Crop crisis: Trouble brewing after ban on beer sales

Smallholder farmers could be stuck with hectares of wheat and barley as covid-19 lockdown beer ban forces South African Breweries to a halt

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Smallholder farmers across the country, who produce non-genetically modified (GMO) maize and barley on contract for the South African Breweries (SAB) are on the edge of their seats about the way in which the banning of beer sales will affect their livelihoods. 

Maria Mashigo, who farms at Rooipoort in Gauteng, has planted 100 hectares of non-GMO maize destined for SAB, but this maize might have to be diverted to another market if the ban on beer sales is not lifted soon. 

“Selling the non-GMO maize as ordinary maize will set me back by at least twenty percent, depending on what is happening in the market. The situation is extremely nerve-wrecking,” Mashigo says.

FarmSol managing director Aron Kole confirms to Food For Mzansi that if smallholder farmers do not secure an offtake agreement for their produce, more than 500 farmers and their families – that are supported by SAB – will be severely impacted.

FarmSol managing director Aron Kole

“We greatly appreciate the efforts made so far to protect the small businesses such as ourselves, but smallholders planting barley and maize are an important community asset that we need to rescue from this looming crisis,” Kole urged.

Matthew Senokwane, who farms near Taung in the North West, says he does not know what he would do if SAB does not fund his production costs and provide a full off-take for his produce, as he has children that needs to be fed: “I have planted 20 hectares of non-GMO maize funded by SAB, which will soon be harvested, and I need to plant barley in June. I must plant barley in winter, there is no other profitable crop alternative.”

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Jabulani Fakude, who farms near Belfast in Mpumalanga, explains that non-GMO maize destined for SAB presents much higher production risks and costs than genetically modified maize, which will not necessarily be compensated for if sold to someone else.

“I have planted 80 hectares of non-GMO maize this year, with input costs reaching R650 000 so far; and these input costs are financed by SAB through FarmSol. The harvesting and transport costs still need to be added to this,” he says.

Solomon Masango, who farms in the same region, adds that this could affect the purity of the maize: “My maize was rejected last season because I planted it on land where I had previously planted GMO maize.”

Barley production downscaled

André Cloete, who farms near Genadendal in the Western Cape, says that he has downscaled barley production from 135 ha to 52 ha because he can see big trouble brewing because of the ban on beer sales.

He adds that barley forms an integral part in the production systems on many farms in the Western Cape, where only a limited number of crops can be produced: “Farmers cannot simply replace one crop with any other crop. The returns for barley are also significantly better than for wheat where we farm.”

Ralph and Preline Swart, who farm near Elim in the Western Cape.

Ralph Swart, who farms near Elim in the Western Cape, says he and his two brothers for now are continuing business as planned, which means they will plant altogether 1 300 ha of barley in their different farming operations.

“We have not downscaled because we have fixed contracts and SAB gives us certain privileges because we are emerging farmers, for example we receive funding from SAB and are not penalised when we are unable to produce our full quota or when we over-produce.”

He admits, however, that many of the commercial farmers in the region have downscaled barley production in anticipation of the negative impact that barley production could have on supply and demand. “It is chaos. Many farmers are already battling to make ends meet due to the previous season’s drought, without this also being thrust upon them.”

Israel Motlhabane, who farms near Wesselsbron in the Free State, is especially worried about the way in which the ban of beer sales will affect the non-financial support he and other farmers are enjoying from SAB: “It only makes sense that the financial blow SAB will suffer due to reduced sales, will blow over to all its programmes and farmer support initiatives.”

Barley farmers in the Western Cape, who started planting in April, have in the meantime started drawing up a petition to lift the ban on beer sales.

Leon Visser, who serves as mentor to many farmers in the southern Cape, explained that contracts of emerging farmers will certainly be honoured by SAB. The problem, however, is that SAB is the main barley buyer and prices will negatively be affected if the company is unable to move and sell stock.

“Farmers supply SAB on contract, with prices for a certain percentage of the produce – as decided by the farmer – usually fixed, based on the average price between March to September, and the rest being a spot price, in other words the SAFEX related price on the day of delivery.”

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