Download Potato session: agri benchmark Cash Crop

Potato session: agri benchmark
Cash Crop Conference
Des Moines, Iowa, USA, August 2014
Article by Pieter van Zyl, Potatoes South Africa
Background on agri benchmark
in South Africa and other countries. An added benefit of
such a network is that key agricultural trends are captured
and distributed across the network. Typically these
trends include mechanisation trends, input related trends,
productivity as well as other information and trends on
production systems. Currently there are 13 typical potato
farms in eight (mainly European) countries in the database.
agri benchmark is a global network of agricultural
economists, advisors and farmers. It is managed by the
Institute of Farm Economics of the Johann Heinrich von
Thünen Institute, based in Braunschweig, Germany.
The network is based on the principle: “Put your country
in and get the world back.” Thus, all members have
access to the data that has been collected throughout the
world. Additional to the central analysis of the data in
Braunschweig each member can carry out and publish
own analyses. During the annual agri benchmark
Cash Crop Conference these results are presented and
discussed among all participating partners. This year’s
annual conference was held in Iowa, USA. As was the
case last year a special session on the economics of potato
production was held.
BFAP (Bureau for Food- and Agricultural Policy
at the University of Pretoria) is the co-worker to
the SA potato industry. Divan van der Westhuisen,
agricultural economist at BFAP, extracted the raw data
from the database and constructed the figures used in this
article.
agri benchmark: Potato session
Background: Production processes in Europe:
•
European potato farmers either sell their produce from
the land during harvesting time (round about August/
September till October/November) or store it in storing
facilities for up to nine months, depending on the
movement in market prices. They sell potatoes in bulk.
70
60
$367
61
50
tons per hectare
$450
$402
45 43
40
30
$133
20
50
40
$289
$244
52
45
39 39
43
39
37
0
DE200GF
PL730WO
UK310WASH
Germany
Poland
United Kingdom
Yield (t/ha) 2013
$350
$250
$200
$150
$100
18
10
$400
$300
31
$206
$337
ZA1600EFS
$50
ZA90LIM
ZA150WC
ZA90KZN
$-
South Africa
Yield (t/ha) 2012
Market price (US$/ton)
Figure 1: Yield per hectare versus Producer price per ton
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producer price: US$ per ton
The agri benchmark potato initiative provides a
platform to compare typical potato farms across the
globe. By taking a snapshot of the performance of the
farm, producers can evaluate various elements in their
production system and cost structures with other producers
Ekonomiese Nuus • Economic News
$6,000
$5,334
$5,117
$5,000
$4,601
US$ per hectare
$4,000
$3,000
$2,714
$2,618
$2,122
$2,000
$1,438
$1,000
$-
DE200GF
PL730WO
UK310WASH
Germany
Poland
United Kingdom
Seed
Fertilizer
ZA1600EFS
ZA90LIM
ZA150WC
ZA90KZN
South Africa
Plant protection
Total Establishment
Figure 2: Seed, fertilizer & plant protection cost per hectare (establishment cost)
$140
$117.50
$120
$100
$117.07
$83.74
US$ per ton
$80\\ADMIN-PC\Verbatim\HJ Design\ASA\Chips\2014\CHIPS November Desember 2014\Chips Nov Des 2014 Art\15 Agri benchmark SA farm-level results_2014.xlsx
$60
$60.30
$67.13
$53.04
$45.94
$40
$20
$-
DE200GF
PL730WO
UK310WASH
Germany
Poland
United Kingdom
Seed
Fertilizer
ZA1600EFS
ZA90LIM
ZA150WC
ZA90KZN
South Africa
Plant protection
Total Establishment
Figure 3: Seed, fertilizer & plant protection cost per ton
In South Africa table producers are the owners their
pack houses from where they market their produce.
Produce are sold on the fresh produce markets whereas
the European producer sells his produce at the farm,
unpacked.
The selected figures in this article were used during the
session on the economics of potato production. (The
German co-worker presented a much more detailed
presentation.)
Data from seven typical farms (producing table/fresh
potatoes) in the following countries were used in the
analysis:
In Figure 1 the yield per hectare realised and producer
prices are illustrated. It is clear that the yield per hectare
realised in South Africa compares well with yields in
Europe for both 2012 and 2013. The Limpopo farm
(ZA90LIM) realised the highest yield in both years. Keep
in mind that the farm in the Eastern Free State (ZA1600EFS)
is cultivating potatoes on rain fed production and therefor
realise lower yields.
