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06 March 2020 | Story Igno van Niekerk | Photo Igno van Niekerk
 Gert Marais looking at pecan leave_
Dr Gert Marais says the UFS is helping to ensure that the pecan industry not only survives but thrives.

“When opportunity knocks, you must jump. The more opportunity knocks, the more you should jump.” 

Look closely, and you will notice the rise in pecan-nut plantations as you travel through South Africa. Do not be surprised if you find that the UFS’s pecan-nut project – steered by Dr Gert Marais, Senior Lecturer in the Department of Plant Sciences – is associated with those pecans.

Main exporter
In an ever expanding and interconnected global economy, South Africa has joined the USA as main exporters of pecan nuts to China. We have several advantages; our seasons differ from that of the USA, and we have the benefit that we are harvesting and exporting pecan nuts at the time when they are most popular at Chinese festivals and events.

Although it takes a long time to grow pecan trees (seven to eight years before they start producing), the long wait has extensive benefits. Dr Marias explains: “Unlike other crops, you do not have to prepare the soil and plant new crops annually. Rather than re-investing, you only need to do proper maintenance. Once planted, the pecan trees can produce for generations to come. And the UFS is involved in ensuring that the pecan industry not only survives but thrives.”

Empowering farmers
As the pecan industry in South Africa grows, new challenges are identified. Some trees suffer from a condition called overall decline, others from scab, and some others are infested by combinations of fungi not found in other countries. Dr Marais and his team have filed several ‘first reports’ of combinations between pecans and pathogens, leading to opportunities for MSc research projects and making a difference in the industry.

Dr Marais undertakes six field trips per year to visit all the production areas in South Africa, share information at farmer’s days, arrange courses to ensure best practices with regard to pecan cultivation; students also use these visits to collect samples for their research. Due to the systemic collaboration between the private sector and the university, farmers are empowered to manage their pecan crops better, the university benefits from cutting-edge research, and South Africa becomes a stronger player in the international economy.

Opportunity is knocking. And the UFS is jumping.

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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