or inbreeding. The biggest drawback is that when farmerskeep hybrid seeds for the next planting, yields are significantly reduced – new seeds are thereforeneeded each season to keep production high. There are plans to extend the hybrid rice plantingsacross Africa over time.

DuPont's Pioneer unit is the main supplier of hybrid maize in Africa. The company says 35 millionhectares of maize in Africa is underperforming at yields of under 2 metric tons per hectare. Africa asa whole produced 77.6 million tons of maize in 2014. While GM maize seed is used in SA, it’s bannedin countries on the rest of the continent. Over the past decade the average yield on SA's maize farmsranged from 2.53 tons to 4.84 tons per hectare. Yields in the US average about 7 tons per hectare,and 5.4 tons per hectare in Western Europe.

A tiny, invasive whitefly that is resistant to pesticides and that can spread more than 100 crop-devastating viruses, has been found outdoors in the US for the first time. The Q-biotype whitefly wasfound in gardens in Florida's upmarket Palm Beach County. It poses a serious threat to crops such astomatoes, beans, squash, cotton and melons. In the past, other varieties of whiteflies have beenblamed for worsening famine in Africa and for causing havoc on farms in the southern US in the1980s and 1990s. There is concern that the insecticides that will be used to combat the new whiteflyproblem, will further harm the dwindling US bee population.

At a practical level, the value of farmland in any area is largely determined by the value ofsurrounding farms, and the income-producing ability of the particular farm. There is a finite supply ofagricultural land on earth, so as prices rise young aspiring farmers in many parts of the world arepriced out of the market. Part of the problem in some areas is the popularity of lifestyle estates – for

example, in the first quarter of 2015 only 44% of British farmland was purchased by farmers,compared with 60% in 2011. Some global farm values are difficult to interpret when converted to SArands. In April 2015 farm brokers put the average price of the highest-quality farmland in the USstate of Iowa at US$11 600 per acre (which is US$28 663 per hectare). Converted at the exchangerate applicable at the time, this would value a hectare of prime Iowa land at R315 000. The land inthis area is popular because farmers don’t have to wait for summer rain – they can plant as soon asthe snow melts and the temperatures are at acceptable levels. Recent declines in crop prices and thedownward trend in US farm income since 2013 have, however, finally somewhat filtered through toland values. Statistics show the value of US farmland has decreased this year by $10 an acre, the firstdecline since 2009. Cropland declined by 1% to a national average of $4 090 an acre, whilepastureland remained unchanged at $1 330 an acre. The decline is expected to continue in the shortterm. So far the decline is largest in the US's Northern Plains. Rhode Island is the state with the mostexpensive farmland in the US (average price of $13 800 an acre), while New Mexico is cheapest ($520an acre).

In SA, Standard Bank says there is almost no better investment than agricultural land. This is whycommercial banks continue to invest in the industry, despite uncertainty regarding governmentpolicy. Commercial banks own around 55% of agricultural debt in SA, with most of the remainderbelonging to co-ops and secondary institutions. Land in the Overberg averaged R4 000 per hectare in2003, but by 2014 Standard Bank financed land in the area at R53 000 per hectare. In the Robertsonarea, the rise of citrus farming is presently fuelling a sharp increase in prices.The average price of agricultural land in Stellenbosch was R742 742 per hectare for the period June2015 to May 2016. Western Cape areas that saw notable growth in land values during this period areVanrhynsdorp (41.1%), Prins Albert (26.7%), Calitzdorp (26.5%) and Robertson (25.2%). The overalltrend in agricultural land prices in the Western Cape is upward.

Mahindra is the largest tractor manufacturer in India, and is working to bring self-drive tractors tofarms. Mahindra believes that tractors are the ideal form of vehicle to test and launch self-drivetechnology, as there is little fear of collisions. Of the 240 721 tractors Mahindra sold in the yearended March, 43% were sold inside India. Mahindra also owns 33% of Mitsubishi AgriculturalMachinery.Competitor Deere & Co already has a strong presence in the market for self-drive agriculturalvehicles. But the company is struggling (and recently got a 'negative' credit rating from Moody's),amid the slowdown in the US agricultural sector. An oversupply of grains continues to eat into farmprofits, and US farmers presently prefer to buy used equipment at auctions. Tough credit conditionsare also making it difficult for farmers to afford new machinery. Deere's unsold stock on hand ispresently at a seasonal record level.In SA in July, tractor sales decreased 32.2% year-on-year. Sales were down 14.3% year-on-year in thefirst seven months of 2016. Industry forecasts for the 2016 calendar year are that tractor sales will bebetween 15% and 20% lower than in 2015.

The world has such an oversupply of wheat, that even the worst harvest in a decade by Frenchfarmers is not sufficient to reduce global stockpiles. This is because the US and the former Sovietstates have increased wheat output, with Russia expected to post a record harvest. Rains havereduced wheat output in France and Germany, with much of the French wheat classified as unfit forhuman consumption. France is the largest wheat producer in the EU. Low-quality wheat is cheaperthan maize, and is therefore being fed to animals instead. This causes a larger oversupply of maize –a grain which is already expected to see a big harvest in the US due to favourable weather.The cool, windy weather that France had in April will likely also reduce wine production to a level10% lower than that of 2015. The Champagne region was one of the worst-hit, and it is likely that

France will again produce less wine than Italy this year. Italy overtook France in 2015 to become theworld's largest wine producer.

In addition to and oversupply of grains, the US is also struggling with an excess of dairy. The country'sagriculture department will buy $20 million worth of stockpiled cheese to distribute to food banks, inaddition to the $11.2 million in subsidies that it has already earmarked for dairy producers. SomeAmerican dairy co-ops had so much milk in spring that they dumped tens of millions of pounds. Apositive aspect for dairy farmers has been the low cost of feed due to the large volumes of grainsavailable. Excess milk has been a problem worldwide. In the past year the EU has issued two aidpackages totalling 1 billion euros (including incentives to cut output), and New Zealand farmers haveculled herds. In New Zealand the banking industry is on edge, because the dairy industry accounts for10% of all bank loans. Despite the remaining stockpiles the overall outlook for the global dairyindustry has recently taken a positive turn, as Chinese demand for imports has recovered.

Unlike other parts of the world, Africa does not presently have an oversupply of grains. Kenya isexpecting a 12% decline in maize production this season due to late rains. This is before taking intoaccount the possible effects of a new threat – an outbreak of head smut which reduces yields. Thereare conflicting opinions about the likely impact on the harvest, with government saying it will haveno notable impact unless the fungus spreads, and other sources saying it could cut yields by 50%.Pores could also remain in the soil and do damage to the next harvest.

Zimbabwe is still favourably considering the possibility of charging rent to black farmers who settledon large-scale commercial farms. The plan is to implement 99-year leases with rent payable annually.Farmers will have to submit five-year business plans to be granted leases, and will be barred fromforming partnerships or sub-letting land without government consent. Government also wants thefarmers to make one-time payments for capital improvements on the farms such as dams, barns,roads and buildings. The government could reclaim ownership if farmers fail to pay.Zimbabwe plans to abolish around 50% of the jobs in its agriculture department in order to savemoney. The country spends 82% of its national annual budget on salaries and wages. A 2010 audit byprivate consultants showed that up to 70 000 non-existent workers were on the government'spayroll.

Forecasters are still having difficulty confirming whether a La Niña phenomenon will develop thisyear. There is a chance of a weak phenomenon developing, which will bring little relief from the2015/2016 drought in SA and could result in a very short planting window for many farmers.

Agbiz says SA's agricultural exports declined in 2015 for the first time in 10 years. Africa remainedSA’s largest market in 2015, taking 45% of agricultural exports. The EU took 27%, Asia 12%, theMiddle East 7%, the Americas 5%, and the rest of the world almost 5%. Agricultural exports to Asiaand Africa declined, while those to the EU increased. Edible fruits accounted for 60% of the country’sagricultural exports to the EU, while 20% were wines. More than 50% of SA's agricultural exports areproduced in the Western Cape.

In August an aerial crop sprayer that sprayed canola fields with pesticides near Tulbagh, causedoutrage among many residents in the area. It allegedly killed bees in 170 hives belonging to a beefarmer, causing losses of over R1 million. Other residents complained about health issues such assinus and asthma, and noise from the low-flying plane. A crèche closed early due to childrencomplaining about headaches and respiratory problems. There was disagreement about whether theapplicable civil aviation standards had been followed in the spraying process.

Canola is usually the topic of positive news in SA. It has been the country's top-achieving crop interms of production over the past four years. It is used for crop rotation purposes and its productionhas on average increased by 6% on an annualised basis since 2011. Overberg farmers earned profitsof over R2 500 per canola-hectare last year. With improved farming techniques, this profit canincrease to R3 700 per hectare in the near future. The 95 000 hectares planted with canola in thewinter rainfall area in 2014, is expected to grow to 270 000 hectares by 2024. The Swartland is thearea where most of the increase in plantings will likely take place.

According to the applicable formula, SA's wheat import tariff should have increased by 30% in lateMay to R1 591 per tonne. It typically takes a few weeks for the new tariff to be officiallyimplemented, but by August Grain SA had lost patience with the time government took to sign off onthis tariff increase. Grain SA took the matter to court and SARS was ordered to publish the new tariffin the Government Gazette in order to finalise its implementation. SA wheat producers say theimport tariff is necessary to protect them from highly subsidised foreign competitors.

With peanuts becoming more expensive in SA, the demand for whole peanuts is projected todecrease in 2017. But peanut butter sales will likely increase in 2017 to a level 18% higher than whatit was four years ago. It is estimated that only 22 600 hectares of peanuts will be available for harvestin SA in 2017, the smallest since record-keeping began in 1936. SA imports peanuts fromMozambique, Malawi, India and the US, and exports to the Netherlands, Mozambique, Belgium,Egypt, and the UK.

As from 17 November, all fresh produce sold in SA will have to comply with the same labelling andgrading requirements that have long been in effect for potatoes. Produce will be checked todetermine whether it is properly packaged, marked and graded according to legislation. The mainaim is to assist consumers and supermarkets in their choices, by ensuring that grading criteria areconsistently applied by farmers. Farmers will have to pay an inspection fee, which will be billedmonthly and deducted directly from market earnings. Inspections performed in supermarkets will bebilled to the relevant supermarket.

Climate experts are concerned about the future of apple plantings in Grabouw and Villiersdorp. Thearea is expected to see a downward trend in winter rainfall, rainfall moving to later in the year(September to December), and a significant decrease in cold-units. In future there will be fewer butheavier rainy days. In the longer term, Grabouw and Villiersdorp farmers may end up having tocultivate alternative crops. Ceres is also expected to see a steep decline in cold-units, but the areawill still be able to grow apples. Fruit farmers will see their need for irrigation increasing in order tomaintain moisture levels.

High temperatures and drought have taken their toll on the canning fruit industry, but good pricesmay end up somewhat compensating for low volumes. After a problematic period a few years ago,prices for canning fruit have recovered because of the weak rand and an improved balance betweensupply and demand on the international market. The SA industry uses Bulida apricots, cling peachesand Bon Chrétien pears for canning. SA is the world's leading apricot exporter, and farmers earnR2 000 to R3 000 per tonne. About 90% of SA's canning fruit is exported to regions outside of Africa,and the industry is keen to develop markets inside Africa. The greatest problem in the canning fruitindustry is that SA farmers are not planting enough orchards, and existing orchards are ageing.

SA's wine exports are expected to increase by 13% over the next decade. The wine industry isworking to reduce tariffs in strategic export markets such as Angola, Kenya, the US and China. WOSAcontinues to promote SA wines in Africa in particular, and sales to most African markets (exceptAngola and Nigeria) grew over the past year. Nielsen data indicates the volume of SA wine sold in the

US increased by 14% for the 52-week period ended 16 July. There was a corresponding 25% increasein the value of sales, meaning US consumers are willing to pay more for SA wine. There is ampleroom to do more marketing of SA as a wine tourism destination. Stellenbosch established thecountry's first wine route in 1971, and wine tourism in SA as a whole generated $358 million in 2013.By contrast, the US's Napa Valley generated $1.63 billion in wine tourism revenue in 2014, from 3.3million visitors that year.

The Nedbank Cape Winemakers Guild Protégé Programme is aimed at transformation of the wineindustry, by mentoring aspirant winemakers and viticulturists. Over the span of the internship, eachprotégé is assigned to work alongside one of the members of the guild for a one-year period. Duringthe course of their internship, every protégé is mentored by three members of the guild. In thesecond year they are required to make their own wine for auction. The transformation programmecelebrates its tenth birthday this year.

The African Farmers Association of South Africa (Afasa) in the Free State has called for a secondmodel to the land reform programme to complement the existing Proactive Land AcquisitionStrategy (Plas) programme. Afasa believes their complimentary model will help to save money andspeed up land redistribution. Many farmers have applied to receive land in the Free State throughPlas, but they remain on long waiting lists. When farmers are offered land, they sometimes feelpressure to accept the farm even if it is not ideal for them, because after a long wait they do not wishto pass up the opportunity. Afasa received information that only R5 million may have been allocatedto each of the five districts in the Free State under Plas. Afasa's complementary redistribution plan isthat farmers should identify farms on the market that they would like to buy, and government shouldsubsidise the purchase by up to 50%. After the government subsidy, farmers can then approachfinanciers – preferably the Land Bank – to finance the remainder of the purchase price. Afasa saysfinanciers should give mortgage loans not shorter than 30 years, with a fixed interest rate of no morethan 5%.

Business Day says that if Kaap Agri were listed in the retail sector of the JSE's main board, its shareprice would be 50% higher. The company is 100 years old and has 120 stores in several provinces thatgenerate 85% of its business in the form of retail sales. Its fastest growth area is sales of items suchas pet food, building materials, cement and fuel to non-agricultural clients. The company has beensteadily converting its agricultural fuel depots to a very successful forecourt convenience storemodel. Business Day believes Zeder, which owns 40% of Kaap Agri and has twice tried to buy outminorities, may be the reason for a delay in Kaap Agri's JSE listing.

OVK has posted strong full-year financial results, which enabled it to pay R50 million in dividends andloyalty payments to farmers. Geographical and business diversification helped to maintain growthdespite the drought. OVK is assisting approved drought-stricken farmers with finance products tohelp them through their cash crisis.

Banking & Capital Markets

In August Cape Town-based Futuregrowth Asset Management, Africa’s biggest specialist fixed-income money manager, announced that it would stop lending money to six of SA's largest stateentities – including Land Bank, the IDC and the DBSA – due to concerns about how they aremanaged, government infighting and threats to the independence of the finance ministry.Momentum Wealth says Futuregrowth was merely the first to make a public statement in this regard,and it is expected that more companies may follow. This is because the changes in governance ofstate-owned enterprises may mean the return no longer justifies the risk.

Financial Mail says the ANC's relatively poor election results means that the PIC is now less likely toface a much-feared replacement of its Board Chair, which is the deputy Finance Minister. FinancialMail has heard that PIC CEO Daniel Matjila has reportedly had a difficult time recently in his attemptsto ensure that the PIC does not fall prey to persons with strong political connections. But whileconcerns regarding who might control the PIC are now somewhat less of a concern, the financialpress remains very concerned about the lack of transparency surrounding the PIC's 'unlistedinvestments' in which 30% of its funds are invested. There are no publicly available financialstatements for these investments, and it is not possible for the public to determine the rationale forthese investments.

Stellenbosch University's Prof Nick Vink, an agricultural economist, has been appointed as a non-executive director at the Reserve Bank. He hopes to make the bank aware of how agriculture impactsthe wider economy, and wants to create awareness of how the bank's decisions impact agriculture.He recently also became the first African chair of the International Association of AgriculturalEconomists.

Treasury recently extended a number of the Jobs Fund's enterprise support projects, and revised jobtargets of others downwards, as the worsening economy has made it difficult for many projects tomeet initial targets. Despite the revised targets, Treasury will still take into consideration the initialtarget when evaluating a project. Jobs Fund head Najwah Allie-Edries says economic factors do notremain constant from the formation of a project to its completion, so a project's success shouldn't bemeasured only by the number of jobs created. One should also consider whether the long-termlivelihoods and circumstances of beneficiaries were improved.

Norfund, Rabobank and the Dutch development bank FMO have pooled their African investments.The new development-finance venture is known as Arise and will be based in Cape Town. It willcontrol banking and other assets worth more than $660 million across sub-Saharan Africa. Arise willstart operations in January and will have enough funding to be able to reach almost $1 billion worthof assets within five years. Norfund, which has offices in Johannesburg, Maputo and Nairobi, willhold a 48% stake in Arise, FMO will hold 27% and Rabobank just under 25%. Arise’s ambition “is tobuild strong and stable financial-service providers that will serve retail, small-and-mediumenterprises, the rural sector and clients who have not previously had access to financial services”.

Treasury is targeting trusts in its efforts to collect more tax. A proposed tax amendment (Section 7Cto be inserted into the Income Tax Act) may cause problems in cases where a farmer sold his farm toa trust and thereby granted a loan to the trust. If the interest levied on the loan is lower than therepo rate plus 1% (which presently comes to 8%), the difference will be deemed income in the handsof the farmer who granted the loan. This deemed income is not classified as interest by SARS andtherefore will not qualify for the annual interest exemption. Furthermore, Section 7C requires thatthe additional tax levied in this way, should be recouped from the trust within three years. If this isnot done, the money will be regarded as a donation and subject to 20% donations tax. A furtherprovision rules that any donation of a loan by connected person to a trust, will also be subject todonations tax.