• Germany
• Poland
• United Kingdom
• South Africa: four farms
• Eastern Free State: rain fed production
(EFS in graphs)
The producer prices per ton in US dollar (2013) received
by South African farmers are higher, according to the
figure. Their prices are being realised on the fresh
produce markets (value adding is being done) whereas the
European farmer sells his potatoes at the farm, in bulk and
unpacked.
• Limpopo (LIM in graphs)
• Sandveld (WC in graphs)
• KwaZulu-Natal: seed production (KZN in graphs)
Results
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CHIPS • November/December 2014
• Page 47
$180
$159.91
$160
$145.76
$140
US$ per ton
$120
$100
$110.44
$100.91
$88.67
$86.13
$78.56
$80
$60
$40
$20
$-
DE200GF
PL730WO
UK310WASH
Germany
Poland
United Kingdom
Seed
Fertilizer
ZA1600EFS
ZA90LIM
ZA150WC
ZA90KZN
South Africa
Plant protection
Diesel
Hired labor
Total
Figure 4: Establishment cost, Hired labour & Diesel cost per ton
$250
US$ per ton
$200
$150
$100
$50
$-
DE200GF
PL730WO
UK310WASH
Germany
Poland
United Kingdom
Seed
Fertilizer
Plant protection
Diesel
ZA1600EFS
ZA90LIM
ZA150WC
ZA90KZN
South Africa
Hired labor
Marketing cost
Packing material
Transport
Figure 5: Establishment + Operating + Marketing/value-adding (cost per ton)
In Figure 2 seed, fertiliser and plant protection cost per
hectare (establishment cost) for the respective typical farms
are illustrated for 2013.
Both the Limpopo and KwaZulu-Natal (ZA90KZN) farms
have a relatively high seed cost per hectare. Both farms do
not want many large tubers (large tubers = lower producer
price) and therefore have a high planting density (between
four and five tons of seed planted, while the European
farms plant less than three tons of seed per hectare. This
will be discussed later.
Both the Limpopo and Sandveld (ZA150WC) farms have a
high fertiliser costs per hectare. Reason: Mainly sandy soils
which means more fertiliser has to be applied. Because
of the sandy soils these two regions always realise a good
quality of potato and also realise high market prices.
It is clear that the costs per hectare for South African farms
are much higher, except the farm in the Eastern Free State
which does rain fed production with a consequent lower
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CHIPS • November/Desember 2014
yield. The next figure investigates the costs per ton.
In Figure 3 seed, fertiliser and plant protection costs per ton
for the respective typical farms are illustrated for 2013.
When comparing the cost per ton for potatoes, it is clear
that three South African farms (Limpopo, Sandveld and
KwaZulu-Natal) still have a relatively high cost structure. The Eastern Free State Farm has the lowest cost per ton.
Despite the fact that the latter do dry land cultivation,
growers in the region are low cost producers. Overall it
can be said that the risk involved in rain fed cultivation is
much higher than is the case with irrigated potatoes.
In Figure 4 establishment cost, hired labour and diesel cost
per ton are illustrated.
When adding the hired labour and diesel costs to the
establishment costs (see Figures 2 and 3) it is clear that
the Eastern Free State still realised the lowest cost per ton
in 2013. Only the farm in Germany has a relatively low
Ekonomiese Nuus • Economic News
US$ per hectare
$25,000
$24,537
$20,000
$16,646
$15,000
$8,225
$5,976
$4,541
$5,000
$-
Seed
$13,232
$12,086
$10,000
$3,547
$9,515
PL730WO
UK310WASH
Germany
Poland
United Kingdom
Fertilizer
Plant protection
Diesel
$9,048
Hired labor
$7,658
$5,344
$3,359
DE200GF
$9,605
ZA1600EFS
ZA90LIM
ZA150WC
ZA90KZN
South Africa
Marketing cost
Packing material
Transport
Total
Market reveneue
Figure 6: Establishment, Operating & Marketing costs versus income per hectare
labour cost, because it is highly mechanised (see also high
diesel cost). This farm also realised the lowest market price.
