Winter Crops Income and Cost Budgets

Foreword

The Protein Research Foundation (PRF) strives to make a significant contribution to the promotion of local production of protein on a sustainable basis, in order to satisfy the growing demand for protein for animal production purposes as well as the optimal utilisation thereof, which will lead to an increase in the standard of living of all people in the Republic of South Africa. The main objectives of the Protein Research Foundation (PRF) are to replace imported protein used in animal feed with locally produced protein and to encourage the better utilisation of this protein. The objectives are promoted through research funding and technology transfer.

Historically, the Protein Research Foundation (PRF), Grain South Africa (GSA), the Bureau for Food and Agricultural Policy (BFAP) and agribusinesses have published their individual cost of production budgets which focusses on summer and winter crops produced in South Africa’s key agro-ecological zones, both under dryland- and irrigation cultivation. Given the existing activities associated within the organisations and the extent of the coverage of South African agricultural production, these initiatives are once again integrated to compile the 2025 winter crop budgets.

It is acknowledged that regional variation will occur and that estimates will differ from farm to farm. Whilst every care has been taken in preparing this report, it is advised to adjust the estimates according to the farm’s respective location, yield potential, cultivation system and/or strategies.

Executive Summary

Commodity Markets and Price Dynamics

Global prices are highly sensitive to geopolitical events, with US tariffs creating uncertainty. The US stance on biofuel demand remains unclear, affecting vegetable oil prices. However, Indonesia's extension of its biofuel policy has calmed markets, with a B50 blend planned for 2026. South America expects a record soybean crop, which is likely to lower prices, while the Black Sea region faces challenges due to the Russia-Ukraine war. Australia anticipates a strong winter crop. Policy uncertainty from multiple government changes in 2024 impacts inflation and monetary policy. Sustainability is becoming increasingly important, potentially raising compliance costs and affecting market access.

Trends in Agricultural Input Cost Markets

The South African Reserve Bank projects a 1.4% GDP growth in 2025, driven by stable electricity supply and monetary policy easing, although the IMF has revised its projection to 1% due to US tariffs. Global oil price drops are expected to reduce fuel and fertilizer costs, with fertilizer prices projected to decline in 2025 but increase slightly in 2026 (World Bank). Despite numerous downward trends, input costs remain higher than pre-Russia-Ukraine war and pre-COVID-19 levels.

Farm-Level Profitability

The Swartland experienced yield declines due to adverse weather, while the Southern Cape had a good season in 2024. Margins are expected to remain flat in 2025 and 2026, with a marginal recovery for wheat in the Swartland. Overheads have outpaced revenue growth, increasing break-even yields. Efficiency gains and careful assessment of cost structures are crucial to managing the increasing risk environment.

 Download PDF document

Disclaimer