Contents

AgricultureMilk, not plastic, will protect food in the futureIndoor farm boxes promise little work and lots of fresh produceFinally, you can rent a farm animalCould less gassy livestock be a cash cow?Why big pharma wants to switch billions of farm animals to vaccines from antibioticsSay goodbye to fatter chickens as producers avoid ‘woody’ meatJapan turns to illegal foreign workers as farmers ageA 10-foot-high daisy may be the fuel of the futureMonsanto’s superweeds saga is only getting worseJapan, South Korea block certain U.S. wheat varieties over GMO concerns: USDAChina backs GMO soybeans in push for high-tech agricultureScientists hope new varieties can start Africa rice revolutionDuPont’s Bajwa says Africa could more than double corn yieldsPesticide-resistant whitefly could 'devastate' many US cropsWhat is the value of farmland?Last holdout of crop rout gives way as U.S. farmland value dropsNiks troef landbou as belegging – bankierGrond in Stellenbosch gaan jou sak ruk!India’s largest tractor maker sees self-driving future in farmsUsed tractor sales bad for Deere as farmers pinch penniesSales of tractors down by a third on uncertainty after devastating droughtFrench wheat woes can’t stop record world grain glut swellingDire EU crops leave more wheat for cows at corn’s expenseStormy outlook hits French wine outputU.S. takes a bite from cheese mountain with stockpile purchaseKenyan farmers find yield-reducing fungus on corn farmsZimbabwe may charge farmers rent for working land seized from whitesZimbabwe abolishes 8,000 jobs in agriculture ministry to cut wagesNo guarantee La Niña will ease droughtDrought has cost SA R2bn in lost exportsAerial crop sprayer destroys 170 hives near Tulbagh‘Kanola is landbou se top-presteerder’SA’s grain body says court rules government must hike wheat tariffPeanut butter trumps nuts as South Africans spread 18% moreNuwe streng reëls vir alle groenteboereAppels in Grabouw uit oor verwarming?Opportunities in the Canned Fruit industrySA wine export will thrive over the next decadeStellenbosch has potential to become major wine tourism destinationTransforming the wine industryFarmers suggest new model in land reformKaap should consider a JSE listingOVK woeker ondanks droogte

Banking & Capital MarketsSA’s biggest debt manager halts loans to State firmsEditor's Note: And now for the PICProf. Vink direkteur by ReserwebankJobs Fund: Many obstaclesNorway-backed fund on hiring spree in Africa finance ventureTaks-wysigings spel probleme vir trusts

Agriculture

Milk, not plastic, will protect food in the future

Much of the plastic packaging we see in the grocery store can be recycled, from egg containers, tomilk jugs, to butter tubs. But what about that thin plastic film stretched around wedges of manchegoin the cheese bin or the 16-ounce rib-eye in the chiller case?It turns out that kind of plastic is tougher to recycle and might even be adding harmful chemicals toyour food. Oh, and it’s not even good at doing what it’s supposed to do: prevent food spoilage. Luckily, researchers are investigating alternative forms of food packaging—the kind you can eat.U.S. Department of Agriculture researchers have discovered that a milk protein called casein can beused to develop an edible, biodegradable packaging film. The casein-based film is up to 500 timesbetter than plastic at keeping oxygen away from food because proteins form a tighter network whenthey polymerize, the researchers found. It’s also more effective than current edible packagingmaterials made from starch and protects food products that are sensitive to light. “Everything is in smaller and smaller packaging, which is great for grabbing for lunch, for school, butthen it generates so much waste,” said Laetitia Bonnaillie, a USDA researcher who co-led the caseinpackaging research. “Edible packaging can be great for that.”To produce a more practical packaging material, the team added glycerol and citrus pectin to thecasein film, which is made by spreading a mixture of water and commercially available caseinpowder. Glycerol made the protein film softer, and citrus pectin added more structure to the film,allowing it to resist humidity and high temperatures better. Bonnaillie said the additives used byresearchers also distinguish their packaging, because pectin is good for us.Flavorings, vitamins, and other additives can be used to make the packaging, and the food itsurrounds, tastier and more nutritious.“These films will be more health-enhancing than starches,” Bonnaillie said.One of the potential applications could be as a dissolving packet of dried coffee or soup. Instead oftearing the top off and pouring it out, you just drop the whole thing in hot water, and it dissolves,adding protein to boot. Another is as single-serve food wrappers that use large amounts of plasticfor such products as cheese sticks.“I use these a lot, and my thought every time is there’s almost more plastic than cheese,” Bonnailliesaid.Because the casein film dissolves in water, one of the main drawbacks to single-serve pouches is thatthey would need larger, nondissolving plastic or cardboard containers to keep them clean and dry.Bonnaillie said many packages already have an outer layer, however, so in a multi-layer system withsecondary packaging, casein would still help the environment.Casein in liquid form can serve as packaging and food. It can be sprayed onto cereal flakes and bars.Many cereals currently maintain their crunch because of a sugar coating but could achieve the samegoal without sugar using the milk protein.It could even be used to line pizza boxes. While the U.S. Food and Drug Administration bannedperfluorinated chemicals, which used to coat the cardboard surrounding your pepperoni, sausage,and extra cheese pie, a sprayed-on casein coating could serve as an alternative product to preventgrease and stains.Unless companies try finding their own applications of the casein packaging, it will be many yearsbefore the USDA researchers can make it available, Bonnaillie said. She said they are at the verybeginning of a process of finding applications for a product that has the potential to be “so muchbetter than plastic.”

Amrith Ramkumar, Bloomberg, 22 August 2016

Indoor farm boxes promise little work and lots of fresh produce

For many city-dwelling apartment renters, securing a home with a sprig of green space is a tall order,let alone a place that gets enough sunshine or rain to cultivate a fresh vegetable garden. A pair ofdesigners have found a way to bring farms to homes—no outdoor space required.“There’s a lot of people who have tried to start a garden to have fresh-picked food at home,” RuwanSubasinghe, lead product designer of the start-up Replantable, wrote in an email to TakePart. “Buttheir garden never lived longer than a single season, because the soil was poor, or the plants didn’tget enough light, or they didn’t have a green thumb, or most often because they just didn’t have thetime to keep up with it.”Enter the nanofarm, a roughly 18-by-14-inch wooden box that uses LEDs in place of the sun tonourish greens. Subasinghe has also created specially designed plant pads for the boxes. The fabricpads are woven to trap moisture and nurture the crops—including lettuce, arugula, beets, and bokchoy—all without the use of pesticides.“Instead of trying to modify the crop through genetic modification or pesticides, indoor agriculturemodifies the environment that the crop grows in,” Subasinghe explained.Subasinghe and business partner Alex Weiss have turned to Kickstarter to fund their indoor farmingproject. The nanofarms cost $350, along with $25 for a set of five plants. With more than a month togo, the two have raised more than a quarter of their $50,000 goal.A plethora of urban- and indoor-farming projects have cropped up in recent years, but most requiredaily care. Subasinghe said that people would be able to forget about their nanofarms until the timecame to pick the produce. “We already have too many things to keep track of in our busy lives,” hesaid.The no-muss, no-fuss farm boxes simply require users to add water, turn on a timer, and wait for anotification light, which signals that the plants are ready for picking. So far, the nanofarm has beendelivered to a handful of test users, all of whom report hands-off farming and plentiful harvests.Subasinghe anticipates that his effort will help cut down on food waste—an environmental hazardthat accounts for 8 percent of global greenhouse gas emissions. Antihunger advocates estimate thatAmericans waste about 40 percent of all food produced, most of which gets tossed out at home.“When [consumers] buy a bag of salad greens at the grocery store, they rarely get to eat the wholething before it gets forgotten in the fridge,” Subasinghe wrote. “The nanofarm lets people harvestminutes before eating, and only pick what they’re about to eat. The rest stays alive and growingrather than decomposing and shrinking. Our customers have shown us that they’re able to harvestevery last bit of produce from the nanofarm.”Subasinghe acknowledges that shelling out $350 for a nanofarm can be daunting for some buyerscompared with a few dollars for a head of lettuce. But he hopes people will see the boxes as aninvestment. The nanofarm lasts for up to five years and only adds about $1 a month to utility bills.Replantable aims to have the first units out to buyers by August 2017.

TakePart.com, 28 August 2016

Finally, you can rent a farm animal

Sheep, chickens, and even falcons have joined the sharing economy.Rocky Mountain Wooly WeedersAnimal: SheepPrice: From $1 per sheep per dayLocation: Sonoma, Calif.

A lot of mowing, pruning, and fertilizing happens in wine country, where the land can be rocky anduneven—perfect terrain for sheep. They trim the grass under and between rows of vines to golfcourse lengths in 24 to 48 hours, says owner Don Watson. Fred Cline, proprietor of Cline FamilyCellars in Sonoma, recently rented about 2,000 sheep for landscaping. In the summer, when grapesare small and too bitter to eat, the animals eat leaves off the vine, allowing more air to reach thefruit and prevent mold. Cline says sheep are much more economical than humans and “don’tcomplain.”

Rent-a-ChickenAnimal: ChickensPrice: From $300 for two chickens for six monthsLocations: Traverse City, Mich., with availability in 18 states

Rent-a-Chicken representatives deliver two hens (each of which lays an egg almost every day), acoop, and food in the spring and then retrieve it all in the winter. “We give a tutorial on everythingyou need to know on how to care for the chickens,” says founder Leslie Suitor. For the past threeyears, Evelyn Elsing has rented chickens at her summer home in Traverse City. The farm-fresh eggsare nice, she says, but what she really likes is that “they sing, and they carry on, and they have theirlittle personalities. It’s fun to get to know them.”

Falcon ForceAnimal: FalconsPrice: From $65 per hourLocation: Los Angeles

Falcon Force, owned by master falconer Vahe’ Alaverdian, supplies farms and orchards with trainedfalcons—most jobs require four—in harvest season to scare off starlings and other birds that aredrawn to ripening fruit. “We’re like security guards,” says Alaverdian, who owns 39 raptors and worksin California, Arizona, Nevada, Oregon, and Washington. (The falcons are supervised and kept at aweight intended to prevent them from eating the pests.) Falcon Force spends about 30 days eachspring at Roy Farms in Moxee, Wash. Mark Flamm, the blueberry manager, says, “Let’s say we have a$3 million crop. We could easily lose 10 percent. So that’s $300,000. Vahe’ being here for 30, 35 daysis cheap insurance.”

The Pollination ConnectionAnimal: BeesPrice: From $175Location: Danville, Calif.

Owner Denise Qualls rents bees to almond farmers, delivering and maintaining hives in January andFebruary, when bees pollinate blossoms. Dirk Ulrich, who rents hives for his 100-acre almond farm inBallico, Calif., among other properties, says about 1.8 million hives are required in the state annually:“You can go up Highway 80 at Donner Pass, and there’s bee truck after bee truck after bee truckgoing by at Christmastime.”

Rent-a-RuminantAnimal: GoatsPrice: From $275 for 15 goatsLocations: Seattle; Vancouver Island, B.C.; Dallas

Goats gobble invasive weeds such as poison ivy, poison oak, thistle, and kudzu, preventing newgrowth and fertilizing the ground as they roam. Herds are useful in hilly yards, hard-to-reach areas,and spaces where machines could cause damage, says Rent-a-Ruminant owner Tammy Dunakin, whoadds that franchises are available. Russ Ayers, landscape manager for the Issaquah HighlandsCommunity Association, near Seattle, rents goats from Dunakin for about a month every summer tolandscape 20 acres of the wooded community of about 4,000 homes. “If you were to pay humans todo what the goats do for us, you’d pay about four times more per acre,” Ayers says.

Kate Silver, Bloomberg, 17 August 2016

Could less gassy livestock be a cash cow?

The hamburgers and cheese that come from US cattle may be favorite fare at many summercookouts, but the methane the same cows produce is significantly less appetising.That’s especially the case for sustainable investors looking for a low-emission place to park theircash. “Enteric fermentation,” or livestock’s digestive process, accounts for 22% of all US methaneemissions, and the manure they produce makes up 8% more, according to the US EnvironmentalProtection Agency.And although agriculture is a growing industry as the world looks to feed its swelling population,some investors are reluctant to support a sector with such a hefty methane footprint.“There are a lot of factors or buckets that go into agricultural emissions, but livestock tends to be oneof the largest focuses,” said David Nicola, portfolio manager of the Gratitude Railroad FarmlandFund, which launched this week and is targeting $40 million in capital commitments focused onregenerative agriculture.It’s also an issue for Michael Landymore, a senior portfolio manager at Impax Asset Managementresponsible for the firm’s food and agriculture strategy. “We tend not to invest in companies that aresolely focused on growing livestock,” he said in an interview Wednesday.Methane, like carbon, is a greenhouse gas, but methane’s global warming impact per molecule is 25times greater than carbon’s, according to the EPA.In June, scientists from the Consultative Group for International Agricultural Research found that theagricultural sector must reduce non-CO2 emissions by 1 gigatonne per year by 2030 if it’s going tohelp meet the two degree limit on increases in global temperature required by last year’s UnitedNations climate agreement in Paris. Almost 130 countries that arrived in Paris last year to agree onemissions reductions included agriculture in climate change mitigation targets, according to CGIAR.But while many agree lower emissions are an important goal for the livestock industry, just how theyget there is still up for debate. It doesn’t help that there isn’t even a uniform way to measure cow-produced emissions.For meat producers, “monitoring greenhouse gas emissions from cattle is challenging as there aremore than 700,000 cow-calf stocker ranches in the US” beef supply chain, Cargill Inc. spokesmanMichael Martin said in an e-mail.Isolating the impact of direct livestock emissions versus indirect emissions such as fertilizer, cropproduction, and transport for animal feed is also a challenge, companies and investors say. “Theissue for agriculture is identifying the actors and creating levers for change,” Cynthia Simon, seniormanager of investor initiatives at CDP, a not-for profit focused on corporate carbon and watermeasurement, said in an e-mail.Some big producers are banding together to try to tackle the issue. The US Roundtable forSustainable Beef, which includes companies such as McDonald’s Corp., Wal-Mart Stores Inc., TysonFoods Inc., JBS USA Holdings Inc. and Cargill, launched in 2015 with the aim of finding better ways tomeasure the environmental impact of cattle. Greenhouse gas emissions is one of its six “highpriority” indicators for sustainability, but “it is a challenge to align the entire value chain,” to getemissions measurements, said John Butler, chair of the roundtable, in an interview.Some companies are also taking matters into their own hands, getting creative when it comes tocutting emissions from their herds. Cargill, for example, uses domed lagoons to capture some of themethane released from biodegrading cow manure. Yogurt maker Danone found through its researchthat adding Omega-3 fatty acids to a cow’s diet — largely through infused flax seed — can reducemethane emissions from cows by up to 30%. Further research, however, found that while the flaxadditive reduced methane, it also reduced milk production, pushing Danone to focus on other waysto cut farm emissions.“We’re really actively engaged in supporting research in this area,” said Britt Lundgren, Director ofOrganic and Sustainable Agriculture at Danone-owned Stonyfield Farm Inc. “Our understanding of

this I think is still just at the tip of the iceberg and we’ve got a lot to learn before we feel like we haveall the answers on how to reduce emissions from our farms.”In Argentina, home to over 50 million cows, researchers from the Argentina National Institute ofAgricultural Technology (INTA) are attempting to use “methane backpacks,” plastic contraptionsattached to cows, to capture methane from a cow’s digestive tract. The technology is in its earlystages, but so far the backpacks have been able to extract 300 liters of methane a day, enough topower a car or refrigerator, according to INTA.Creating tools that will help farms identify opportunities to reduce emissions, while maintaining orimproving profitability is “the holy grail,” Lundgren said.Impax, whose food and agriculture strategy has about $178 million in assets under managementglobally according to its website, is investing in companies that breed livestock that produce lessmethane, develop emissions-reducing feeds and provide consumer alternatives to dairy, Landymoresaid. But it’s going to be consumers, not investors, whose involvement results in real change, saidGratitude Railroad Farmland Fund’s Nicola.“Where the pressure to measure these emissions more thoroughly will come from are consumers.It’s not likely to come directly from investors,” he said. “The opportunities that are created insustainable agriculture nowadays, it’s generally based on the consumer waking up and realising thatthey would like to have a higher quality product.”

Jason L Strongin, Bloomberg, 18 August 2016

Why big pharma wants to switch billions of farm animals to vaccines from antibiotics

A sparkling and sprawling 48,000-square-foot two-story structure, decorated with artwork of animalsetched onto interior glass walls, recently opened its doors 23 miles outside Indianapolis with onesole purpose: to keep the globe’s 70 billion farm animals healthy.That increasingly means less reliance on antibiotics for animals. So the new research center, built andoperated by Elanco LLC, a unit Eli Lilly & Co., is focused exclusively on developing vaccines asalternatives. It’s all part of a broader effort by the drug industry to join forces with the medicalestablishment to reduce use of antibiotics, as resistant superbugs become more prevalent inhospitals, nursing homes and other public spaces. Weaning animals from antibiotics in favor ofvaccines has become central to that effort. Farm animals are fed about 80 percent of the antibioticsin the U.S., which make their way into the human body.“We see a world where there is less need for shared-use antibiotics,” said Elanco President JeffSimmons. “There are going to be more alternatives than ever before.”Scientists say there is an intimate link between the health of the planet’s livestock and the humanpopulation. An estimated 700,000 people die annually from drug-resistant infections, with millionsmore falling sick. The prevalent use of antibiotics in animals plays a role in those deaths because theyallow super-bugs to flourish. Farmers and ranchers aren’t eager to give up antibiotics because the drugs are cheap and easy toadminister. But change is coming as voluntary Food and Drug Administration rules becomemandatory in January. Those include prohibiting labels that claim antibiotic use promotes growthand requiring veterinarians to administer most of the drugs. Vets also will oversee drugs that arecurrently bought over the counter.The deadline has prompted the $30 billion animal-health and drugindustry to embark on a campaign to educate agribusiness and farmers that vaccines can do just ascredible a job protecting animals.“The companies see that change is going to have to come,” said Laura Rogers, deputy director of theAntibiotic Resistance Action Center at George Washington University in Washington.A 2015 study estimated the global animal-vaccine market will be worth $7.2 billion by 2020, up from$5.5 billion in 2010. Already, about one-third of the industry’s revenue is from vaccines, according to

company and industry officials. A summit in Washington, D.C., planned for September will gatherdrugmakers, government officials and nonprofit groups to discuss antibiotic resistance.Elanco plans to unveil several new vaccines this year and will invest two-thirds of the budget for itsfood-animal unit in alternatives to antibiotics; vaccines will help the unit outpace the industry’sannual growth rate of 4 percent to 5 percent.The company expects European approval to market Clynav, a DNA vaccine for north Atlantic salmonto fight pancreas diseases. The company is also working on a new vaccine for bovine respiratorydisease, said Aaron Schact, Elanco’s research and development chief.Elanco has plenty of company. At New Jersey-based Zoetis Inc., vaccines accounted for almost halfthe company’s product approvals last year. It received a license in 2013 for Fostera PCV MH, whichhelps control porcine circovirus and enzootic pneumonia. This year, regulators granted the companya conditional license for its vaccine to help prevent disease caused by avian influenza H5N1 inchickens.Merck Animal Health, also in New Jersey, last year introduced Porcilis Ileitis, a vaccine for bacterialintestinal infections in pigs. And the Merck & Co. units COCCIVAC-B52 vaccine prevents intestinaldisease in chickens. Last year, Merck acquired Harrisvaccines Inc., an Iowa-based biotech companythat develops vaccines.“The future of our company is heavily grounded in vaccine development,” said Rick Sibbel, aveterinarian who runs the company’s technical services for cattle, poultry and swine.Experts stress vaccines alone won’t resolve antimicrobial resistance problems. Vaccines can’t replaceall antibiotics since they effectively treat some diseases but not all. For example, calves transportedin groups can develop shipping-fever pneumonia that may require antibiotics. There is no similarlyeffective vaccine because the cause of the illness isn’t clear, said David Wallinga, a physician with theNational Resources Defense Council.That helps explain why chains like McDonald’s Corp. and Perdue Farms Inc. vow to switch toantibiotic-free poultry but aren’t making similar commitments with their beef or pork. Cattle andpigs also have longer life spans than chickens and change owners more frequently, making antibioticsa more sure bet in eradicating such illnesses as pneumonia and mastitis, a common inflammatorydisease.“Animals are still going to get sick,” said Gail Hansen, a veterinarian who has consulted for animal-health companies and public agencies. “What the drug companies are looking at is vaccines that arebasically cheaper to give to the animals en masse than to treat them if and when they get sick.”

