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4 March 2014

Productivity to be increased if undercover farming is to remain profitabile Presented By Ernst Janovsky. 4 March 2014.

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4 March 2014

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  1. Productivity to be increased if undercover farming is to remain profitabile Presented By Ernst Janovsky 4March 2014 • Disclaimer: Although everything has been done to ensure the accuracy of the information, the Bank takes no responsibility for actions or losses that might occur due to the usage of this information.

  2. A few production philosophies Principle 1 Production always need to be demand led Principle 2 You will need to go to the market the market will not come to you

  3. Synopses • Through undercover farming one tends to make the mistake that due to the implementation of production technology you do not have to continuously address productivity to up ones production. • This is especially true as producers do not have any control over the price of the commodity they produce. The only control that is in the hands of the producer is: • Production volume, • Quality of product, and • the Cost of production. • As in general farming the cost of production in undercover farming is currently increasing faster than the growth in value of the output. • This implies that production margins are constantly under threat. The only instrument that producers have to counter this cost curve is to up productivity. The question then arises what is productivity and what can a producer do to improve productivity.

  4. Constant improvement in productivity is needed independent of the farming method to remain profitable. Productivity = (Price x Volume ) - Production cost Unit -

  5. Producers do not have any control over price and are deemed to be price takers

  6. Vegetable trends

  7. Agricultural production to outstrip demand due to efficiency increases as well as a growth in production area, hence agricultural commodity prices are expected to soften.

  8. Through productivity increases, Farming Enterprises continue to remain profitable in spite of a Cost Curve Productivity increased to counter cost curve through the implemen-tation of the following technologies: Storage technology Energy efficancy 3. Information technology 4. Biological farming 5. Genetic technology 6. Economy of scale

  9. Given all challenges and opportunities farming remain profitable

  10. Thank you for the opportunity to share some ideas Contact details E Janovsky Tel (011) 350 6102 Emailernst.janovsky@absa.co.za

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