Northern Cape – irrigation

Cautionary remarks

• Under conventional input cost structures—comprising fertilisers, agrochemicals, fuel, and related resources—the production of maize in the Northern Cape currently yields close to negative gross margins, rendering it economically unviable.
• Producers are expected to evaluate their individual break-even thresholds. Should adverse margins persist, it is likely that input levels will be scaled back, or producers may pivot to alternative crops offering more favourable returns.
• In periods where input costs remain elevated while commodity prices decline sharply, high-intensity production systems such as irrigation will face increased financial pressure compared to dryland operations.
• Ultimately, producers cannot sustain operations at a loss, particularly when fixed overheads must still be accounted for. Strategic adjustments in crop selection and input application will be necessary to preserve financial viability.

Gross margin per hectare: Northern Cape irrigation

Notes

• Farm gate price for groundnuts is calculated according to assumptions based on the share of the crop that is graded according to selection grade (40/50-60/70 and 70/80), diverse and crush (human and oil).
• The cost items reflect the input allocation based on the target yield for the respective crops.
• Although some expenditure items are zero, it is reflected in the budgets to allow for individual inclusion.
• Other macro- and microelements such as calcium, magnesium and zinc are included in the fertiliser costs.
• The cost of fuel includes pre-harvest and harvesting costs with the assumption that own machinery is used.
• The cost for soybean seed reflects a combination of own and purchased seed.
• There will be large fluctuations for insurance cost (hail) based on the associated risk in respective areas. It is advised that producers adjust this cost based on their individual premiums.
• It is important to note that overhead costs are not included and should be accounted for.