Jared S Hopkins, Bloomberg, 5 August 2016

Say goodbye to fatter chickens as producers avoid ‘woody’ meat

When it comes to chickens, 2017 could mean juicier -- but maybe not plumper.Sanderson Farms, the third-largest US processor of the birds, says bird weight-gains could startslowing. After decades of fattening up their chickens, some producers are now starting to reduceweights to avoid breast meat that has a “woody” texture, said Joe Sanderson Junior, the chiefexecutive officer of Laurel, Mississippi-based Sanderson. The problematic texture is a result ofgenetics, but the issue appears to be worse in heavier birds, he said.“In 2017, you will not see increases in live weights you’ve seen the last couple of years,” Sandersonsaid in a telephone interview on Thursday. “The increase is going to slow.”Smaller birds would mark a stark reversal from years of plumper poultry. US chickens raised for meatweighed 6.24 pounds (2.83kg) on average in 2015, almost doubling from 1955 and more than triplingfrom 1925, according to the National Chicken Council website. Heavier animals had been favoured asa way to boost production and revenue.

But the bigger birds meant that so-called woody breast, which describes the hard texture and notthe taste or quality of the meat, was being found more frequently, Sanderson said, while declining toidentify the companies that are cutting weights. Sanderson is holding its weights steady.The tougher texture was found in as much as 5 percent of the boneless breast-meat at thecompany’s big bird deboning plants, Sanderson said. The plants account for about 28 percent ofSanderson’s total live-weight. Woody breast isn’t a health or food-safety concern, and the exactcause is unknown, according to the National Chicken Council.Sanderson hasn’t found the woody meat at its so-called tray-pack plants that prepare chicken forretailers. Birds slaughtered at the company’s big-bird deboning plants are about 9 pounds, whilechickens weigh about 6.5 pounds at the tray-pack plants.Supplies identified as woody after screening are sold at a discount and used in products such aschicken nuggets, because the meat is too tough for dishes requiring tender meat, such as salads. Theproblem started a couple of years ago when breeders selected certain birds for growth rates andbreast-meat yield, Sanderson said. Breeders will take two to three years to fix the issue as theyeliminate birds that produce the trait, he said.Some chicken buyers “are considering requiring their suppliers to move to a smaller chicken, becausethey’re having problems with woody breast in their restaurants”, Sanderson said on a conference callThursday to discuss fiscal third-quarter results with analysts.While chicken processors are trying to avoid the woody meat, another reason to slow gains in animalweight is that making birds bigger will “not satisfy customer needs”, Sanderson said. Customers whobuy wings from the company sell the product by piece not weight and need the appropriate weightfor the right count, he said.

Shruti Singh, Bloomberg, 26 August 2016

Japan turns to illegal foreign workers as farmers age

Japan is struggling to keep its farms running as farmers age and young people shun the work. Thishas opened the door for more foreign workers -- including a growing number found to be workingillegally.The number of Japanese farmers has dropped by about half since 2000, to below 2 million this year,according to the agriculture ministry. About two-thirds of those who remain are 65 years old or older.This could slow Prime Minister Shinzo Abe’s push for a renewal of the sector. Abe sees agriculture asan important driver of economic growth, and has urged farmers to target overseas markets withpremium products.Japan’s agricultural exports hit a record in 2015, according to the agriculture ministry, thanks partlyto a weaker currency. Abe’s government has been looking to the proposed Trans-Pacific Partnershiptrade deal to expose Japanese farmers to more competition and improve productivity. The pact,which brings together 12 nations including Japan, may be in doubt with the U.S. presidential electioncampaign fueling protectionist sentiment.A shortage of farm workers means the rise in exports isn’t sustainable, said Takeshi Minami, chiefeconomist at Norinchukin Research Institute, which specializes in agriculture. Younger Japanesesimply aren’t interested, he said.“It’s easier to be a salaryman,” Minami said. “You can’t be a farmer unless that’s your passion.”One result is the rapid rise in productive farmland being abandoned.Some farms are tapping cheap foreign labor. Japan generally doesn’t accept migrant workers, butmany companies use a so-called internship-training program as a back door. About 7,000 foreignworkers entered the agriculture sector through this program in 2013 after passing exams at the endof their first year, according to the Ministry of Justice. That is more than double the number in 2007.

Others hire unauthorized foreign workers. Authorities last year caught about 1,700 foreignersworking on farms illegally, about triple the number just three years ago, and more than in any othersector, according to the ministry.There are likely more. About 60,000 foreigners remained in the country without permission as of Jan.1, according to the government.

Yoshiaki Nohara, Bloomberg, 22 August 2016

A 10-foot-high daisy may be the fuel of the future

A giant form of the flowering daisy plant that can grow 10 feet high may become the favored fuel ofGermany’s biogas industry.The plant with small yellow flowers whose Latin name is Silphium Perfoliatum is known as Silphie inGerman. It’s sometimes called the Cup Plant or Indian Cup in the U.S., where it is native. Fieldexperiments show it has advantages over maize, since it’s a perennial that comes up every year fortwo decades without replanting.The industry group representing 9,000 biogas plant owners in Germany said Silphie, which is in thesame family as the daisy, has the potential to reduce costs for green energy producers who now usemaize. The industry makes gas from renewable sources like plants that can be burned to makeelectricity.“Maize is an extremely good resource, but people feel intimated by this big plant -- it doesn’t helpthe image of the industry,” Andrea Horbelt, spokeswoman for the Biogas federation, said by phonefrom Freising, which is north of Munich. “Silphie is friendly, hardy, needs no chemical treatment, isideal for bees. It’s probably as good for power generation.”The biogas industry in Germany can do with the boost. Sales declined last year to 8.3 billion euros($9.4 billion) from 8.4 billion in 2014, according to the industry group. Chancellor Angela Merkel thisyear sought to stop feed in tariffs for the wider biomass industry as a whole, relenting only afterprotests.About 150 megawatts of biomass power will be auctioned annually from next year, a quarter of theload on offer for solar and a fraction of the 2,800 megawatts on the bloc for onshore wind.The biogas industry predicts a slow uptake for Silphie initially, citing the risk aversion of farmers andmaize’s foothold in generating green power. Silphie planting has focused on Baden-Wuerttembergstate in Germany’s southwestern corner, where some 480 hectares (1,200 acres) of the crop weresown by this summer. With Silphie awaiting wider acceptance, maize will continue to dominate Germany’s biogasproduction, said Horbelt. Maize contributes as much as two-thirds of Germany’s 4.1 gigawatts ofbiogas power generation. The industry employs 43,000 and supplies power for 8.3 million homes.

Brian Parkin, Bloomberg, 24 August 2016

Monsanto’s superweeds saga is only getting worse

You’d like to think there are certain types of corporate malfeasance that really only exist in the realmof Hollywood fantasy. For example, the soulless biotech company that, through a combination ofshortsighted greed and scientific hubris, decides to play God with Mother Nature—only to unleash ahost of unintended consequences, which said company then refuses to acknowledge and insteadcontinues to pursue its reckless technology to devastating ends. Sounds like the plotline of dozensupon dozens of dystopian sci-fi flicks, right? Or maybe it’s just the ongoing saga of Monsanto and thesuperweeds.

Yes, the story has taken far longer to unfold than any feature film, but still, your average teen who’staken a semester of biological sciences would get the gist in a flash: A generation ago, Monsantorolled out its patented line of genetically engineered crops that, in a (diabolical?) bit of corporatesynergy, were designed to survive being doused with the company’s trademark weed killer Roundup,made with the herbicide glyphosate.Monsanto billed its “crop system”—the “Roundup Ready” GMO seeds combined with Roundup itself—as a revolutionary boon for farmers: higher yields with fewer chemicals. Yep, fewer chemicals. It’sworth remembering today, when the use of glyphosate has soared by more than tenfold in the pastdecade, that the original bill of goods Monsanto sold to farmers centered on the argument thatbecause Roundup Ready seeds could withstand glyphosate, farmers wouldn’t have to use as much ofthe chemical to kill all those nuisance weeds.That’s not exactly what happened, as we’re reminded once again by the latest Monsanto-relatedheadlines this week.As NPR reports, a scourge of superweeds that have become resistant to glyphosate is plaguingsoybean farmers in parts of Arkansas, Tennessee, and Missouri. They’re not alone. This graph fromthe International Survey of Herbicide Resistant Weeds shows how the number of unique cases ofherbicide resistance in weeds in the U.S. shoots off like a rocket in the years following Monsanto’sintroduction of Roundup Ready GMO seed in the mid-1990s.Monsanto’s own solution to this escalating problem would seem as laughably predictable as a badHollywood sequel if it weren’t all too real: Let’s roll out more GMO crops designed to withstandbeing doused with even more weed killer. Monsanto calls its next-generation line of GMO soybeans“Xtend,” and these are capable of not only surviving heavy applications of glyphosate but an older,more potent herbicide known as dicamba.Federal regulators have yet to approve the new dicamba-based weed killer Monsanto formulated topair with its dicamba-resistant GMO soybeans. But that apparently hasn’t stopped some desperatefarmers from spraying dicamba anyway. And because the chemical has a nasty tendency to drift toneighboring fields, Monsanto’s new GMO crops aren’t only upending the natural order, they appearto being upending the social order in tight-knit farming communities too: Neighbors are accusingneighbors of illegally spraying dicamba and killing off crops that haven’t been engineered to toleratethe chemical. Dozens and dozens of complaints have been filed in Missouri and in Arkansas, but thatmay only be the beginning in the next chapter of the Monsanto saga. If the company’s new herbicidewins federal approval and certain farmers start spraying it, surrounding farmers might have no choicebut to plant Monsanto’s dicamba-resistant GMO crops too—or risk their own crops dying fromherbicide drift.As one crop scientist at the University of Arkansas tells NPR: “[These farmers are] afraid they’re notgoing to be able to grow what they want to grow. They’re afraid that they’re going to be forced to gowith that technology.”That is, of course, until the next generation of superweeds develops its own resistance.

Takepart.com, 3 August 2016

Japan, South Korea block certain U.S. wheat varieties over GMO concerns: USDA

Japan and South Korea have both taken steps to block certain imports of U.S. wheat afterunapproved genetically-modified (GMO) plants from Monsanto Co seeds were found growing inWashington state, a spokeswoman for the U.S. Department of Agriculture (USDA) said on Monday.Japan's Ministry of Agriculture, Fisheries and Forestry said it will suspend purchases of all WesternWhite wheat from the United States for food use, and all purchases of Western White wheat fromthe U.S. West Coast, but not from the Gulf, for feed use until it can start testing incoming shipments,according to the USDA.

Japan has also suspended distribution of all previously purchased U.S. wheat until testing isestablished. It is the first time Japan has blocked U.S. wheat imports since mid-2013, when adifferent strain of GMO wheat - also developed by Monsanto, but never commercially released - wasfound on a farm in Oregon.South Korea has suspended clearance of U.S. wheat for food use, the USDA said. South Korea, thefifth largest market for U.S. wheat, had already said it would step up quarantine measures for U.S.milling and feed wheat shipments.In 2013, some Asian countries along with Japan halted U.S. western white wheat imports for months.In 2014, another group of biotech wheat plants - also developed by Monsanto - were discoverednear a Montana State University crop research facility.Since then, Japan and other wheat importers regularly test shipments of U.S. wheat for biotechtraits.Japan expects to lift its new restriction once it has a system in place to test grain for the new GMOtrait seen in the Washington state wheat plants, the USDA said."We knew they (Japan and South Korea) were going to be cautious about this until they had the testin hand," said Steve Mercer, spokesman for trade group U.S. Wheat Associates.The USDA expects the latest suspensions to end quickly because testing supplies, which includewheat samples sent by Monsanto, should arrive in Japan and South Korea in the next few days, theUSDA spokeswoman said.U.S. federal and state agriculture officials have confirmed an inquiry is under way to figure out howthe 22 unapproved GMO wheat plants came to be growing in an unplanted Washington state farmfield.

Reuters, 2 August 2016

China backs GMO soybeans in push for high-tech agriculture

China will push for the commercialization of genetically modified soybeans over the next five yearsas it seeks to raise the efficiency of its agriculture sector, potentially boosting output of the crop bythe world's top soy importer and consumer.China, which has spent billions of dollars researching GMO crops, has already embraced thetechnology for cotton but has not yet permitted the cultivation of any biotech food crops amid fearsfrom some consumers over perceived health risks.In its latest five-year plan for science and technology to 2020, China for the first time outlinedspecific GMO crops to be developed, including soybeans - used in food products such as tofu and soysauce and for animal feed - and corn.The blueprint, published on the government's website on Monday, recommended "pushing forwardthe commercialization of new pest-resistant cotton, pest-resistant corn and herbicide-resistantsoybeans".The use of the technology for corn was flagged in April when an agriculture official said that Beijingcould greenlight GMO crops in the next five years. Corn is used mostly for animal feed and industrialproducts like starch and sweeteners and a move to biotech crops could be less contentious than withsoybeans.Support for new soybean varieties comes as China seeks to overhaul its crop structure. Farmers arebeing encouraged to switch from growing corn to soybeans and to rotate between crops.But analysts say boosting soybean production could be difficult without higher subsidies.China is expected to produce 12.5 million tonnes of soy in 2016/17 but will import a record 86million tonnes, according to a forecast by U.S. agriculture officials. China permits the import of GMOsoybeans for use in animal feed.

Herbicide-resistant soybeans are already planted by most growers in the United States, the world'stop soy producer."You can't manually kill weeds on the large farms in the north-east," said an executive at a seedcompany in China. "If if you're going to rotate between soy and corn, herbicide-tolerant soybeans areneeded for mechanization," he added, referring to the need for crops to be able to tolerate repeatedexposure to weed killers applied by tractors.But cultivating GMO soybeans is likely to face strong resistance from consumers and a local industrythat sells GMO-free soybeans at a premium to imported beans."The major production areas for key commodity crops shouldn't be planted with GMOs," said LiuDenggao, vice president of the Chinese Soybean Industry Association."Domestic soybeans are extremely desired and trusted by consumers for food."Commercialization of GMO soy is likely to take a backseat to GMO corn however, said Huang Dafang,professor at the Biotechnology Research Institute under the Chinese Academy of AgriculturalSciences.The government has previously said it will roll out biotech varieties of industrial crops such as cornbefore moving to food crops like soya."Corn is more important from a production point of view," Huang said.

Reuters, 10 August 2016

Scientists hope new varieties can start Africa rice revolution

The first hybrid rice varieties developed in sub-Saharan Africa are yielding up to four times more thanother improved varieties, say scientists, who are using web-based tools to identify the right climateconditions to maximise harvests.The 15 hybrids, bred in Kenya and Tanzania, are also tolerant to diseases and the high temperaturesfound in Kenya’s western Lake Region and coastal areas.Local farmers have always depended on imported hybrid rice varieties, particularly from Asia, whichsometimes do not adapt well to conditions in sub-Saharan Africa.As the climate shifts and arable land shrinks under population pressure, experts say there is a needfor more innovative ways to produce food.Africa’s food deficit is projected to increase to 60 million metric tonnes by 2020 if no action is taken,according to the Alliance for a Green Revolution in Africa (AGRA).Joe DeVries, director of an AGRA programme to strengthen Africa’s seed systems, said productivityon the continent is limited by the fact that farmers have a narrow choice of improved varieties.“Most of them (are) planting varieties that were released more than 30 years ago,” he said.Denis Kyetere, executive director of the African Agricultural Technology Foundation (AATF), which hasdeveloped the new hybrids in a public-private partnership, said hybrid technology had revolutionisedrice production in Asia, especially in China.Asia’s productivity dramatically increased from an average of 1.89 metric tonnes per hectare in 1949to 6.71 tonnes per hectare in 2012.“With this technology, we look forward to Africa being able to feed Africa,” said Kayode Sanni,project manager for rice at the AATF. In 2014, Africa imported 12 million tonnes of rice, mostly fromAsia, he noted.The AATF, in collaboration with private firm Hybrids East Africa Limited, has so far developed 140hybrid rice varieties using African parent lines.Of these, 15 – each yielding 7 to 10 tonnes per hectare – have been presented to the Kenya PlantHealth Inspectorate Service (KEPHIS) for national performance trials.

U.S.-based aWhere Inc, a partner in the hybrid rice project, has developed web-based tools thatallow scientists to determine when and where to conduct breeding, seed multiplication and seedproduction to take advantage of the best climate conditions.Improved inbred rice varieties, such as the New Rice for Africa (NERICA) lines, are already in use onAfrican farms.With this method, two different parent varieties are cross-bred, and their offspring are selectedthrough several cycles of self-pollination, or inbreeding, to get the desired result.The end product has the ability to reproduce itself through self-pollination because the rice plantflowers contain both the male and female organs.With hybrid varieties, the parent plants are crossed separately with new varieties, and the offspringfrom those crosses are united to produce a first-generation hybrid seed, which performs better thanboth parents. The process is repeated each time.Currently, the average yield of inbred rice varieties in sub-Saharan Africa is 2.3 tonnes per hectare.But in trials, some of the new hybrids have produced between 7 and 10 tonnes per hectare, saidSanni, more than the breeders had hoped for.“I think it is a tremendous breakthrough,” he added.One potential problem is that seeds harvested from hybrid plants are not recommended forreplanting because their superior performance is lost due to genetic separation, resulting in a loweryield.That means farmers do not save seed from their harvest to plant again, and seed companies mustcross the parent materials every season to produce new hybrid seed for planting.“This has always been a setback – particularly for farmers who cannot afford higher prices of hybridseeds. But through this project, we have developed an innovative way of helping the poor farmers,so that they can borrow the seed and pay (it) back only after harvest,” said John Mann, managingdirector for Afritec Seeds Ltd, which is testing more than 100 hybrid varieties under the AATF’s“Breeding by Design” project.Although farmers will have to buy seeds each time they plant, the extra profit from the hybrids’higher yield is expected to be far higher than the cost of the seeds, said Sanni.Apart from Egypt, which has been producing hybrid rice on a commercial scale for over a decade, noother African country had succeeded in developing its own local hybrid rice.Egyptian farmers have improved the country’s average rice production to almost 10 metric tonnesper hectare, a feat praised by the U.N. Food and Agriculture Organization and others.Farmers who are participating in the trials in East Africa are eagerly waiting for the hybrid seeds to beofficially released for commercial use – probably in less than a year, after two seasons of trials byKEPHIS.“We have already set aside money to buy the new breeds,” said Charles Wawo, a rice farmer andchairman of the Ahero Irrigation Scheme Multi-Purpose Co-operative Society in Kisumu County inwestern Kenya.Kenya and Tanzania will be the first beneficiaries of the new hybrid varieties. Trials will then be rolledout in other countries in East, West and Southern Africa, Sanni said.

