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09 March 2018 Photo Barend Nagel
Experts engage in stimulating discussion on South Africa future
Moeletsi Mbeki, Prof Phillippe Burger, Dr Ina Gouws, and Waldimar Pelser.

The University of the Free State (UFS) and the broader Bloemfontein community had the privilege of listening to expert opinions on the country’s future at the Wynand Mouton Theatre on the Bloemfontein Campus on 2 March 2018. On stage were Waldimar Pelser, Rapport editor; Prof Phillippe Burger (Department of Economics); Dr Ina Gouws (Department of Political Studies and Governance) from UFS; and author and businessman Moeletsi Mbeki. Together they painted a critical picture of our current and future state of affairs during a remarkable morning hosted by Rapport Regstreeks and kykNET. 

The ills of our economy
Master of his subject, Prof Burger had the audience spellbound when he explained the real issues surrounding our current sluggish economy. He was concerned about the general lack of growth – the major reason for unemployment. Figures have shown that even a slight increase in economic growth, creates an increase in employment. “We know that good education leads to economic growth,” he said. Poor education is one of our big problems, with our school mathematics performance among the worst in the world. He further advised that we should roll back patronage, stabilise public debt, facilitate a true partnership between government and businesses, identify specific growth sectors, address tenure rights, develop supply chains, and develop special skills. “I believe that we should bring back apprenticeships,” he said. 

Political pains
Mostly in agreement with Prof Burger’s contribution, Mbeki wanted to add politics in the mix as a factor that harms our economy. Capturing the audience with his impressive knowledge and insight, he explained that we basically still sat with the British economic systems set out between 1902 and 1910 – the production and export of minerals, fuelled by cheap labour. The mining sector provided a market for agriculture that also used cheap labour. Currently, we sit with two elites: the capital elite that produces, and the political elite that taxes the profits. Hence, the money is not reinvested. “We need new elite, that will invest in the country, instead of consuming the profits,” he said. Who should this be? “Such a coalition must include owners of productive assets who should form an alliance with rural people.”

Remain vigilant
Dr Ina Gouws supported this notion, saying that now was not the time to put our hopes in one leader for a better future. We should remain critical and vocal about our concerns. Political leaders did not always paint a true picture of what the people wanted and felt. 

More interesting and current topics were addressed during the question and answer session, and Pelser ensured that all adhered to a strict schedule, while using the available time optimally. We hope to see more such events on campus, inviting discourse on current topics. 

News Archive

Producers to save thousands with routine marketing strategies, says UFS researcher
2014-09-01

 

Photo: en.wikipedia.org

Using derivative markets as a marketing strategy can be complicated for farmers. The producers tend to use high risk strategies which include the selling of the crop on the cash market after harvest; whilst the high market risks require innovative strategies including the use of futures and options as traded on the South African Futures Exchange (SAFEX).

Using these innovative strategies are mostly due to a lack of interest and knowledge of the market. The purpose of the research conducted by Dr Dirk Strydom and Manfred Venter from the Department of Agricultural Economics at the University of the Free State (UFS) is to examine whether the adoption of a basic routine strategy is better than adopting no strategy at all.

The research illustrates that by using a Stochastic Efficiency with Respect to a Function (SERF) and Cumulative Distribution Function (CDF) that the use of five basic routine marketing strategies can be more rewarding. These basic strategies are:
• Put (plant time)
• Twelve-segment pricing
• Three-segment pricing
• Put (pollination)(Critical Moment in production/marketing process), and
• Pricing during pollination phase.

These strategies can be adopted by farmers without an in-depth understanding of the market and market-signals. Farmers can save as much as R1.6 million per year on a 2000ha farm with an average yield.

The results obtained from the research illustrate that each strategy is different for each crop. Very important is that the hedging strategies are better than no hedging strategy at all.

This research can also be applicable to the procurement side of the supply chain.

Maize milling firms use complex procurement strategies to procure their raw materials, or sometimes no strategy at all. In this research, basic routine price hedging strategies were analysed as part of the procurement of white maize over a ten-year period ranging from 2002–2012. Part of the pricing strategies used to procure white maize over the period of ten years were a call and min/max strategy. These strategies were compared to the baseline spot market. The data was obtained from the Johannesburg Stock Exchange’s Agricultural Products Division better known as SAFEX.

The results obtained from the research prove that by using basic routine price-hedging strategies to procure white maize, it is more beneficial to do so than by procuring from the spot market (a difference of more than R100 mil).

Thus, it can be concluded that it is not always necessary to use a complex method of sourcing white maize through SAFEX, to be efficient. By implementing a basic routine price hedging strategy year on year it can be better than procuring from the spot market.

Understanding the Maize Maze by Dr Dirk Strydom and Manfred Venter (pdf) - The Dairy Mail


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