Jaco and Danie Minnaar discuss farming in South Africa, where getting a loan requires collateral most farmers don't have. They cover agricultural training, maize exports, and how John Deere Financial works in the African market.
In Granny SA, we started about 15, 18 years ago, started training people because farming is more about what you know than what you do and when to react and how to react. So we started training people way back then to give them the tools in order to farm correctly and the correct methods. And we still do that and we still see the huge difference that we made. Even last year, we see in certain areas that we moved the yields from 1 ton per hectare to about 5 to 6 tonnes per hectare. On a small scale, it's half an hectare plot, but just applying the correct methods of producing. So that's certainly a big part of training people and excelling them into becoming successful producers, either in small scale or that. But to move to the next level, you need finance. To move from that communal land up to a scale where you can be profitable or really profitable, you need finance. And that's the biggest constraint that we have at the moment. The people don't have collateral, they don't have anything to offer as collateral to access the findings to get to a bigger scale.
I think Grand South Africa is doing very, very good job in educating people how to farm, what to farm from the Synvest site. As a commercial company, we do finances on a commercial basis and we got a lot of farmers which are already on commercial level because of the Grain South Africa program. But the problem is there's a lot of farmers which is put on government land who haven't got collateral to put against their loans. And that's our biggest constraint at this stage. We can't help all the farmers we want to because there is no collateral and we got a credit act In South Africa you can't provide credit to somebody which is haven't got the assets. So yes, we're doing the work there, but it's on the commercial side. We're not funding guys who only plant one or two hectares. We're not there. Land will always be an issue because there's not much countries in Africa where you can own land and land gives you collateral to do things. I think that's one problem of Africa. The other problem of Africa is that most of Africa's very fertile soil is landlocked. If you take a country like Zambia, high rainfall, good soil, the closest harbor is 1700km and there's no rail, no river, so you need to do that by truck. So in South Africa, import, export parity is an issue. We can easily produce that import parity, but we struggle at export parity. More of that is happening in the central part of Africa, which is landlocked.
Eight out of the 10 years we export maize and our main customers are two towards the eastern side. Korea, Vietnam, Japan is also imported a lot this year. So that's our main market, the markets. But it's also the main markets of the Brazilians and the Argentinians and the US for that matter. So for us we're in a competitive space because we're a bit closer to them, but it's totally hard to compete internationally with the bigger countries. We're the only one, we only four countries in the world that's constantly exporting maize. So South Africa is a very small part of that. But we're one of those that's on the WASD report of the usda because we are exporter of maize as we live in an open market in South Africa and very little or no protection. All our inputs and outputs are pretty much linked to international prices, which is mainly dollar based. So like Dani said, we buy less inputs than we have outputs. So a weaker round in the short term is certainly better for us, but it's a short term outlook. I think the stability is the more important one because with stability you can plan better, you can, you can create better expectations for the future.