Isaiah Esipisu, Thomson Reuters Foundation, 29 August 2016

DuPont’s Bajwa says Africa could more than double corn yields

DuPont Co.’s Pioneer unit, the biggest supplier of hybrid corn seed in Africa, said farmers of the grainon the continent could more than double productivity over the next few decades if they switched tohybrid seed.The continent currently has about 35 million hectares (86.5 million acres) planted with corn, yieldingunder 2 metric tons per hectare, Prabdeep Bajwa, the African regional business director for Pioneer,

said in an interview in Bloomberg’s Johannesburg office on Aug. 5. Productivity could rise to anaverage of between 5 and 7 tons per hectare if farmers used the right seed, he said. The amount ofland under corn is unlikely to increase, he said.“We see great opportunity to bring that maize seed, tested locally, adopted locally, and justtremendous opportunity to improve productivity,” he said. Maize is the term used for corn in Africa.Africa as a whole produced 77.6 million tons of corn in 2014, data on the Food and AgricultureOrganization website shows.Over the past decade the average yield on South African corn farms, which include the mostadvanced in Africa, has ranged between 2.53 tons and 4.84 tons per hectare, according to the SouthAfrican Grain Information Service. While genetically modified seed is used in South Africa, it’sbanned by countries on the rest of the continent. Yields in the U.S., the world’s biggest cornproducer, average about 7 tons per hectare, while they are about 5.4 tons in western Europe, Bajwasaid.Pioneer bought a controlling stake in South Africa’s closely held Pannar Seed Ltd. in 2013, andmarkets the seeds under both brands.

Tshepiso Mokhema & Liezel Hill, Bloomberg, 8 August 2016

Pesticide-resistant whitefly could 'devastate' many US crops

A tiny, invasive whitefly that is resistant to pesticides and carries crop-devastating viruses has beenfound outdoors in the United States for the first time, raising concerns among fruit and vegetablegrowers.The Q-biotype whitefly turned up in April in the heavily manicured gardens of an affluentneighbourhood in south Florida's Palm Beach County, where landscapers were spraying the flowersand shrubs regularly with insecticides.Its discovery outdoors comes more than a decade after it was first found in a US retail nursery inArizona.Since 2005, the whitefly has also been found in about two dozen US states, but only in greenhouses.It is already considered a major invasive pest worldwide.Now that the Q-biotype whitefly is outdoors in the United States, researchers say it poses a seriousthreat to crops such as tomatoes, beans, squash, cotton and melons.Having whiteflies outdoors makes the problem "much more difficult to control," and they may neverbe fully eradicated, said Lance Osborne, a professor of entomology at the University of Florida."The resistance to pesticides - that is what really sets them apart," he told a few dozen growers whoattended a recent session to learn about the whitefly in Homestead, an agricultural area south ofMiami."The best single treatment we have kills 90-91% of them. That is as good as we can do withoutmultiple applications."Whiteflies draw fluid out of a plant's leaves, and excrete a sticky residue that allows fungus to grow,turning the leaves black and making it harder for them to photosynthesise.The insects can also spread more than 100 viral diseases that weaken the plants and can make fruitsand vegetables inedible.There are dozens of different kinds of whiteflies in the world. This one, known as Q-biotype whitefly(Bemisia tabaci), looks exactly like the silverleaf whitefly, or B-biotype, but is a completely differentspecies.The Q-biotype whitefly is believed to originate in the Mediterranean region, particularly from tomatofields in Spain, Portugal and Israel, Osborne said.

Since its discovery outdoors in Florida in April, they have been found in more than 40 locationsacross the state, including residences, wholesale nurseries and retail plant outlets, crawling on theleaves of hibiscus, eggplant, lantana, ficus hedges and porter weeds.Whiteflies can live on 600 different kinds of plants, 300 of which are grown in Florida, according tothe state agriculture department."They attack so many crops - there is always something in the ground these things will attack,"explained Osborne.While the Q-biotype whitefly has not done any major damage yet in Florida, its emergence has keptagriculture officials busy organising inspections, working on plans to control the bugs and imposingquarantines around positive finds as necessary, a spokesperson said."With our climate, robust international trade and more than 100 million visitors a year, Florida is ahotbed for agricultural pests and diseases," Florida agriculture commissioner Adam Putnam said."The Q-biotype whitefly poses a serious risk to Florida's $120bn agriculture industry and the morethan two million jobs it supports."Whiteflies have been blamed for worsening famine in Africa and for wreaking havoc on farming inthe southern United States in the 1980s and 1990s.Back then, swarms of whiteflies of the B-biotype destroyed cotton, tomato and melon fields, causinghundreds of millions of dollars in losses."The bottom line is, this can be devastating," said Osborne.To encourage growers to check their plants for whiteflies, the University of Florida has extended apledge of secrecy to anyone who wants to find out what kind of whiteflies they have on their plants.Samples of whiteflies can be sent to their lab for DNA analysis, free of charge, and they promise thesender won't be identified except by county and the general type of location.Meanwhile, inspectors are making random checks in farming areas, quarantining nurseries andstopping the sale of any products deemed to be infested."It seems to me like it's a little bit of a witch hunt," said one grower at the meeting in Homestead,who asked to remain anonymous.He complained that an inspector had taken action against his business after finding just one tinywhitefly on a leaf."If that is what you guys are going to do, it is going to make it very difficult for us, for our industry, tostay in business growing particular crops," he said.Osborne urged growers not to panic. There are tools to fight the whitefly, and the arsenal of availableinsecticides is far more powerful today than it was a few decades ago, he said."We can achieve better control when we combine chemicals and make a programme," said Osborne.Still, he admitted, there is "no magic bullet".While modern neonicotinoids - a type of insecticide - may be more effective than previousgenerations, they are also blamed for harming bees and other pollinators that are necessary forhealthy crops.And given the toughness of this whitefly, natural or organic solutions are not likely to work, Osbornesaid.

AFP, 18 August 2016

What is the value of farmland?

Sources have it that both Mark Twain and one Will Rogers (American actor) many, many years agosaid to the US Congress: “Buy land, they don’t make the stuff anymore!”, or something to that effect.The discussion was about farmland then, and it is very much the discussion today. How valuable isfarmland really? Is it the best thing since “God separated land from water”?Well, this may get you thinking.

In 2011 an academic from the Canada, Marvin J. Painter delivered a paper in New Zealand at aconference on farmland value under the title “Is farmland better than gold?” – he was referring tobullion.His finding is not that overwhelmingly clear, but he indeed shows beyond reasonable doubt thatfarmland can sometimes hold its own in the international investment market – and can even standup against gold during specific economic trends.In April 2015 an outfit called the Iowa Farm & Land Chapter 2 Realtors Land Institute (really?) said itssurvey of local (that is Iowa) farmland brokers put the average price of the highest-quality farmland(in Iowa in the US) at US$11 600 per acre or US$28 663 per hectare (that, at a year-ago-South-African-Rands equates to R315 000 per hectare) – outright ridiculous. But it’s not economicallysound to do comparisons like this – it plays games with your mind.A farmer in Iowa with an average farm of just 135ha (333 acres) has an asset worth R42 000 000(US$3 800 000) a year ago. So the next time you travel to the US to visit your family or offspring inthe north-central parts of that country on your way to Minneapolis, and you happen to pass throughWaterloo or Story City, you should show the guys in the proverbial khaki pants and two-tone shirtssome respect – they aren’t what and who you think they are!In the US farmland has solidly beaten the stock market since the late 1990s. So there are manymillionaire farmers around Iowa – like on the South African Highveld, and Lowveld, and KwazuluNatal, and some parts of the Free State.Note: Iowa, like Wisconsin, Illinois and Minnesota are some of the coldest states in the USA. Thistranslates into one very true thing; they have heavy snowfall in winter. This happens to be a welcomephenomenon that guarantees an auspicious planting season. Farmers in the north-central states ofthe USA don’t have to wait for early summer rain. When the snow melts and the temperatures are atacceptable levels the farmers can plant their corn (‘mealies’) and other cash crops as if there is notomorrow. We don’t know such luxury in South Africa – we have to wait for good rain, whichsometimes never arrive.Now, don’t accuse farmers of manipulating farmland values.I’ve done some research in the Karoo some years ago and found that many investors purchasingfarmland don’t really want to farm. They just want to hold tangible assets and are more thanprepared to leave the expertise of farming to a farmer – the real thing. The farmer in this instance isthe person that understands the fickleness and temperamental behaviour of farmland better thanthe performance of a fully-let skyscraper in Sandton (that most expensive 100ha in Africa). A farmeris experienced, a highly skilled expert, and knows just about everything about the type of farmingthat he mastered, and he is also a lay agri-economist that knows the business case of crops andlivestock.Says Old Mutual in a survey report: “Many investors are now turning to tangible assets. Over the lastdecade, the combination of population growth, rising incomes and urbanisation has driven up foodand agricultural prices globally – and in Africa. Food security has become an important issue sincethe food price shocks in 2007 and 2008. A sustainable solution to this is to be found in policies thatencourage investment in farmland.”So, if you believe, like most smart people do, in following smart money, farmland must be somethingsmart to consider.If, on the other hand, you’re not convinced, I’ll be last to blame you for being a little apprehensive orreserved. In fact, I can think of several reasons why investors should think carefully before ploughingtheir money into soil.For one, you have to perfect your timing. Timing is especially critical if you want to avoid devastatingdroughts, or better still, if you want to score big on mega-harvests and enjoy the good times to thefull. But, you also have to be absolutely clear on your personal level of involvement. To be in lovewith farmland doesn’t mean you are naturally and abundantly endowed with farming talents.Lastly, you should also consider your relevant expertise. There seems to be, more and more, asubstantial difference between a farmland investor and a farmland operative.

Farmland bulls (the investment kind) would reply that farmland is an asset with inhibited supply in aworld with increasing demand for quality and quantity food, which makes it a buy, or at least a hold(based on the quote right at the top). Similar sentiments are being recorded in the UK.Oscar Quine, a London journalist writes, “Yet not everyone is happy with the new economiclandscape of the British countryside (that is more lifestyle farming and less farming – my comment).In the first quarter of this year (2015), just 44% of the farmland that changed hands was bought byfarmers – down from 60% in 2011. Echoing the urban housing crisis, young people are being pricedout of farming. A host of initiatives have been set up to remedy this and to try to correct the ageingstock of British farmers. Lifestyle farmers, it turns out, have made only a small contribution to thisseismic shift. The main, insurmountable problem is a lack of supply. Unlike the national housingstock, more cannot be built (“they don’t make it anymore”). Farmland is not just a finite resource, itis a diminishing one. Last year, says the estate agency Savills, 131 000 acres of farmland was traded, arecord low since their records began in 1995.” (The Independent, 14 November 2015)Even though farmland prices may move sideways from time to time (as it does), it will over the longrun face the strong certainty of demand outstripping supply. The demand for food and the shrinkingavailability of farmland stock, interpreted against the potential capital appreciation and also theincome it generates over time, gives you a good formula for reaping serious benefits.So, what is the value of a piece of farmland? Sometimes I’m not very sure myself.Often I value farmland where the owner expects a ridiculous value to emerge from the investigation– I mean, really absurd. But I’m always slow to ridicule them, because I understand where it comesfrom – I almost have a deep veneration for the old farmer who shares his deepest emotions with meby trying to translate those very emotions into value. I understand that he expects “compensation”for the intangible, the imperceptible and the immaterial.Mostly farmland value is determined by the value of the farms by which it is surrounded, and itsinherent ability to produce an income. Yes, the improvements, the infrastructure, the quality of thesoil, the availability and quality of water, the quality of grazing or of arable areas and so many otherfactors that play a direct role in determining the value are also important. But one farm of a similar,comparable, equal farm in the same neighbourhood can’t be double the value of that farm.However, the one thing I can’t put a value on is the enormous emotional value a farmer and hisfamily get out of working the land. This type of return can’t be calculated on a spreadsheet or withapplication of fancy formulae.It unfortunately plays an important role in the retirement arithmetic for many farm owners.The problem is that they can’t (never-ever) get compensated for emotion, for history, for sentiment,for legend, for myth, for the lore that goes with the land. And mostly, the next guy is not (never-ever)prepared to pay for it either.When an investor understands the real commercial value and puts money on the table, then theretiring farmer is mostly, after having received some education on the real value, reasonably contentto cut the ties and allow the land to bring joy and fortune to another human being.

Jannie Wessels, Moneyweb, 11 August 2016

Last holdout of crop rout gives way as U.S. farmland value drops

U.S. farmland values this year dropped for only the second time since a 1980s farm crisis prompted awave of foreclosures, drawing warnings of harder times ahead.Farmland values in the lower 48 states, including land used for crops and for livestock, declined $10to $3,010 an acre, the first drop since 2009, the U.S. Department of Agriculture said Friday in areport. Cropland declined 1 percent to $4,090 an acre, while pastureland was unchanged at $1,330an acre.

Farm income has slumped since 2013, but land values had so far held out even as crop pricestumbled. Now, the trend in land prices is likely to be similar to the 1980s, when values fell for threeyears, said Brent Gloy, an agricultural economist at Purdue University in West Lafayette, Indiana, anda farmer in southwest Nebraska. While the current skid may not match the magnitude of that slump,the decline probably will continue, he said.“It’s going to be soft for another year, at least,” he said in a telephone interview. “We haven’t workedthrough the magnitude of the drop in commodity prices.”Losses were highest in the Northern Plains. The biggest drop was in Kansas, down 7.4 percent to$1,880 an acre. The Corn Belt remained the most-expensive region, even as prices fell 0.9 percent to$6,290 an acre. Rhode Island is the costliest state to own farmland, at $13,800 an acre, while NewMexico is cheapest, at $520 an acre.Declines have been mostly "measured," said Randy Dickhut, senior vice president for real estate atFarmers National Company in Omaha, Nebraska, which manages more than 5,000 farms and ranchesin 26 states."Demand is lower, but supply is also lower," which is keeping prices from falling more dramatically,he said. Higher-yielding land is tending to hold prices better than lower-quality land put intoproduction during the crop boom, he added.Still, farmers and investors have largely come to grips that the days of steep price runups are over, hesaid. “Sellers have to be more realistic about what they’ll get for their land,” he said.Corn and soybeans, the two most-valuable U.S. crops, have dropped from records in 2012. As ofFriday, the grain fell 61 percent to $3.3425 a bushel from the all-time high of $8.49, while the oilseeddeclined 45 percent.In February, the USDA said declining commodity prices will push farm income down 2.8 percent to$54.8 billion this year, less than half the 2013 record.The next forecast on income is set for Aug. 30.

Alan Bjerga, Bloomberg, 8 August 2016

Niks troef landbou as belegging – bankier

Hy dink nie daar is ’n beter belegging as landbougrond nie: Geen aandelebeurs kon die prys vangrond inhaal nie, sê ‘n bankier. ʼn Mens kry “amper nie ’n beter belegging” as landbougrond nie en dis een van die redes waaromkommersiële banke aanhou belê in die bedryf, ten spyte van beleidsonsekerheid.Mnr. Johan Delport van Standard Bank het tydens die produsentevereniging vir inmaakvrugte (IPV)en Droëvrugte Tegniese Dienste se tegniese inligtingsdag vir vrugteboere op Robertson gesêkommersiële banke besit sowat 55% van die skuld in die landbou. Die res behoort aan koöperasies ensekondêre landbou-instellings.“Ons is baie gelukkig en bevoorreg in die landbou. Die prys van grond het die afgelope tyd sogeweldig gestyg; ek dink amper nie daar is ’n beter belegging nie. Geen aandelebeurs kon die prysvan grond inhaal nie.”Volgens Delport het landbougrond in die Overberg in 2003 teen R4 000 per ha verhandel. In 2014 hetStandard Bank grond in die omgewing teen R53 000/ha gefinansier. “Ek dink dis ’n baie goeieopbrengs op jou belegging!”Hy sê in die Robertson-area het die opkoms van sitrusboerdery ook pryse opgejaag. “Daar is beslis ’ngroot skuif na sitrus in ons area. Die boere wat van die Noorde van die land af kom om hier sitrus teplant, het ’n groot invloed op grondwaardes en daar is ’n baie groot vraag na grond in die gebied.”Delport sê terwyl die hoeveelheid landbougrond dieselfde bly, raak boere minder en plase raakgroter. “Dis ’n neiging wat al van die 1960’s af aankom. Daar was egter ’n strukturele verandering interme van dit waarin boere belê. Die afgelope dekades het die belegging in toerusting verdubbel. Dis

as gevolg van ’n verskuiwing na verhoogde produktiwiteit en die arbeidsprobleme waarmee boere op’n daaglikse basis te doen kry.”

Lucille Botha, Landbou.com, 16 August 2016

Grond in Stellenbosch gaan jou sak ruk!

Die gemiddelde prys van grond in Stellenbosch die afgelope jaar was ʼn stewige R742 742 perhektaar! Die volgende ontleding van grondverkope in Suid-Afrika handel oor die grondtransaksies vir stukkegrond groter as 20 ha in die Wes-Kaap vanaf Junie 2015 tot Mei 2016. Dié ontledings word op ‘nmaandelikse basis gedoen met data van Windeed.Altesame 499 ooreenkomste is in 29 distrikte in die Wes-Kaap gesluit en 254 315 ha is teen R3,894miljard verhandel.Daarvan was 30 transaksies met mense van kleur. Transaksies van kleur is dié tussen individue watnie wit is nie, regeringsaankope en grond wat vir munisipale gebiede bekom is. In dié proses is 10741 ha (of 4,2%) teen R523 miljoen (13,4% van die waarde) verhandel. Drie transaksies was vir diekoop van landbougrond, 11 vir dorpsontwikkeling en 16 kan as private verkope geklassifiseer word.Altesame 166 (33%) van die transaksies was vir grond kleiner as 50 ha, 126 (25%) vir grond van 50 hatot 150 ha en 152 (30%) vir grond groter as 300 ha.In tien van die distrikte het die pryse gedaal. Daarvan was slegs twee in die Karoo. Oorwegend wysdie syfers op ‘n stygende neiging in die provinsie.Van die distrikte waar grondpryse merkbaar gestyg het, is Vanrhynsdorp (41,1%), Prins Albert(26,7%), Calitzdorp (26,5%) en Robertson (25,2%).

Johann Bornman, Landbou.com, 5 August 2016

India’s largest tractor maker sees self-driving future in farms

India’s largest tractor maker says it wants to play a role in bringing self-driving vehicles to farmsacross the country.“The most fertile ground -- pardon the pun -- for autonomy is in agricultural tractors,” AnandMahindra, chairman of Mahindra & Mahindra Ltd. told shareholders in Mumbai Wednesday. “This isan area where productivity increases are sorely needed to feed the growing needs of the world. It’salso an area where paranoia about accidents and collisions is virtually non-existent.”Mahindra’s plan to develop self-driving tractors comes at a time when competitors such as Deere &Co. are already offering autonomous vehicles and digital tools and technologies are increasinglybeing adopted by the industry. Automakers from Toyota Motor Corp. to Tesla Motors Inc. andtechnology giants including Google have been working on vehicles capable of driving themselves thatthey expect to be ready in the next few years.Mahindra sold 240,721 tractors in India and overseas in the year ended in March, with a 43 percentshare of the domestic market. Over the past decade it has acquired competitors and collaboratedwith other farm-equipment makers. In 2015, Mahindra bought a 33 percent stake in MitsubishiAgricultural Machinery to boost its presence in the heavy-duty tractor market.

