South Africa’s strong grain yields tell only part of the story. Behind the good harvest are producers who must enter the next planting season facing lower commodity prices, more expensive inputs and increasing financial risk.
According to Grain SA, maize prices in January 2026 were approximately 22% lower than a year earlier, while the total input costs associated with maize production had risen by approximately 19%. In many cases, farm income declined by nearly half. Moreover, more than 80% of grain production inputs are imported and priced at import parity.
“A large harvest is not necessarily a profitable harvest. Producers must pay for seed, fertiliser, diesel, chemicals, labour, repairs, insurance and financing upfront, yet they have no control over the weather, final yield or market price,” says Bertus van der Westhuizen, Chairperson of TLU SA Free State.
The diesel price increase that took effect on 5 August has intensified the pressure. Depending on the sulphur content, the wholesale price of diesel increased by between R1.23 and R1.38 per litre. For a producer who uses 50,000 litres, this increase alone represents an additional gross expense of approximately R61,700 to R69,200 – before any further changes in the cost of fertiliser, seed, chemicals or financing are taken into account.
The strong production experienced in South Africa during the past season should also not simply be attributed to improved cultivars. It is largely the result of farmers farming more effectively and precisely. Fertilisation, crop protection, plant populations, soil cultivation and other production decisions are being managed in an increasingly timely, scientific and precise manner.
“Our producers have improved their efficiency, but there is a limit to how much cost pressure and market risk can be absorbed through better management. When the margin disappears, even an excellent farmer cannot continue planting indefinitely,” says Van der Westhuizen.
TLU SA is not asking the government to assume the normal business risks faced by farmers or to provide general financial assistance to producers. Such assistance could easily be linked to political or transformation conditions that place pressure on producers’ independence and property rights.
Instead, the organisation is calling on the Minister of Agriculture, Willie Aucamp, to use his influence to help create a more competitive and functional production environment.
TLU SA is calling, among other things, for:
- the government to support a transparent, fair and evidence-based system for calculating JSE location differentials;
- the departments of agriculture and trade, industry and competition to work together to expand grain exports, particularly to markets in Africa, and reduce trade and logistical barriers; and
- the government, in collaboration with the Department of Mineral and Petroleum Resources, to expedite regulatory certainty regarding biofuel blending to enable private investment in ethanol and biofuel production.
The current dispute regarding soybean location differentials demonstrates the significant financial impact that a technical market mechanism can have. Grain SA estimates that the difference between the multiple and single reference point methods could amount to an average of approximately R220 per tonne, with a potential total value difference of around R696 million across the relevant volumes and silo points.
The development of a local biofuel industry could simultaneously create new domestic demand for surplus grain, add value, encourage investment in processing and support employment in rural areas.
“The warning is not that South Africa will run out of food tomorrow. The warning is that production capacity is gradually eroded when producers plant less, lease out their land, sell assets or leave the industry because the risk can no longer be financially justified,” says Van der Westhuizen.
“Food security cannot be protected only once a shortage arises. It must be protected while farmers are still willing and able to plant.”
Food security does not begin on the supermarket shelf. It begins at the farm gate.
