RPP Guest post 1

RPP is our code for the weekly blog post, op-ed by the School’s celebrity economist / pundit / opinionista, but he will probably only start writing later in the year, so in the meantime we are filling in with some guest posts.

This week Frans Dreyer reports from the Free State Maize farmers’ day.

Free State Maize (www.fsmaize.co.za) held their annual national farmers day in Potchefstroom on 20 September 2012 at the Elgro Hotel Convention Centre. The aim of the farmer’s day was to give a conservative forecast of the coming production and marketing season to farmers and interested parties. This year Free State Maize organised a special guest speaker in the form of the well-known economist from the Efficient Group, Dawie Roodt.

Free State Maize CEO, Mr. Adriaan Snyman, started the farmer’s day with a domestic and international soft commodity market presentation. Some of the interesting facts presented included world production figures. As a percentage of world production of maize, North America produces 40%, South America 9.6%, EU 6.6%, FSU 4%, China 20% and last but not least, South Africa produces 1.3%. The corresponding figures for shares of soybean world production were: North America 32%, South America 49% and China with 5%. Noticeable here was the fact that although China only produces 5%, it consumes 28% of production, making them a very large importer of soybeans.

Mr. Snyman also presented the farmers with balance sheets of current and expected stock levels. Both the international, especially US, and local stock levels are very low. US farmers are harvesting at the moment and given the current dry conditions they are ahead of schedule but the dry conditions during the season will not alleviate the worrying low stock levels as states like Illinois. The state typically produces around 60 000 000 metric tons, but they are only expecting around 35 000 000 metric tons from the current harvest.

Given the current and expected low world and local stock levels, farmers were cautioned to get their maize marketing plan for the season ready. By all expectations, prices will remain historically high but might vary as wide as R2200 per metric ton to R3300 per metric ton. The variation would largely be caused by uncertain local weather conditions as well as the expected international prices for maize which would in turn affect import-and export parity prices.

In the second part of the morning Dawie Roodt took the floor with a presentation titled:  Confessions of an Unreconstructed Neo-liberal Fundamentalist: A Plan for South Africa. Shortly after starting his presentation, he explained the title.  The Deputy Minister of Transport and NEC member of the ANC as well as the SACP, deputy general secretary, Mr. Jeremy Cronin labelled Dawie Roodt a “Hysterical” Unreconstructed Neo-Liberal Fundamentalist. So, Dawie went with it and is actually at this stage writing a book with the same title as the presentation title.

Some of the interesting and main ideas Dawie wanted to bring home to the farmers can be summarised as follows.

To him it is clear that although the ANC and government of the day call themselves Communists they do not know their own ideology since Communism can be defined as: “A revolutionary socialist: for a classless, moneyless, and stateless social order structured upon common ownership of the means of production. “

Jobs cannot just be created; they have to evolve out of sustainable economic growth. He explained this by saying that no person can really on his own make a cup of coffee. He would first have to plant a coffee tree, then harvest, dry, roast and grind the beans. After that he would have to manufacture the cup, plant sugar cane, extract the sugar and somewhere in between find a cow to milk, if he prefers milk.

On the Nationalisation of mines he argued that he cannot understand why the government would want to nationalise mines since they are at this stage already receiving around 50% of mines’ revenue through tax. Why would they then want to have 100% ownership when they would have to assume 100% risk as well when they already get 50% “ownership” without any risk.

Regarding the credit crisis he mentioned that the international recovery of the sub-prime crisis might take as long as 20 years with expected economic growth of between -1% to 1% and a big potential for the EU to fall apart completely. He also mentioned that the end of 2012 is not only the end of the world according to the Mayan Calendar, but more importantly, it would be the first time in 400 years that the emerging economies would be stronger than the first world or Industrialised countries. He also mentioned that the outcome of this would be positive for South Africa and emerging economic growth.

In the end Dawie gave his plan if he were to be appointed the Minister of Finance. He has a few interesting ideas on tax, health and interest rates, which he would definitely include in his book. He concluded by saying that despite the fact that we do not always agree with government on how the country is governed he can safely say that in his experience he has seen that:

We all want a better SA

Perhaps it’s time to trust South Africans

So, let’s set them free, and trust the Market

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