Siddharth Vikram Philip, Bloomberg, 10 August 2016

Used tractor sales bad for Deere as farmers pinch pennies

Deep in the heart of the U.S. grain belt, farm-equipment auctions are attracting bidders from as faraway as South Africa as the agriculture rout makes used machinery more attractive.As farmers move away from buying new tractors and combines, it could mean more pain for Deere &Co., the world’s biggest agricultural equipment manufacturer, which is already struggling through anindustry-wide glut. To understand why, look no further than Matt Maring, owner of an eponymousKenyon, Minnesota-based auction operation.Buyers are driving more than 400 miles (644 kilometers) to attend his auctions and online simulcastsare drawing participants from around the globe, boosting the bidding field, said Maring, who’s beenan auctioneer for 36 years. Farmers are spending $50,000 on replacement tractors that wouldotherwise cost more than $100,000 new from Deere, he said.As a global grain glut is poised to reduce U.S. farmer incomes for a third straight year, growers aretightening their pocket books and increasingly turning to used machinery to trim spending. Adding tothe picture, credit conditions have eroded and made it tougher to get a loan for new equipment. ForMoline, Illinois-based Deere, farmers turning away from its dealerships could further pressure profitsand underscores why Moody’s Investors Service this week downgraded its outlook on the company’scredit rating to negative from stable.“This is much worse than expected,” Eli Lustgarten, an analyst at Longbow Research inIndependence, Ohio, said by telephone. “The crops are so much bigger,” making farmers less willingto spend, he said.Deere’s third-quarter adjusted profit is expected to drop 38 percent from a year earlier to 94 cents ashare, the average of 19 estimates in a Bloomberg survey showed. The company is scheduled toreport on Friday before the start of trading in New York. A Deere spokesman declined to comment onthe earnings outlook, citing its quiet period ahead of the report.The company’s shares have fallen 18 percent over the past 12 months, compared with an 8.5 percentadvance in the Standard and Poor’s 500 Industrials Index. Even as Deere has shed jobs and reducedoutput, the prolonged slump in commodity prices has crimped demand and limited the impact ofcost savings. Warren Buffett’s Berkshire Hathaway Inc., Deere’s second-biggest shareholder, reporteda reduced stake in the company in a filing this week.While inventories of farm tractors have declined since reaching a 16-year high in April, stockpiles arestill at record seasonal highs, data from the Association of Equipment Manufacturers show. Asfarmers buy more used equipment, the glut is unlikely to be wiped out any time soon.“It’s like a bus service,” Maring said. “If business is slow, but you need to get a new bus, you’re goingto go out and buy a well-cared-for used one.”Analysts are expecting that Deere’s full-year net income will get dragged down to $1.23 billion,compared with the $1.2 billion the company forecast in May when it slashed guidance. That wouldbe the lowest since 2009. Last month, it said it was laying off 120 workers at an Illinois plant becauseof slow sales. Potential customers are being squeezed by higher farming costs while crop pricesdecline, Bloomberg Intelligence analysts wrote in a report Wednesday.Meanwhile, machinery auctions are on the rise, said Greg Peterson, the founder ofMachineryPete.com, a website that monitors prices of farm equipment at auctions. He’s seen a 20percent jump in the past year for search traffic for low-horsepower machinery on his website.At an auction last week in Hammond, Illinois, it took about 17 minutes for a large tractor in excellentcondition to sell, when it should take about three minutes in a healthy market, Peterson said. Thelonger auction time reflects the increased number of bidders and an aversion to escalating prices.Peterson said even dealers are showing up at auctions to get good deals and resale at a profit. ForDeere, it means a prolonged rough market to navigate, according to Karen Ubelhart, an analyst atBloomberg Intelligence in New York.“People are comfortable that it’s bad and that it will take a while” to recover, Ubelhart said. “It’s notgreat, but they’re not bleeding. It’s just not getting better.”

Mario Parker, Bloomberg, 18 August 2016

Sales of tractors down by a third on uncertainty after devastating drought

Tractor sales fell 32.2% year on year in July to 451 units after dropping 12.2% in 2015 to 5,673 units,according to the South African Agricultural Machinery Association.Tractor sales have been hurt this year due to uncertainty about crop yields and exchange rates,whether the weather had transitioned from a dry El Nino global cycle to a wet La Nina cycle, landrestitution issues and farmworker shares in farms."Market sentiment still remains positive. However, with the maize harvesting having been delayed insome areas, farmers are still waiting to see what their crops will yield. The late rains, particularly inthe east of the summer rainfall areas, will have helped a lot with winter wheat and the upcomingsummer crops," the industry body."Nevertheless, it is likely that the market will continue to be depressed for the next month or two.Thereafter, the market will be driven mainly by weather conditions as they develop in the summercropping areas."Sales are down 14.3% year on year in the first seven months of 2016. Current industry forecasts forthe 2016 calendar year are that tractor sales will be between 15% and 20% down on last year.

Helmo Preuss, Business Day, 5 August 2016

French wheat woes can’t stop record world grain glut swelling

The worst French wheat harvest in decades isn’t enough to stop a record global glut of grain fromrising.Lower wheat production in western Europe will be offset by increased output in the U.S. and formerSoviet states, while prospects for American corn crops have improved, the International GrainsCouncil said in a report Thursday. The IGC raised its 2016-17 grain-stockpile forecast by 0.8 percent to492 million metric tons.While rains earlier this year have cut French wheat yields to a three-decade low and also hurtGerman crops, farmers in the Black Sea region are faring better and top exporter Russia is expectedto harvest a record amount. The U.S. government said earlier this month that American growers willcollect more corn than anticipated as favorable weather helps yields. Bumper harvests around theworld pushed crop prices down over the past few years.“The largest adjustment this month is for maize and is nearly entirely due to a sustainedimprovement in crop prospects in the U.S.,” the council said, referring to corn. It expects total grainproduction in the 2016-17 season to rise 3.5 percent from a year earlier to a record 2.07 billion tons.While the London-based IGC expects the wheat harvest to probably be a record, concerns haveincreased about the quality of crops. The flooding in France has left much of the grain unfit forhuman consumption.“The past month has seen escalating concerns about availabilities of milling grades,” it said. “Amplerains boosted average yields of wheat in many places, but caused some quality downgrading. Ampleavailabilities and low prices are seen encouraging feed demand.”France, the European Union’s biggest wheat grower, may boost trading with Germany as it seekshigher-quality wheat, according to Guido Seedler, a representative of Germany’s DeutscherRaiffeisenverband. In return, Germany may look to import more lower-level grain to feed animals, hesaid.

Grain trading will total 330 million tons in 2016-17, 1.9 percent more than the IGC’s July 28 estimate.That will still be below the previous year’s record, it said.

Camilla Naschert, Bloomberg, 25 August 2016

Dire EU crops leave more wheat for cows at corn’s expense

European livestock farmers will use the most wheat in a decade as they cut back on corn to fatten upanimals.As rain-damaged crops leaves more grain unfit for human consumption, usage to feed cows, chickensand pigs this season will rise 3.4 percent to the highest since at least 2007-08, European Union datashow. Prices are attractive too. London feed-wheat futures have been cheaper than French cornsince mid-2015, compared with a premium in most of the two years before that.Deluges in top producer France this year decimated crops and caused many plants to fall over,stoking concern about diseases and that grain quality won’t be good enough to make bread. GroupeSoufflet said a “catastrophic” year for French farmers has been unlike anything seen in four decades.Total EU wheat production is set to drop 11 percent this season, according to Offre & DemandeAgricole."Due to quality issues, a lot of French wheat doesn’t qualify for milling, but only for feeding animals,"said Carsten Fritsch, a commodities analyst at Commerzbank AG in Frankfurt. "The EU wheat harvestis going to be lower than expected due to France and Germany."Livestock typically accounts for about 46 percent of EU wheat consumption, with demand fromhumans closer to 40 percent and other uses making up the rest. The region will direct 57.9 millionmetric tons to animals in the season that started last month, 15 percent more than the five-yearaverage, European Commission data show. The amount of corn used as feed will fall to 57.6 milliontons, the lowest in four years.French wheat production is set to plunge by about a quarter to 30 million tons, with more bearishforecasts pointing to 28 million tons, said Francois Berson, director of grain collection at SouffletAgriculture. The company buys about 4 million tons of grains in France each year.German wheat quality will be on average worse than last year and areas in the south-western part ofthe country have faced similar conditions to France, trader BayWa AG said last month. Rains havebeen delaying the harvest in the nation and farmers have only picked a third of the crop in someregions, the German Farmers Association said in a statement Wednesday.Rainy weather will also reduce output in the U.K. to the lowest in three years. Production willprobably fall to 14.5 million tons, down 12 percent from a year earlier and the lowest since 2013-14,according to CRM Agri-Commodities in Newmarket, England, and data from the Agriculture andHorticulture Development Board.Priced in euros, feed-wheat traded on ICE Futures Europe has dropped 23 percent since late 2013,compared with a 4.2 percent increase in corn futures on Euronext in Paris."The lower wheat prices are relative to maize prices, the more you would expect wheat to be fed asanimal feed,” said Arthur Marshall, an analyst at AHDB Market Intelligence. "As a buyer, you wouldbe comparing those prices and working out what works best for you.”

Isis Almeida & Manisha Jha, Bloomberg, 4 August 2016

Stormy outlook hits French wine output

Fierce storms which hit France in April will help to push wine production down almost 10% this yearon 2015 output, the ministry of agriculture said on Thursday.

Unseasonally cool weather through the spring and into the summer will drag overall productiondown to 42.9 million hectolitres from 47.8 million a year ago, a seven percent fall on a five-yearbasis, according to the ministry's statistical service Agreste.In revising down its outlook, Agreste blamed "the spring freeze that hit certain winegrowing areas,recurring winds made worse by drought around the Mediterranean and damage stemming fromfrost."Champagne was one of the worst hit regions after several bouts of spring frost and hailstorms whichare forecast to drag output down by as much as one third, leading to harvesting being already a weekbehind schedule based on a 10-yearly average.The inclement weather means France, which has also had to battle outbreaks of rot and mildew, willlikely remain behind Italy, which last year claimed the crown as the world's biggest wine producer.

Fin24, 25 August 2016

U.S. takes a bite from cheese mountain with stockpile purchase

The U.S. Department of Agriculture plans to buy $20 million of stockpiled cheese to distribute tofood banks and pantries nationwide in an attempt to stem farmer losses after dairy pricesplummeted amid a global milk glut earlier this year.The purchase of about 11 million pounds of cheese, which the USDA reported Tuesday in astatement, comes in addition to $11.2 million in subsidies for dairy producers announced earlier thismonth. A dairy lobbying group had asked for as much $150 million in cheese purchases."We understand that the nation’s dairy producers are experiencing challenges due to marketconditions and that food banks continue to see strong demand for assistance," Agriculture SecretaryTom Vilsack said in the statement.A combination of plentiful supply and flagging global demand has put farmers on the back foot inrecent years. Some American dairy cooperatives had so much milk this spring they were forced todump tens of millions of pounds.Yet more recently, producers in some parts of the country have seen premiums on the open marketas food manufacturers struggle to purchase enough milk. Declining corn and soybean prices alsomean lower feed costs for farmers.Overall, 2016 dairy margins will shake out close to the five-year average and increase in 2017,encouraging modest expansion within the industry, said Bill Brooks, a Dearborn, Missouri-baseddairy economist at INTL FCStone. Futures prices for Class III milk -- a category of the commodity usedto make cheese -- has rebounded 45 percent since hitting at a six-year low in May in Chicago. That’sreduced the need for federal aid, said Marin Bozic, a dairy economist at the University of Minnesotain St. Paul."The USDA wants to demonstrate that it’s there for dairy," said Bozic, who said the market recoveryis probably why the USDA’s planned purchase amounts to less than the $150 million asked for. "In anelection season, they want to do something, even if the market seems to be rallying."The latest aid has come too late for Kipp Hinz, a 27-year-old dairyman in Ellsworth, Wisconsin, whowatched a trailer haul away his herd of 60 cows last month after shuttering his farm. Hinz said hecouldn’t afford to buy feed for the animals.“It’s heartbreaking,” Hinz said in an interview. “When prices tanked, that was the time I really neededsomething to happen to work out a plan with the bank, renew my contracts and get more feed.”The pain is also being felt on other continents. In the past year, the European Union has issued twoaid packages totaling 1 billion euros ($1.1 billion), including incentives to cut output. In New Zealand,farmers are culling herds due to depressed prices and annual production there is forecast by theUSDA to drop 2 percent in 2016. That’s prompted the New Zealand central bank to stress-test themain lenders in the country, where the dairy industry accounts for 10 percent of bank lending.

One reason for the dairy’s recent difficulties was a slowdown in Chinese demand, but the countrymay now be back in the market, with milk imports up 87 percent this year through May, according tothe USDA. The price of whole milk powder sold by GlobalDairyTrade, an international dairy salesplatform owned by New Zealand’s Fonterra Cooperative Group, jumped 19 percent to $2,695 ametric ton in the most recent auction held last week.“The bear market is over,” said Matt Gould, a Philadelphia-based analyst for the Dairy & Food MarketAnalyst newsletter, said by phone. “The industry does not appear to be in a crisis.”

Alan Bjerga & Lydia Mulvany, Bloomberg, 23 August 2016

Kenyan farmers find yield-reducing fungus on corn farms

Kenyan agricultural authorities are monitoring an outbreak of head smut, a yield-reducing disease,that’s been detected on several corn farms in the North Rift region that accounts for 80 percent ofthe nation’s output of the staple.The disease is unlikely to cut output unless it spreads, Johnson Irungu, director of crops at theAgriculture Ministry, said on phone. Business Daily, a Nairobi-based newspaper, reported earlierMonday that the disease may cut production as much as 50 percent this year.“The head smut is negligible, it has only affected a few farms,” Irungu said by phone from Nairobi.“We are monitoring to see the fungal disease doesn’t spread.”The East African country already expects a 12 percent drop in production this year from the 42.5million 90-kilogram (198-pound) bags harvested last season because of the late onset of rains.Kenyans consume as much as 40 million bags of corn annually.The Cereal Growers Association, an industry lobby group, said it was awaiting an assessment of theinfestation before determining any impact on production. Potential losses are worse when youngseedlings are infected.“My greater worry is for the next season, if these head smut pores remain in the soil,” CGA ChiefExecutive Officer Anthony Kioko said by phone. “Depending on infestation, head smut can destroybetween 30 percent and 50 percent of corn production.”

Samuel Gebre, Bloomberg, 29 August 2016

Zimbabwe may charge farmers rent for working land seized from whites

Zimbabwe is considering charging rent to black subsistence farmers who settled on large-scalecommercial farms confiscated mainly from white owners during state-backed invasions and mayrepossess land from those who don’t comply. The southern African nation’s government is considering 99-year leases that will see rentals chargedannually, it said in a document obtained by Bloomberg News and confirmed by Lands and RuralSettlements Minister Douglas Mombeshora. It also wants the new farmers to make one-timepayments for capital improvements such as dams, barns, roads and buildings, it said. White growersheld the best land in the country, a legacy of 90 years of colonial and white-only rule during whichblack producers were pushed into crowded and unfertile areas then known as Tribal Trust Lands .Between 3,000 and 3,500 farmers had their land taken from 2000 to 2010, while about 300,000laborers lost their jobs, slashing exports of crops ranging from tobacco to roses and sending thecountry into a political and economic crisis that has yet to end. Poor grain harvests following theworst regional drought in three decades mean about 4.1 million Zimbabweans will rely onemergency food aid this year, or a third of the population, according to the United Nations’ WorldFood Programme.

“The value of the improvements of the leasehold will be purchased by the lessee, who may raise amortgage to make the payment to government,” the document showed. The government couldreclaim ownership of the farm if producers failure to pay rentals or for improvements, it said.Finance Minister Patrick Chinamasa said in April that black producers who have settled on the landmay be asked to repay the former owners for their losses. The compensation plan is part of an effortby President Robert Mugabe’s government to restore relations with the International MonetaryFund. Since the nation fell into default to the Washington-based fund in 1999, it’s struggled to obtainfinance to support an economy that is half the size it was 16 years ago.“We are now waiting to submit it to the Cabinet Committee on legislation; we’ve finished our part,”Mombeshora said by phone about the proposal. “We are waiting for our slot.” The government hasmade payments to 240 white commercial farmers, he said in April. Producers will have to submit government-approved, five-year business plans to be granted leases,the agreement said. Producers will be barred from forming partnerships or sub-letting land withoutgovernment consent, which “shall not be reasonably withheld.”Mugabe has repeatedly criticized black farmers for partnering with white farmers, mainly to farmtobacco.Zimbabwe’s Commercial Farmers’ Union, which represents remaining white producers and theinterests of those evicted from their farms and homes, didn’t answer calls.

Godfrey Marawanyika & Brian Latham, Bloomberg, 2 August 2016

Zimbabwe abolishes 8,000 jobs in agriculture ministry to cut wages

Zimbabwe's government plans to abolish about half the jobs in the agriculture department, agovernment official said on Wednesday, as President Robert Mugabe's administration struggles topay public service wages.The southern African nation is facing a biting shortage of cash, its worst since 2009 when it dumpedits hyperinflation-wrecked currency in favour of the U.S. Dollar.Zimbabwe, which spends 82 percent of its national annual budget on wages, said on Monday itwould no longer hire new public workers as it struggles to pay soldiers, police, teachers and otheremployees.The deputy minister in the agriculture department, Paddy Zhanda, said his office was seeking toprevent the shedding of about 8,000 jobs decision by the Public Service Commission (PSC), whichhires state workers.Zhanda said the department had offered an alternative plan that would cut wages but save jobs,because dismissing staff could impact agriculture at a time the sector is struggling to recover fromthe worst drought in a quarter century."For example, workers can work fewer days and we could retire non critical staff above the age of 60years as well as doing away with posts that are vacant," Zhanda told Reuters.Cecelia Alexander, chairperson of the main union for state workers Apex Council, could not bereached for comment.The state-run Herald newspaper reported on Wednesday that the PSC had notified the agricultureministry on July 29 that 8,252 posts out of 19,235 had been scrapped with immediate effect.In March last year, Harare carried out an audit of its government workforce but has not made theresults public. An audit by private consultants carried out in 2010 showed that up to 70,000 "ghostworkers" were on the payroll.There are more than 300,000 employees in government, according to the Zimbabwe NationalStatistical Agency, a number which does not include the army, air force, police and prisons.