Machines in the harvesting process lead to mechanical
damage and this may be the reason that this farm realised
the lowest market price. One cannot ignore the fact that
the fresh potato enterprise always will be labour intensive.
In Figure 5 the establishment cost, operating cost as well as
value adding cost are illustrated.
Only the South African farms do value adding and thus
the following costs are indicated in Figure 5: Marketing
costs (market and agent commission), packaging material
and transport to the fresh produce markets. It is therefore
imperative that the South African farms do receive a higher
producer price, as is depicted in Figure 1.
In Figure 6 the income per hectare is added to the cost
items used in Figure 5.
kilograms of potatoes were realised. The KwaZulu-Natal
farm with the highest nitrogen efficiency (460 kilograms of
potatoes per one kilogram of nitrogen) applied the lowest
nitrogen per hectare, namely 85 kilograms.
In Figure 8 the seed productivity for the respective farms is
illustrated.
The three South African farms to the right in Figure 8
planted between 3.6 and 4.6 tons of seed per hectare in
2013 while the three European farms planted between
2.2 ton and 2.8 tons of seed potatoes (green bars). The
European farms realised more potatoes per kilogram of
seed planted (higher seed productivity) than the three
mentioned South African farms. The Eastern Free State
farm planted less than one ton of seed per hectare and
realised the highest seed productivity, namely 35 kilograms
of potatoes for each kilogram of seed planted.
Closing remarks
The difference between the income and the total cost
of the reflected cost items can be regarded as the gross
margin. The Limpopo and Sandveld (WC) farm realised
the highest gross margin, followed by the United Kingdom
and KwaZulu-Natal farms for 2013. The farm in Germany
realised the lowest gross margin per hectare while the
farm in the Eastern Free State realised the second lowest.
It is clear that the Eastern Free State farm realised high
technical efficiencies (see Figures 3 and 4), but do not do
well in terms of total financial performance.
In Figure 7 nutrient application rates and fertilizer use
efficiency (nitrogen productivity in this case) are illustrated.
Only the Sandveld farm (WC) does have a relatively high
nutrient application rate, mainly because of sandy soils.
The nitrogen efficiency is also the lowest of the farms which
means for every one kilogram of nitrogen applied 152
The general observation that can be made is that South
African typical farms performed relatively well when
compared to typical farms in Germany, Poland, and the
United Kingdom. Secondly, from a price perspective, South
African producer prices are higher than selective Northern
Hemisphere countries. Irrigation yield levels in South Africa
outperformed the sample space average. A risk, especially
in an environment with fluctuating oil and fertiliser prices,
exists in the Sandveld production system and cost structure
when considering high energy costs. The high application
rates of fertiliser have a significant impact on the cost
structure of these farms. In addition, this causes productivity
indicators to drop substantially and the question really
arises whether these patterns are sustainable. Fortunately
the Sandveld producers do produce a good quality potato
and receive relatively high market prices. C
CHIPS • November/December 2014
• Page 49
460
900
450
800
400
700
kilogram per hectare
500
600
293
251
287
500
350
300
238
255
250
400
200
300
150
152
200
100
0
100
180
137
136
123
256
298
85
DE200GF
PL730WO
UK310WASH
ZA1600EFS
ZA90LIM
ZA150WC
ZA90KZN
Germany
Poland
United Kingdom
N-input
P-input
50
0
kg potatoes / 1kg of N
1000
South Africa
K-input
Nitrogen productivity
5000
4500
4000
3500
3000
2500
2000
1500
1000
500
0
30
25
2,800
2,635
40
35
3,658
20
2,200
15
10
900
5
DE200GF
PL730WO
UK310WASH
Germany
Poland
United Kingdom
Seed application (kg planted per ha)
ZA1600EFS
CHIPS • November/Desember 2014
ZA90LIM
ZA150WC
ZA90KZN
South Africa
Kg potatoes harvested per 1kg of seed planted
Figure 8: Seed productivity (kg yield for every 1 kg of seed planted)
Page 50 •
4,646
4,275
0
Kilograms potatoes / 1kg of seed
Kilograms per hectare
Figure 7: N:P:K application rates and Nitrogen productivity (kg yield per 1 kg of N applied)