Delays in salaries as well as the cash squeeze that has seen long queues at banks, are some of thereasons that have in the last three months fuelled anti-government protests that have ended inclashes with police.

MacDonald Dzirutwe, Reuters, 24 August 2016

No guarantee La Niña will ease drought

Forecasters are unable to predict the weather conditions of the coming season, as patterns changedand the atmosphere remained challenged by the movements of the oceans of the world.The forecasters said yesterday that all signs leaned towards a La Niña phenomenon and explainedthat if it came, it would bring very little, if any, relief to the effects of the 2015/16 drought.“We are looking at the possibility of a weak La Niña, the effects of which would not be felt at all,”said South African Weather Services senior research manager Dr Nhlonipho Nhlabatsi.He said rains could come, but much later in the year, leaving farmers with very short planting timeand unable to meet the expected worthwhile yield quotas at harvest time.“This also increases the likelihood of limited funding due to high risk projections,” he said.Nhlabatsi was speaking at a media briefing on the seasonal climate outlook, where he explained thedifficulty in predicting the summer season with any accuracy.He said the worse case scenario of the summer was the continuation of the drought. “That, or veryheavy rains. They are both disasters we can do without,” he said, adding that all indications pointedto a weak La Niña.The country is still reeling from the drought which has left thousands of farmers on the brink ofbankruptcy as livestock died and crops dried up.The drought started in 2014. Dams dried up. There was a threat to food security and the country wasforced to import maize and beef, among other products.El Niño is the warming up of the atmosphere, which results in severe weather patterns, while La Niñais its opposite.But the country was in a neutral phase. “This is a very critical situation,” seasonal forecaster DrAsmerom Beraki said. “It is not a given that when a country has gone through an El Niño, it will thenexperience La Niña.”The La Niña was not well defined. “If that comes we will not have sufficient rains, and therefore nomeans to get over the effects of the past drought,” Beraki said.“There are many climate drivers which determine the weather and we need to keep eyes focused onthem.”

Ntando Makhubu, IOL, 30 August 2016

Drought has cost SA R2bn in lost exports

SA’s worst drought in decades has cost the country billions of rand in lost export revenue, datashowed on Friday.The country’s agricultural exports declined in 2015 for the first time in 10 years, Agricultural businesschamber (Agbiz) said.Overall, the country’s agricultural exports shrank from R106bn in 2014 to R104bn in 2015, thebusiness chamber said.The drought caused production shortages locally, necessitating costly imports which led to a sharpincrease in food prices. Food inflation has increased steadily from 7% year on year in January to 11%year on year in June.

Africa remained SA’s largest market, accounting for 45% of agricultural exports — which was 1%below the five-year average share, Agbiz said.The EU accounted for 27% of SA’s agricultural exports in 2015, with Asia taking up 12%, and theMiddle East 7%. The Americas and the rest of the world accounted for 5% of SA’s agricultural exports,respectively.The sharpest decline in exports was to Asia, where agricultural exports fell 15% from R14.4bn in 2014to R12.2bn in 2015 mainly on the fall in cereal exports, mainly maize.Exports to Africa fell by 3.5% from R49bn in 2014 to R47bn in 2015 mainly due to the sharp fall insugar and sugar confectionery, cereal, as well as dairy product exports.Agricultural exports to Europe bucked the trend, firming by 8.3% from R26.2bn in 2014 to R28.3bn in2015. Edible fruits accounted for 60% of the country’s agricultural exports to the EU, while 20% werewines, Agbiz data showed.

Ntsakisi Maswanganyi, Business Day, 19 August 2016

Aerial crop sprayer destroys 170 hives near Tulbagh

An aerial crop sprayer recently wiped out bees from 170 hives near Tulbagh in the Western Cape,while spraying canola fields with pesticide.Stean van den Berg, who farms bees with his father Pedro, said they faced a loss of more than R1million. It was, however, not only Van den Berg who suffered damage. Residents of the small CapeWinelands town were furious about the potential health impact and the noise created.According to local resident and editor of Tulbagh eNews, Norman Collins, a crèche had to close earlydue to children complaining about headaches and respiratory problems.Farmer’s Weekly also learnt that some residents complained about worsening sinus and asthmaproblems. Complaints were also received about the noise caused by the low-flying airplane.Aerial crop spraying contractors have to comply with regulations aimed at ensuring the safety ofoperators, the public, well as wildlife. According to the South African Civil Aviation TechnicalStandards (SA CATS), when an agricultural operation is considered over a populous area (such as atown), clearance needed to be received from the local municipality.However, according to Kinnibaas Truter, Western Cape manager of True North Aviation, the companyconducting aerial crop spraying in the region, everything was done above board.Truter said that they were not informed about the hives on the farm when they were spraying thecanola fields. “According to my knowledge not even the farmer knew about the hives on his farm,”said Truter.He added that they only sprayed registered chemicals and said that that he was now in contact withCollins to keep him updated with the company’s activities so that the residents could be informedtimeously.

Jeandre Du Preez, Farmer's Weekly, 25 August 2016

‘Kanola is landbou se top-presteerder’

Die kanolabedryf was die afgelope vier jaar die land se toppresteerder wat produksie betref. “Die kanolabedryf is ’n ware suksesstorie vir Suid-Afrika en iets waarop die bedryf trots kan wees,” sêprof. Ferdi Meyer, direkteur van die Buro vir Voedsel en Landboubeleid (BFAP).Volgens die BFAP het die produksie in die bedryf sedert 2011 op ’n jaargrondslag met gemiddeld 6%gestyg. Meyer sê kanola is besig om aansienlik veld in die wintergraanproduksiegebiede te wen

danksy die bydrae van meer volhoubare wisselboustelsels, waar die gewas met onder meer koring,gars en kuilvoergewasse geroteer word.“Dié wisselboustelsels is doeltreffend vir die opbrengste van die ander gewasse en is die hoof-aansporing vir kanolaproduksie in veral die Suid-Kaap,” sê Meyer.Meyer sê volgens data uit die Overberg-produksiestreek het die kanolaboere tussen 2010 en verledejaar gemiddeld net meer as R2 500 per hektaar wins verdien, teenoor ongeveer R4 300 vir koring enR4 500 vir gars.“Indien boere egter hul opbrengs met beter produksiemetodes en beter kultivars van gemiddeld 1,4t/ha tot ongeveer 1,76 t/ha kan verhoog, sal die wins wat hulle behaal, soos geprojekteer vir vanjaartot 2018, met dié van koring en gars kan meeding,” sê hy.BFAP projekteer dié hoër opbrengs sal ’n wins van tot R3 700 per hektaar kan behaal. Daarteenoorsal koring en gars onderskeidelik R3 300 en R3 700 per hektaar verdien, gegewe die gemiddeldeopbrengste en prysneigings die afgelope 10 jaar.“Daar moet in ag geneem word dat boere in die Suid-Kaap die afgelope vyf jaar rekord-oeste vir hulgrane van die lande afgehaal het, wat nie noodwendig vir die gars- en koring-oeste in die toekomsvolhoubaar is nie.”In 2014 is ongeveer 95 000 hektaar kanola aangeplant, en die BFAP voorspel dat daar teen 2024meer as 270 000 hektaar in die winterreënstreke aangeplant sal word. Wisselbou sal volgens dievoorspelling die groei van aanplantings in die Suid-Kaap demp, en toekomstige groei sal hoofsaaklikin die Swartland plaasvind.

Fredalette Uys, Landbou.com, 1 August 2016

SA’s grain body says court rules government must hike wheat tariff

A South African court has ordered the government to increase the tariff on wheat imports by 30%,the country’s largest grain producer body said on Thursday, a measure that should have beenimplemented weeks ago.South Africa changes the tariff on a regular basis using a variable formula based on world pricemovements. Industry group Grain SA says the tariff should have been adjusted in late May to R1,591a tonne, from R1,224, a 30% hike.When the adjustment is calculated, it typically also takes a few weeks for it to be signed off andimplemented, but Grain SA said the government was taking too long and took the case to the HighCourt in Pretoria.“The Court instructed Sars (South African Revenue Service) to publish the new tariff in theGovernment Gazette no later than Wednesday 24 August 2016,” Grain SA said in a statement.Publishing the tariff in this manner brings it into effect.“Trading in the South African wheat market almost came to a halt given all the uncertainties anddelays. We need certainty,” Grain SA said.Sars officials were not immediately available for comment.South African wheat producers say the tariffs are necessary to protect them from highly subsidisedforeign competitors.

Ed Stoddard, Reuters, 18 August 2016

Peanut butter trumps nuts as South Africans spread 18% more

Higher prices are hurting South Africans’ demand for whole peanuts, but citizens are set to spread18% more peanut butter than they did four years ago, an industry body said.

Consumption of the nuts is set to drop to 25,000 metric tons in the 2017 season, 15% less than fourseasons earlier, Wandile Sihlobo and Tinashe Kapuya, economists at the Agricultural BusinessChamber, said in an e-mailed report. Meanwhile, people will eat 25,300 tons of peanut butter, about18% more than in the 2012-13 season.Producer prices for choice-grade peanuts have climbed 82% to 15,000 rand ($1,112) a metric tonfrom 2013. A 400-gram (14-ounce) jar of peanut butter has increased about 9% over the sameperiod, data in a separate Agbiz e-mail showed.“Over the years, the growth of middle class generally brought some changes in householdconsumption patterns and that has been part of this growth trend,” Sihlobo said by phone Tuesday.South Africa had the lowest rainfall last year since records began more than a century ago as the ElNino weather pattern decimated crops of everything from corn to wheat. While the middle class inthe continent’s largest economy has grown and eats more processed foods, the government hasstruggled to create employment and address poverty, with almost 27% of the nation’s working-agepopulation being without jobs.Local farmers may harvest 29,285 tons of groundnuts next season, according to the Crop EstimatesCommittee, 53% less than a year earlier and the least since 1947, South African Grain InformationService data shows. The area of 22,600 hectares is the smallest since records started in 1936. Thecountry will probably import 30,000 tons of peanuts in the 2016-17 season.Mozambique, Malawi, India and the US have been the leading suppliers to South Africa, whichexports to countries including the Netherlands, Mozambique, Belgium, Egypt, and the UK, Sihlobosaid in February. China and the US are the biggest providers to Japan.

Tshepiso Mokhema, Bloomberg, 23 August 2016

Nuwe streng reëls vir alle groenteboere

Alle groenteboere gaan aan onder meer aan streng etiketterings- en graderingsvereistes moetvoldoen om hul produkte te verkoop. Alle vars produkte gaan vanaf 17 November aan dieselfde streng regulasies en vereistes moetvoldoen waaraan aartappels al jare lank blootgestel is, met die doel om die hele bedryf te verbeter.Boonop sal hulle self daarvoor moet opdok.Dit volg op die Departement van Landbou, Bosbou en Visserye se aanstelling van die maatskappyProkon as inspekteurs van alle vars produkte wat plaaslik verbou, verpak en verkoop word.Volgens mnr. Billy Makhafola, die hoof van landbouproduktestandaarde by die Departement vanLandbou, maak hierdie stap die speelveld gelyk. “Die goeie nuus is dat dit sonder twyfel waarde totdie varsproduktebedryf gaan toevoeg en dus vir boere ’n beter inkomste sal beteken.”“Die Wet op Landbouprodukstandaarde (Wet 119 van 1990), skryf reeds spesifieke vereistes voor viralle produkte wat op varsproduktemarkte verhandel word. Prokon is aangestel om seker te maak dataan hierdie spesifikasies voldoen word.”Dit beteken dat alle produkte ordentlik verpak en gemerk word, die gradering duidelik op dieverpakking aangedui word en dat die inhoud korreleer met die gradering op die verpakking.Mnr. Etienne Booyens, uitvoerende hoof van Prokon, reken hierdie stap is die beste ding wat met dievarsproduktebedryf kan gebeur. “Prokon is reeds 23 jaar gelede deur die aartappelbedryf in die lewegeroep, met uitstekende resultate.“Supermarkte se grootste beswaar teen varsproduktemarkte is dat daar nie ’n betroubaregraderingstelsel is nie. Ek dink die departement verdien ’n pluimpie vir hierdie stap, want dit gaansorg dat een boer se eerstegraadse produkte ooreenstem met ’n ander boer s’n. Dit gaan die kopermeer vertroue gee.“Prokon het tot 17 November tyd om sy stelsels gereed te kry en kapasiteit te bou. Die inspeksies salvan 17 November af ingefaseer word. Teen 1 Januarie sal die proses in volle swang wees.

Daar is kommer dat kleinboere of nuwe toetreders nie bewus daarvan gaan wees of die vermoë salhê om hieraan te voldoen nie.’n Deel van ons mandaat is om ’n opleidingsrol te speel om te verseker dat alle boere aan vereistesvoldoen sonder dat dit hul ondergang beteken,” sê Booyens.“Dit sal sinneloos wees om die kleinboere met die wet dood te druk. Ons is besig om saam metProkon aan ’n oplossing daarvoor te werk,” sê Makhafola.Die inspeksiefooi wat meestal op varsproduktemarkte sal ontstaan, sal op ’n maandelikse grondslaggehef word en regstreeks van die boer se verdienste op die mark afgetrek word.Produkte wat direk uit pakskure verkoop word, sal ook geïnspekteer word. Inspeksies sal ook insupermarkte se verspreidingsentrums gedoen word, waarvoor die supermark sal moet betaal. Diespesifieke fooie word nog deur Prokon bepaal en sal voor 17 November bekend gemaak word.

Johan van der Merwe, Landbou.com, 5 August 2016

Appels in Grabouw uit oor verwarming?

Minder winterreënval, wat ook tot later in die jaar verskuif, en ʼn kwaai afname in koue-eenhede kanernstige gevolge vir die appelbedryf in Grabouw en Villiersdorp inhou. Appelboere in Grabouw sal dalk alternatiewe gewasse moet oorweeg indien modelle oorklimaatsverandering in die kol is oor temperatuurtoenames in die Wes-Kaap.Volgens dr. Stephanie Midgley, projekbestuurder van die SmartAgri-plan in die Wes-Kaap, toonklimaatmodelle dat dié provinsie teen 2050 sowat 1,5 °C tot 3 °C warmer sal word, hoewel hullehoop dit kan tot 2 °C beperk wees. Meer warm dae per jaar word ook verwag.Sy sê ’n seisoenale skuif in reënvalpatrone is ook opvallend. Winterreënval verminder en skuif naSeptember tot Desember. Minder reënerige dae word verwag, maar wanneer dit reën, sal dithewiger neerslae wees. Volgens klimaatmodelle sal die westelike deel van die provinsie meer geneigwees tot droër toestande. Die hoeveelheid koue-eenhede gaan ook in veral Mei daal.“Teen die middel van die eeu sal ’n afname van 7% tot 17% in koue-eenhede in die Bokkeveld (nabyCeres) waarneembaar wees. ’n Ander studie meen dit sal tussen 13% en 20% wees, maar selfs metdie afname sal die Bokkeveld steeds gunstig vir appelproduksie wees. In Grabouw en Villiersdorp,waar die projeksies op ’n afname van 19% tot 34% dui, sal daar ernstige gevolge vir appelproduksiewees.”Volgens Midgley, ’n genooide spreker by die Inmaakvrugteprodusentevereniging en DroëvrugteTegniese Dienste se tegniese inligtingsdag vir vrugteprodusente op Robertson, sal die veranderingeonder meer ’n invloed op besproeiing en vruggehalte hê.“Ons sukkel reeds met probleme soos sonbrand en kleur, maar ons kan verwag dat dit sal erger wordsoos die temperature toeneem. Sommige studies meen boere sal 8% tot 10% meer moet besproeinet om op te maak vir die waterverliese deur transpirasie weens die hoër temperature, ongeag diereënval.”

Lucille Botha, Landbou.com, 16 August 2016

Opportunities in the Canned Fruit industry

While canning fruit producers were struggling to stay afloat a few years ago, prospects are againlooking promising. Wiehahn Victor, CEO of the Canning Fruit Producers’ Association, spoke toGlenneis Kriel about the opportunities facing the industry.• What was the 2015/2016 canning fruit season like?

High temperatures and the drought has made this a challenging season. Bulida apricot production forthe canning market declined from 20 164t last season to 17 368t this season, while cling peachproduction increased from 97 976t to 105 614t.Bon Chrétien pear production declined from 47 059t to 44 261t . It’s still very early to say, but itseems that farm-gate prices might be 13% to 23% higher than last season, which should helpcompensate for the lower volumes produced.• A few years ago, the industry went through an arduous period, with producers dumping 5000t of apricots and uprooting trees because production was no longer economically viable. Has thispicture changed?Yes. Prices for canning fruit have greatly recovered because of the weak rand and an improvedbalance between supply and demand on the international market. While farmers treated Bulidaapricots like weeds a few years ago, they are now starting to plant again. There is even a canningfactory that supplies producers with apricot plant material.However, there is still room for improvement. Production must be seen in comparison with othercommodities; at only R2 000/t to R3 000/t for apricots, farmers can make better money with othercommodities. South Africa is the leading global apricot exporter, which means that we have a littleinfluence over prices.However, due to high production and processing costs, South Africa’s consumers will have to paymore for processed apricots to keep the industry viable.• Could higher profitability result in a flooded market?There is that danger. Higher earnings would stimulate production expansion, and producers have toguard against this. The apricot market is highly sensitive. With an oversupply of 5 000t, the marketwill crash. If there’s an undersupply, prices will soar sky-high and render the product unaffordable.• Currently, what are the industry’s greatest threats?Producers are not planting enough orchards, and current orchards are ageing. According to the 2015tree census, only 7ha of Bulida apricot trees, 104ha of cling peaches, 2ha of Bon Chrétien pears, and7ha of Early Bon Chrétien pears were planted last year.The industry needs to plant about 80ha of Bulida apricots, 300ha of cling peaches, and 65ha of BonChrétien pears each year to replace old orchards and maintain production volumes. Fortunately,most newer varieties produce far higher yields than older varieties.Another obstacle is water scarcity. The drought has reminded us again that water and soil are finitesources. Producers can build dams to save water for when it’s needed, but ultimately they must bemore astute in how they use water. This will become progressively important as competition for thisresource increases.Production costs are also problematic. In the last year, costs have increased above inflation rates, atbetween 10% and 12%. The rise in processor production costs are even higher, at above 15%, asprocessors must import a lot of production material.At farm level, labour and energy are the biggest costs, while sugar accounts for up to 10%, and metalcans for up to 25% of the production costs at processing plants. To lessen this burden, the industry islooking at ways to save packaging costs, such as possibly using thinner tins.• What are the main needs in terms of new varieties?We have some of the world’s best canning fruit varieties in South Africa. Nevertheless, I think we cando with earlier- and later-ripening cling peach varieties.We have an average turnaround time of 12 days, and some fruit is in storage for up to 20 days, whichhas a negative effect on fruit quality.However, our global competitors in South America manage to can their fruit within five days ofpicking.• Is consumers’ growing concern about excessive sugar in products affecting the industry?Yes, this is a problem. I think people are exaggerating the sugar aspect and overlooking the nutritiousvalue of the fruit in the tin. The industry is looking at ways to address this concern, by, for example,using less sugar in the syrup, or using fruit juice as a canning base.

• What are the industry’s greatest assets?The quality of our produce and labour force are our greatest assets. We are now associated withproducing some of the best canning peaches in the world, and people are willing to pay more for thisquality.Additionally, the vastness and affordability of our labour force could put us at a great advantage overcountries like Australia, the US, and countries in Europe where there are labour shortages and labourisgenerally more expensive.However, for this to become an advantage, our labourers must receive better training and education.• Where is the greatest potential for market growth?Certainly in Africa and South Africa. About 90% of our canning fruit is exported to regions outside ofAfrica, and growing these markets will help us reduce price risks.• Is the industry encouraging farmer development?With current favourable market prices, farmers are in a better position to empower their workers.However, developing new farmers is very difficult, as start-up costs are high and the market highlyvolatile.• How does the industry continue to exist with so much instability?Canning fruit diversifies market risks, with the canning segment of producers’ farms generating 10%to 50% of income. Most producers are therefore also producing other commodities. At the moment,canning fruit is alleviating the impact of low earnings from other commodities.• Do you have any advice for growers?Be sensitive to what is happening in the market and understand that supply and demand is the onlything that affects prices. Moreover, supply the market with good quality products that comply withmarket standards.Globally, there’s a growing concern about food safety and producers need to supply the market withguarantees that their produce is safe to eat.

Glenneis Kriel, Farmer's Weekly, 23 August 2016

SA wine export will thrive over the next decade

South Africa’s wine export is set to soar by 13% over the next decade, according to the latest Bureaufor Food and Agricultural Policy (BFAP) baseline report.The bureau’s annual report‚ produced by researchers from the universities of Pretoria andStellenbosch as well as the Western Cape Department of Agriculture‚ says wine exports reached 313million litres last year‚ up from 122 million litres in 2000.More than 50% of South Africa’s agricultural exports are produced in the Western Cape. “As part ofour Project Khulisa (the province’s economic growth strategy), we have set ourselves the goal ofboosting wine exports to strategic markets and the latest trends are excellent indicators,” saidWestern Cape economic opportunities MEC Alan Winde in a statement.South Africa is exporting to markets across the world. The bulk of exports is destined for theEuropean Union and the UK, but exports to key markets in the rest of Africa, the US and China is alsogrowing.Exports are important for the South African wine industry. However, tariffs can restrict marketaccess. The BFAP report highlighted that removing tariffs in strategic markets (Angola, Kenya, US andChina) would be a key contributor to increased wine exports. But, it is not the only answer.“If we want to grow exports into these markets we have to look at non-tariff barriers which are aliveand kicking in Africa in particular. We also have to look at our marketing strategies and promote ourSouth African brands in these markets,” said Tracy Davids from BFAP.

To stimulate the sale of South African wine on the rest of the continent, tasting events andpromotions were currently being conducted in strategic markets including Angola, Nigeria, Uganda,Kenya and Ghana, according to Matome Mbatha, Africa market manager for Wines of South Africa(WOSA).Wine courses and seminars were also presented across the continent.Despite key markets in Angola and Nigeria declining in the past year, growth had been recorded inMozambique (86%), Mauritius (23%), Zimbabwe (6%) and Kenya (3%) from 2014 to 2015. EastAfrican markets were also growing extremely well, he said.

Jeandre Du Preez, Farmer's Weekly, 24 August 2016

Stellenbosch has potential to become major wine tourism destination

Stellenbosch has the potential to become a major wine tourism destination just like the Napa Valley,says Clay Gregory, President and CEO of Visit Napa Valley, the official tourism marketing organisationfor the region.The Napa Valley is widely considered the most popular wine country destination in the US andattracts wine enthusiasts from all over the world.In 1971 Stellenbosch became the first wine region in SA to establish a wine route.Gregory, who will be a headline speaker at The Business of Wine and Food Tourism Conference inStellenbosch in November, said on Thursday SA already has the skills and assets but currently lacksthe investment to drive wine tourism."You have the wine, the people and the natural beauty to rival any wine tourism region of the world.But SA first needs to spend more on marketing and getting the region top of travellers’ minds," hesaid.Wine tourism is growing fast in many wine-producing regions around the world. Tourists visitvineyards, wineries, wine festivals and wine shows to taste local wines and learn about the wine-making process. Market research by Destination Analysts of San Francisco, on behalf of Visit NapaValley, showed that 3.3-million tourists visited Napa Valley in 2014, spending $1,63bn. By contrast,Conningarth Economists estimated the entire wine tourism industry in SA to be worth $358m in2013.However, the sector is fast becoming the star in boosting tourist numbers to the Western Cape. Theprovince, lauded for its Cabernet Sauvignon and Shiraz, among other fine wines, is home to most ofthe vineyards in SA. SA’s nearly 100,000ha of vineyards generate about 3% of the world’s wineproduction.Local tourism entrepreneur Margi Biggs who is organising the inaugural Business of Food and WineTourism Conference, said: "With the wine industry working together with government … the futurelooks bright."Meanwhile, the local wine industry has received a boost with the news that South African wine salesin the US are up 14% by volume for the 52-week period ending July 16, 2016. According to Nielsendata, a 25% growth in value for total sales was recorded over that same period, indicating anincreasing consumer willingness to spend more on wine from the region.Wines of SA (Wosa), a not-for-profit industry organisation, attributes much of the growth to anincreased importer focus on the region as a whole, coupled with greater boutique-importer demandfor suppliers of small production, higher quality South African wines. Wosa has been working toamplify the surging popularity of the region by engaging trade audiences with a range ofprogrammes and events."As we continue to educate the public, we are thrilled to see consumers viewing SA, not only as agreat region for value, but for quality as well," said Jim Clarke, Wosa US Marketing Manager.

"To see value of sales jump 25% in just 12 months is a true testament to both the skill and dedicationof our wine makers, and the diligence of top-notch importers to bring those wines to market."

Bekezela Phakathi, Business Day, 25 August 2016

Transforming the wine industry

The Cape Winemakers Guild Protégé Programme, a trail blazer for transformation in the wineindustry by mentoring and empowering aspirant winemakers and viticulturists, celebrates its 10thanniversary this year. Driven by a vision to bring about transformation in the wine industry, the mentorship programmewas founded in 2006. Over the past 10 years, 20 talented protégés have come through the ranks, honing their skills whileenjoying the rare opportunity of rubbing shoulders with giants in the industry. Louis Strydom, chairman of the Nedbank Cape Winemakers Guild Development Trust says: “After tenyears of the Protégé Programme we can look back at our success and say (it is) a job well done. Thisis, however, only a start and it is wonderful to see the support from our winemakers and our sector.”The Protégé Programme started out as a four-year skills development initiative for oenologygraduates, but was changed to a three-year internship in 2009. In 2014 the programme wasextended to give cellar workers access to formal training and education through a partnership withWine Training South Africa. Last year saw further expansion of the Protégé Programme into thevineyards, with the enrolment of the first viticulture protégé.Over the span of the internship, each protégé is assigned to work alongside one of the members ofthe guild for a one-year period. During this year they are given first-hand experience of the innerworkings of the cellar. During the course of their internship, every protégé is mentored by threemembers of the guild. Over and above working in some of the most acclaimed cellars in South Africa,protégés are given ample opportunity to enrich their winemaking experience even further – fromannual exchange programmes to some of the world’s famous wine regions to being judges at variouswine competitions. “Over the three-year period, the protégés have the opportunity to develop their skills while beingexposed to different terroirs and styles of wine. This gives them invaluable experience and a firmfoundation upon which to build their careers,” adds Strydom.Making their own wine is a requirement in their second year and enables the protégés to give backto the industry when the wines are auctioned at gala dinners and at the silent auction at the annualGuild auction. All funds raised are ploughed back into the programme.V The 2016 Nedbank CapeWinemakers Guild Auction takes place at Spier in Stellenbosch on 1 October.

People's Post, 30 August 2016

Farmers suggest new model in land reform

The African Farmers Association of South Africa (Afasa) in the Free State has called for a secondmodel to the land reform programme to complement the existing Proactive Land AcquisitionStrategy (Plas) programme. The body strongly maintains such a move will expedite the current land reform process and also savegovernment money in the process. The decision to table another proposed model to the existing Plas one was taken recently (on 29July) at the Afasa and the National Emergent Red Meat Producers’ Organisation (Nerpo) Free Stateannual congress held in Frankfort.

Afasa Free State said the current land reform process through the Plas was bogged down byinadequate budgets and red tape which are slowing down the process of acquiring land forredistribution. Shadrack Mbhele, Afasa Free State president, said the slow pace of land reform in the province wasfrustrating to the transformation progress as land availability continues to be a challenge. Mbhele said many farmers in the Free State have applied for land.However, their applications still remain on long waiting lists as budgets are already exhausted for theyear 2015-’16. He said, according to information they received, only R5 million was allocated to each of the fivedistricts in the Free State. “How much land will be purchased with R5 million? “You’d be very lucky if you can find one farm under R5 million in the Free State,” said Mbhele. Maseli Letuka, Nerpo Free State chairman, has urged the minister of Rural Development and LandReform to seriously consider the proposal the province had tabled. He said not only will this new proposed model fast-track the process, but it will save government alot of money. Letuka further urged government to subsidise the land acquisitions with up to 50% of the marketprice. “Through this model, farmers will have to identify the farms that are on the market and which theyare interested in buying. “They will then start negotia-ting with the seller and once there is an agreement, the farmer mustthen inform the office of the land valuer general.The land valuer general will then determine if the price agreed on, is market related. “Once this farm has gone through the land valuer process, the farmer can then approach theDepartment of Rural Development and Land Reform (DRDLR) for 50% subsidy. “Once the subsidy has been approved, farmers can approach financiers of their own choice Zpreferably the Land Bank Z with the approval from DRDLR, which in this instance could serve aseither deposit or collateral. “These mortgage loans should not be shorter than 30 years and must have a fixed interest rate of notmore than 5%. “This will make repayments lighter and affordable to black farmers,” Letuka elaborated. According to Aggrey Mahanjana, Afasa secretary general, the model will eliminate more than 70% ofthe red tape involved in the current land acquisition process.Through this, more responsibility will be given to the farmer than to the department, which has a lotto deal with already. “The model also ensures that farmers get exactly the farms they want which are suitable to theirenterprises.“This will therefore make their chances of succeeding a lot higher. “In the current process, farmers sometimes find themselves having to accept any farm madeavailable to them Z whether it is suitable or not for their enterprises Z due to the fears of losing theopportunity to acquire land,” Mahanjana concluded.

Teboho Setena, Qwaqwa Express, 10 August 2016

Kaap should consider a JSE listing

With a 100-year history, a 2015 revenue of R5.3bn and profit of R257m, Kaap Agri is one of the best-kept retail secrets, and possibly also the cheapest, operating in SA. If the stock were a main boardJSE-listed business in the retail sector its share price would be 50% higher than now.

But Kaap is "trapped" trading on the over-the-counter (OTC) market, and I see real opportunity as itheads towards its 2020 goals of a main board listing of value creation if enough coercion is applied,especially to its majority shareholder, Zeder Investments. With about 120 stores in several provinces,Kaap Agri’s fastest-growing area of business is servicing its nonagricultural clients.More than 85% of its business is derived from retail, which is why several years ago I nicknamed thecompany a "Boere Massmart".Apart from wooden poles, tractors and fertilisers for farmers, Kaap’s biggest-selling items through itsapproximately 120 stores are pet food, building materials, work and safety wear and, increasingly,fuel from its chain of ExpressMart fuel and convenience stores. It is the biggest reseller of cement inthe Western Cape and, outside of the big oil majors, one of the largest fuel retailers.Listed on the OTC market at R29, the counter is trading on a historic price:earnings ratio of 11 andshould fall below 10 when its September results are released.I recently met management to discuss prospects. Kaap had a good interim financial reporting periodto March, with its diverse and wide-ranging agricultural and retail interests spread from its WesternCape heartland to four other provinces and Namibia.Margin mix improvements, as the wider retail offering expanded, generated good profit; for theinterim period profit increased 17% to R179m. HEPS growth rose by 18% to 185.24c/share despitethe drought in certain parts of the country.Management comments that the second half of its financial period (March to September 2016) hasstarted "better than [expected]". An uptick in the core agricultural trading business and solid growthin the inputs business have been seen. Second-half growth will be slower than the first half, due tothe drought affecting the wheat division, but the underlying retail businesses remain strong.The real growth and profit driver within Kaap Agri the past years has been from converting itsagricultural fuel depots to more of a forecourt convenience store offering. Kaap sells nearly 200ml offuel a year and thus gains great trading and rebate terms from the major fuel suppliers due to itsscale.The fuel offering and rapidly expanding ExpressMart forecourt convenience store format willcontinue to deliver outstanding results. Fuel now consists of 30% of Kaap’s entire business — and it isgrowing. Kaap has just over 20 such outlets offering convenience store formats, with plans for afurther eight by the end of 2016 and five others thereafter.The stock, even given its prospects, is not the easiest to trade or deal in. Since the imposition of theFinancial Services Authority rules on the OTC market, there has been a dramatic decline in daily tradeand volumes though, if patient, your stockbroker should be able pick up stock.For a business of this inherent quality and management’s strategy of ongoing 15% growth incompound annual growth rate which — on management’s forecasts, will lead to Kaap attaining anoperating profit of R500m by 2020 — this OTC trading mechanism is hampering Kaap’s valuation. Ihave questioned why this business is being hamstrung by an OTC listing rather than the companymaking preparation for a main board JSE listing. This is anathema to me and many other Kaapshareholders.The main hindrance could be majority shareholder Zeder Investments, with its 40% stake, which hastried twice before to buy out minorities.I say that Kaap should list on the JSE as soon as possible and let the wider market decide what its"proper" valuation is.I guarantee you that it will not be a PE of 9.

Anthony Clark, Business Day, 16 August 2016

OVK woeker ondanks droogte

Die OVK-groep het danksy ’n goeie vertoning van sy finansiële resultate vanjaar R50 miljoen aan symeer as 10 000 produsente-aandeelhouers in die vorm van dividende en sy lojaliteitskema uitbetaal.Volgens die groep se jaarverslag het OVK ’n netto-wins van R181 miljoen voor belasting behaal. Ditverteenwoordig ’n styging van 7,51% teenoor verlede jaar se finansiële vertoning.Mnr. Stéfan Oberholzer, besturende direkteur van die groep, sê nieteenstaande ’n baie droë seisoen,het OVK steeds gegroei. “Die geografiese verspreiding, asook die diversifikasie binne die besigheid,verseker dat daar altyd sekere gebiede en afdelings is wat sal presteer, al ervaar ander gebiedeongunstige toestande soos die afgelope jaar se erge droogte,” sê hy.Die wins is na die uitbetaling van R16,6 miljoen se lojaliteitskorting. OVK se aandeelprys het dieafgelope jaar ten spyte van die droogte steeds gestyg. Volgens die jaarverslag het die styging in OVKse aandeelpryse meegebring dat meer as R53,2 miljoen se waarde op aandeelhouers se balansstaattoegevoeg is.Oberholzer sê OVK kan danksy sy winsgewendheid en sterk eie kapitaal van meer as R900 miljoenvanjaar daarin slaag om goedgekeurde produsente in die ongunstige landboujaar met verskeiefinansieringsprodukte bystaan om volgende jaar steeds te produseer. ‘n Volledige verslag is op OVKse webtuiste beskikbaar.

Johan Norval, Landbou.com, 31 August 2016

Banking & Capital Markets

SA’s biggest debt manager halts loans to State firms

Africa’s biggest specialist fixed-income money manager will stop lending money to six of SouthAfrica’s largest state companies because it’s concerned about how they are being run, governmentinfighting and threats to the independence of the finance ministry.Futuregrowth Asset Management, which has about 170 billion rand ($11.7 billion) in assets, shelvedplans to lend more than 1.8 billion rand to three state companies on Tuesday, Chief InvestmentOfficer Andrew Canter said by phone from Cape Town on Wednesday, without giving more detail.The fund manager will only resume offering loans and rolling over existing debt once it hasdetermined that what it sees as proper oversight and governance at the companies have beenrestored.The companies are power utility Eskom Holdings SOC Ltd., rail and ports operator Transnet SOC Ltd.,South African National Roads Agency SOC Ltd., the Land Bank of South Africa, the IndustrialDevelopment Corp. of South Africa and the Development Bank of Southern Africa. The decisionwon’t immediately affect lending to the government and other state bodies such as water boardsand municipalities.“We’ve observed recent reports that strongly hint of conflict between branches of South Africa’sgovernment, the possible machinations of patronage networks and a seeming challenge tothe National Treasury’s independence,” Canter said. “Any material risk to the state-owned entities’governance, budgeting and approval processes for spending or lending must impact on our forward-looking credit assessments. It is difficult to make reasoned and defensible decisions to continueproviding state-owned companies with additional funding using clients’ money.”The rand fell as much as 1.5 percent, while yields on dollar bonds of Eskom and Transnet, thenation’s two biggest borrowers after the government, soared.

The move comes as Finance Minister Pravin Gordhan battles with President Jacob Zuma and themanagement of state companies over board appointments and spending plans. The governmentannounced last week that Zuma will lead a new panel to oversee all state-owned companies toensure they help develop the country — a role previously delegated to Gordhan and other ministers.That decision lacks clarity and context and creates uncertainty about who the companies will answerto, according to Canter.Should other asset managers follow Futuregrowth, it will increase the state companies’ borrowingcosts and make it harder for them to finance plans to spend billions of rands on new infrastructure.The Treasury may also come under increased pressure to directly fund them and grant additionaldebt guarantees at a time when the economy is stagnating and it’s seeking to rein in the budgetdeficit to protect the country’s investment-grade credit rating.“Futuregrowth might be the first one to publicly come out and make a statement like this, but I don’tthink its going to be the last,” Wayne McCurrie, head of portfolio management at MomentumWealth Ltd. in Pretoria, said by phone. “They just don’t believe that the return justified the riskbecause of changing circumstances with regards to the governance of state-owned enterprises.”S&P Global Ratings and Fitch Ratings Ltd., which place South Africa’s debt at one level above junk,have raised concerns that state-owned companies aren’t being managed optimally. Governmentdebt guarantees to state companies totaled 467 billion rand at the end of March, according to theTreasury.“People who lend each other money, it’s because of a number of variables and it’s a voluntaryexercise,” Eskom spokesman Khulu Phasiwe said by phone. “If they disclose now that they’re notgoing to lend us money, then I suppose it’s fine, we will go elsewhere.”Transnet spokesman Molatwane Likhethe didn’t immediately return calls or e-mails seekingcomment. The Treasury said in an e-mailed response to questions it couldn’t comment onFuturegrowth’s business decisions.Zuma has rebuffed Gordhan’s attempts to replace the board of South African Airways, which ischaired by Dudu Myeni, who also heads the president’s charitable foundation, and the minister hasrefused to grant the loss-making carrier new loan guarantees.The Treasury is investigating coal contracts Eskom awarded to a company linked to the Guptas, afamily who are friends of Zuma’s and have been accused by some government officials, oppositionparties and civil-society groups of using that to wield political influence. The Treasury has also filed alawsuit aimed at preventing state arms company Denel (Pty) Ltd. from entering into an Asia-focusedbusiness venture.The state companies have said their dealings are above board and criticized the Treasury’s conduct.The Guptas, who have denied any wrongdoing and say they are the victims of a media witch hunt,last week announced plans to sell their businesses in South Africa.Fears that Zuma may seek to install a more compliant head of the Treasury were sparked by therevelation that the police are investigating Gordhan in connection with allegations that he oversawthe establishment of a illicit investigative unit while he headed the national tax agency, that allegedlyspied on politicians including the president. Zuma and the ruling African National Congress have saidwhile Gordhan has their full support, the law has to take its course. Gordhan denies any wrongdoing.While other business leaders have voiced concern about the standoff and called on Zuma to ensurethe police stop what they said is harassment of Gordhan, Futuregrowth is the first company to takeaction to try and persuade the government to change course.“When the country’s largest debt manager pulls the plug on lending to key state-run firms because ofconcerns about political meddling, it’s clear that South Africa has a serious reputational problem,” Nicholas Spiro, a partner at London-based Lauressa Advisory Ltd., which advises asset managers, saidby e-mail. “This is a downgrade in itself. The fallout from the political infighting within the ANC isproving more costly by the day.”Based in Cape Town and founded 20 years ago, Furturegrowth describes itself as “a specialistinvestment company that manages a full range of interest-bearing and developmental investments in

an ethical and sustainable way.” Among the projects it has helped fund are renewable energy plantsand toll roads.Futuregrowth has had a long-standing relationship with state companies and its decision to denythem new loans wasn’t taken lightly, Canter said. To start lending again, the money manager will askthe companies to provide it with information about the independence of their boards, investmentand credit committees and procurement processes, and to demonstrate greater transparency onmaterial spending or asset sales, he said.“It is certainly not our desire nor intent to undermine their developmental missions, nor disrupt theirability to deliver,” Canter said. “But we want to send a message that we can’t provide finance unlessthe governance and decision-making of the state-owned entities improves and becomes moretransparent.”

Mike Cohen, Bloomberg, 31 August 2016

Editor's Note: And now for the PIC

There would have been anxious eyes trained on last week’s election results in the Pretoria offices ofAfrica’s largest money manager, the Public Investment Corp (PIC). In recent weeks, the corridor talksuggests that after the election President Jacob Zuma will reshuffle his cabinet, with direconsequences for SA’s fiscal institutions.In particular, one man said to be in the firing line for "redeployment" is deputy finance ministerMcebisi Jonas, who last year blew the whistle on how he’d been secretly offered his boss’s job by theGupta family.This would be acutely troubling — not least because Jonas chairs the PIC, a position heldautomatically by the deputy minister. Now, the PIC controls R1.8trillion in government employees’pensions, so it’s a role in which you’d want someone with pretty unshakeable ethics.Jonas fits the bill: you don’t brand the president’s friends as liars unless you have a pretty unyieldingpersonal conscience.Those touted as his replacement include Sfiso Buthelezi (who was sworn in as an ANC member ofparliament in March) and Eskom CEO Brian Molefe.Both have solid credentials: Buthelezi, who was an adviser to Zuma between 1994 and 1999, is aneconomist; Molefe is a proficient former deputy director-general at treasury.But the concern is that their elevation would be less a benign reshuffling of the decks, and more aprecursor to Zuma’s lackeys tightening their grip on the PIC’s massive untapped financial reservoir.Thankfully, the ANC’s parlous electoral showing — in which it lost control of four key cities and itsnational support fell from 62% to 54% — means a Zuma-led assault on the PIC’s coffers is now thatmuch more remote.This is just as well, considering that well-placed sources say that in recent months a war of attritionhas been bubbling at the PIC.Dr Daniel Matjila, the CEO of the institution, has been having a "torrid time", according to thoseclose to him, as he has fought to resist those with aspirations of turning the pensions manager into apersonal piggy bank of the well-connected.Matjila is nobody’s fool. He has a PhD in mathematics — a subject he went on to teach at theUniversity of the North for nine years. Dr Dan also studied management at Harvard before workingfor Anglo American as a manager of quantitative research analysis, and then at asset managerStanlib.So he gets why it’s crucial that the PIC doesn’t fall into the hands of people who would allow it to bebent to the will of politically connected vampires.Commendably, the PIC wasn’t involved in funding the Guptas’ purchase of Oakbay in 2009; nor was itinvolved in stumping up the cash so the family could buy Optimum Coal from Glencore in March.

But with a more compliant chairman, it might be different.However, insiders say that in recent times, the Guptas have repeatedly pestered Matjila to meet withthem — overtures he has resisted.The public isn’t blind to these currents. The impunity with which the Guptas tried to compromise keyinstitutions seems to have been a key factor in the ANC’s bloodletting at the polls.Julius Malema put it bluntly: "Our county is being molested by the Guptas and Jacob Zuma, withoutVaseline."Were a Zuma loyalist — someone who placed party above country — hired to replace Jonas, hewould have enormous influence.Already, much that happens at the PIC happens in pitch darkness, with no transparency.Of its R1.8trillion in assets, 30% are "unlisted investments", which include companies like IqbalSurvé’s Independent Newspapers. But for these "unlisted investments", there are no publiclyavailable financial statements, nor is the rationale public for why the PIC invested.In this context the PIC, with the wrong leadership, has the potential to be the deepest slush fundimaginable.

Rob Rose, Financial Mail, 12 August 2016

Prof. Vink direkteur by Reserwebank

Prof. Nick Vink, landbou-ekonoom verbonde aan die Universiteit van Stellenbosch (US), is deur dieSuid-Afrikaanse Reserwebank (SARB) se aandeelhouers as nie-uitvoerende direkteur verkies.Vink is die voorsitter van die department van landbou-ekonomie in die Fakulteit vanAgriWetenskappe en sal vir drie jaar op die SARB se direksie dien. Prof. Ben Smit, voormaligedirekteur van die US se Buro vir Ekonomiese Ondersoek, is ook vir ’n tweede termyn verkies.Hy hoop sy rol bied hom die geleentheid om groter bewustheid te skep oor die Reserwebank sebesluite se uitwerking op die landbou en wil die bank ook “attent maak op hoe gebeure in dielandbou die breëre ekonomie beïnvloed”, sê hy.Vink is ook onlangs as die aangewese voorsitter van die Internasionale Vereniging van Landbou-ekonome verkies en is die eerste person uit Afrika wat dié posisie vul. Hy is ook ’n voormalige wennervan die Landbouskrywers SA se nasionale Landboukundige van die Jaar-toekenning.

Liezl Vercueil, Landbou.com, 5 August 2016

Jobs Fund: Many obstacles

"Very difficult" – that’s how Hot Dog Café MD Derek Smith describes getting his project to meetnational treasury’s Jobs Fund targets.Treasury recently extended a number of the fund’s enterprise support projects and has revised jobtargets of others downwards, as the worsening economy has made it hard for many to meet initialtargets.Smith’s franchise was granted an extra 15 months to meet its target of creating 372 jobs throughtraining and funding black youths to become franchisees. The Jobs Fund has committed more thanR17.2m, with the franchisor contributing a further R18.2m, to set up 62 outlets. But by end-June,three months past the deadline, the project had created just 218 jobs.Smith attributes this partly to last year’s power blackouts, which led many customers to stay awayfrom malls where a number of the outlets operate. Treasury has since agreed to extend the projectuntil June 30 next year. But now the slowing economy has begun to bite. The combined turnover ofoutlets was down 16% in May from the previous month.

For Curafin, which finances owner-driver schemes for seven firms through a R96m (half from theJobs Fund) project, a 2014 strike prevented the project from meeting its job targets.Curafin MD Brendan Nunan says the project was to have ended last year but that treasury hasgranted an extension until at least the end of next month, as the strike had delayed the purchasing ofnew vehicles for six months. As of the end of June, 359 of the 367 targeted jobs had been created.For business A2Pay, which provides imported vending equipment and business equipment such asprinters and fax machines to franchisees in townships, the crash in the rand affected job creation.The company had initially pledged to create 5,000 jobs and the Jobs Fund allocated R78m, which wasmatched by A2Pay. But the target was cut to 3,128 after the decline of the rand last year. By the endof the three-year initiative on June 30 the project had created 3,123 jobs — about a third being theoperators themselves.A2Pay chairman Bert Roux admits that the company should have taken out forward cover to hedgeagainst any drop in the value of the rand.Despite this he believes the project had "taken off like a rocket". The company has now begunassembling the equipment locally and is seeking a local partner to manufacture the goods. It is alsolooking at creating spaza shops to operate the devices.Mining giant Anglo American also adjusted the jobs target of its enterprise development programmeZimele – from 8,000 to 6,000 jobs — following the commodities slump.By the end of the three-year project on March 31 the programme had created just 4,143 jobs, byfunding 106 small businesses from its R500m Sebenza Fund (half of this was committed by the JobsFund). Just R281m of the funding had been utilised by the project’s end.The initial plan was to fund 1,600 businesses via Zimele’s network of business development hubs.Zimele MD Hlonela Lupuwana says the company subsequently found that only a few high-qualitybusinesses are able to create sustainable jobs.Jobs Fund head Najwah Allie-Edries points out that despite the revised targets, treasury would stilltake into consideration the initial target when evaluating a project."In SA, projects operate in dynamic markets — if we assume that forces within the economy andlabour market will remain the same from concept to completion, we are being very short-sighted,"she says.She adds that a project’s success shouldn’t be measured only by the number of jobs created, but alsoby whether the long-term livelihoods or circumstances of beneficiaries had been improved or not.So far nine small business support projects (excluding those in the agricultural sector) have beencompleted. These have created 17,663 jobs through R885m in funding from the Jobs Fund and fromorganisations’ own contributions. Not all have met their targets (see graphic). The average cost of ajob across these projects was R50,104 — with the state covering between 41% and 83% of the costof each job.Key for most of the projects has been finding the right entrepreneurs to back. Hotdog Café’s Smithsays a quarter of all applicants drop out of the project’s initial month-long training course, somebecause of a family issue or alcohol problems.This, he says, adds significant wastage, which needs to be costed into the programme. But he saysthere may be some future benefits even for those who drop out of the training.Many who are recruited to the programme are unemployed township youths with little or nobusiness experience. Only about 5% did maths in matric, he notes.Interviews often don’t tell the full story, because candidates are so desperate to make an incomethat they will say anything to get the opportunity. It’s often down to "trial and error" when it comesto finding the right person to run outlets.But there is some evidence that project managers are learning to get better at finding the rightentrepreneurs to support.Just 15% of those whom business-support organisation the Awethu Project trained and mentored inits first round of funding from the Jobs Fund created jobs. But two years into its second round offunding from the fund, almost half of all entrepreneurs are creating jobs.

This has helped to halve the cost borne by the Jobs Fund to create each job.Yet even with the best intentions the focus on creating jobs can create other problems, as Cape-based business Rain, which makes bath and body products, discovered.The business tapped R2.4m in funding from the Jobs Fund via the Cape Craft & Design Institute (towhich it had to contribute R600,000 of its own money), to fund various interventions such asdeveloping a new products range and recruiting specialist employees.This helped the company to grow its job numbers, including those generated from communityprojects, from 50 to 172. Turnover has increased by more than 120%.But Rain CFO Helen du Toit says the new hires also pushed the company’s overheads "sky high",putting strain on the business’s cash flow. It will take time before the increase in turnover covers allthe new jobs, she says.Masibonge Mthethwa’s fruit retailing business, Frutee Belliez, created four jobs during the periodshe received training and mentoring from a R5m project run by Project Preparation Trust . ButMthethwa can’t attribute those hires directly to the organisation’s help.While she found a week-long course on basic business skills useful, she says one mentor failed tohelp with her business plan. A second was more forthcoming, providing some useful legal advice.Next month the Jobs Fund is expected to announce new projects to be funded in its innovationround, which closed in February. Supporting the right entrepreneurs will be vital, but those involvedwill be hoping strikes, currency depreciation and further economic woes don’t stand in their way.

Stephen Timm, Financial Mail, 25 August 2016

Norway-backed fund on hiring spree in Africa finance venture

A new development-finance venture that will control banking and other assets worth more than$660 million across sub-Saharan Africa plans to hire as many as 20 people including analysts tomanage its investments and help it spend another $300 million on acquisitions.The Norwegian Investment Fund for Developing Countries, the state-owned financier known asNorfund, is pooling its investments on the continent with Dutch lender Rabobank Groep and Dutchdevelopment bank FMO to create Arise, which will be based in South Africa. Arise will start operatingin January with investments in 20 African countries and enough funding to be able to reach almost$1 billion of assets within five years, said Deepak Malik, the southern African head of Norfund.“We’re going to go through an extreme recruitment phase, looking for senior investment staff andanalysts and more,” he said in an interview in Johannesburg, where the company has five employees.“We’ve also got to get regulatory approval in all the African countries we operate in. That could takeus six to eight months.”The venture will hire 20 to 25 people over the next six months and is also contemplating moving itssub-Saharan African headquarters to Cape Town, Malik said. Even though European banking regulations have made it more expensive to hold foreigninvestments, Rabobank decided not to exit its African assets and instead set up the partnership withNorfund and FMO. Utrecht, Netherlands-based Rabobank, which specialises in agricultural lending, isensuring its shareholdings are below regulatory thresholds that will require it to set aside capital forthe investments.The formation of Arise comes after growth in sub-Saharan Africa eased to 3.5% in 2015, the slowestpace in 15 years, with the International Monetary Fund predicting an expansion of 3% for this year. Arise’s ambition “is to build strong and stable financial-service providers that will serve retail, small-and-medium enterprises, the rural sector and clients who have not previously had access to financialservices,” the three partners said in a statement on August 4.

Norfund’s investments span a solar park in Rwanda, biogas generation in South Africa, a 12.5%holding in Kenya’s Lake Turkana wind project, which will be the largest on the continent, and 12% ofEquity Group Holdings, Kenya’s biggest bank by market value.“Africa has the world’s youngest population, the lowest banking penetration rate, a weak financialsector in terms of capital and the foreign banks are struggling with regulation in their homemarkets,” Malik said.The continent has the lowest access to financial services in the world, with less than a quarter of thepopulation owning a bank account, compared with about 34% in Latin America, according to a 2015report by the African Development Bank Group. Further, with over 40% of its working-age populationbetween the ages of 15 and 24, Africa is the youngest continent in the world, United Nationsresearch shows.Norfund, which has offices in Johannesburg, Maputo and Nairobi, will have a 48% stake in Arise,FMO will hold 27% and Rabobank just under 25%, Malik said. Banco Montepio, a Portuguesefinancial services company, may join the partnership, the companies said in a statement on August 4.Norfund has invested about $2 billion in Africa in the past 13 years. Half of its investments are inclean energy with financial services its next biggest investment portfolio. It typically takes minorityequity stakes and its African investments span countries including Uganda, Rwanda, Kenya,Mozambique, Zambia and Zimbabwe.“Norfund is already working on two transactions with two listed companies, one in South Africa, andone elsewhere,” Malik said, without giving more details. “After Arise starts in January we wanteveryone to get entrenched with the portfolio in the first six to eight months. You might also see aselloff in some assets we don’t want to stay in as the new company.”

Renee Bonorchis, Bloomberg, 16 August 2016

Taks-wysigings spel probleme vir trusts

’n Plaas wat aan ’n trust verkoop is deur middel van ’n lening van die boedeleienaar, kan problemebring met die voorgestelde wysigings op belastingwette. Dié wysigings wil verandering aan diebelasting van rentevrye lenings aan trusts sien.Dié soort probleme kan vir die belastingjare wat op 1 Maart 2017 volg, ’n werklikheid word met dieNasionale Tesourie wat wil toesien dat die staatskoffers met die miljarde gevul word wat jaarliksverlore gaan weens trusts wat gebruik word om welvaart teen boedelbelasting te beskerm.Adv. Ronald King, hoof van strategiese navorsing by PSG, verduidelik dat probleme kan opduik byplase wat onder die 8%-markkoers aan die trust deur middel van ’n lening van die boedeleienaarverkoop is. As die trust egter die lening aan die bank skuld, dan is daar nie ’n probleem nie.“As jy die plaas aan die trust verkoop het teen ’n rentevrye lening, gaan die geagte rente nou vereisdat die plaas se waarde in die trust met meer as 16.4% per jaar moet toeneem sodat dieboedelbelastingvoordele die inkomstebelasting nadele kan ewenaar. Trusts in boerdery het egter ’nverskriklik belangrike beskermingswaarde, veral wanneer ons na die droogte kyk. Dit behou dussteeds sy hoofdoel.”King sê dit is egter uiters belangrik dat die trust nie borg staan vir skulde nie, anders verloor dithierdie voordeel. Dis ook belangrik om te onthou dat trusts dit makliker maak om plase byvoorbeeldvan geslag tot geslag oor te dra sonder dat dit in die boedel gevries of oordragkoste betrokke is.Hierdie voordeel is nie verloor nie.Met die Parlement se staande komitee vir finansies, wat nog oor die wysigings moet beraadslag enook kommentare oor die wysigings moet deurwerk, kan die situasie egter verander indien verderewysigings aan die belasting rondom trusts gemaak word.

Die wysigingswet bevat ’n nuwe artikel wat grootliks rentevrye lenings aan trusts sal neutraliseer.Artikel 7C wat by die Inkomstebelastingwet ingesluit word, het betrekking op alle lenings wat gemaakword tussen ’n trust en die verbonde persone en maatskappye.King verduidelik dat indien die rentekoers wat op die lening gehef word, laer is as die Reserwebankse repokoers plus 1%, tans 8% in totaal, sal die verskil in rente ’n geagte inkomste in die hande vandie uitlener wees.Hierdie geagte inkomste is nie rente nie en kwalifiseer derhalwe nie vir die jaarlikse rentevrystellingnie. Die resultaat is dat dit ten volle teen die uitlener se grenskoers belasbaar sal wees. Om sakeverder te versuur sê hy, vereis artikel 7C dat die bykomende belasting gehef binne drie jaar van dietrust verhaal moet word.Indien dit nie gedoen word nie sal hierdie bedrag as ’n skenking gesien word en teen 20% belas word.Die wetgewing wil ook sien dat enige skenking van ’n lening deur ’n verbonde persoon aan ’n trust,onderworpe aan skenkingsbelasting sal wees.

Joylene van Wyk, Landbou.com, 19 August 2016

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