DLG-Agrifuture – farmers investing in modernising and expanding production

DLG-Agrifuture Insights supplies essential information for agribusiness and farmers from the world’s most important agricultural regions. Recent studies on Brazil, South Africa, Thailand and Zambia offer detailed information on investment plans in animal husbandry and crop production in these four countries.

International farmers' investment intentions differ from continent to continent and from region to region. A recent survey by DLG-Agrifuture Insights in four countries - Brazil, South Africa, Thailand and Zambia -  shows that Thailand’s farmers hold the top position in investing into modernising their farms and production systems.

In contrast, South African farmers reported to the Agrifuture surveyors that investments were being curbed owing to restricted bank loans and growing uncertainty of a land reform that had been announced by the Government. The DLG-Agrifuture survey was published in spring 2018 at the DLG-Agrifuture Insights website.

Brazil boosting the livestock sector to increase exports

In global terms, agriculture in Brazil is a powerhouse. For example, agricultural production has doubled since the 1990s and has even tripled in animal husbandry.

Growth in production is mainly driven by agricultural exports, which represent an important source of foreign currency income for the Brazilian economy.

According to the DLG-Agrifuture Insights survey, nearly 40 per cent of Brazilian farmers plan to invest in the next twelve months. At 45 per cent, the poultry farmers are above average compared to arable and dairy farmers. Poultry farmers are continuing on an expansion course that is driven both by exports and by a growing domestic demand. According to estimates by the UN Food and Agriculture Organization (FAO) and the Organisation for Economic Co-operation and Development (OECD), poultry meat exports are to increase by 18 per cent by 2026, when Brazil is expected to have a 35 per cent share of the global poultry meat market.

Besides soy production, poultry production is also heavily geared towards international markets.

Zambian farmers strengthening their position on agricultural markets

At 57 per cent, farmers in Zambia are demonstrating an above-average readiness to invest in agricultural production compared to other countries, the study shows. Zambian farmers expect the positive development of recent years to continue. In addition, the country is in a strategically favourable location in southern Africa that encourages maize, soy and meat exports to neighbouring countries.

Especially cash crop producers and pig farmers intend to invest in the coming twelve months. The economic environment for the cash crop producers has improved thanks to favourable weather conditions.

Moreover, the dynamic development of pig farming in Zambia has boosted the demand for soy. In addition, cash crop producers are adding a new, important sales market. Through this they can diversify yield risks (i.e. less harvest losses than in monocropping) and thus also their economic risk.

Based on the current favourable prospects for both livestock owners and cash crop producers, half of the planned investments will go into animal husbandry and half into arable farming.

Asked about their preferred investment areas, the farmers quoted maize and soy cultivation. Maize remains the most important commodity for cash crop producers.

Fewer investment plans in South Africa

The DLG-Agrifuture Insights survey shows that investor confidence among farmers in South Africa is lower compared to the other countries surveyed. Only 29 per cent of the farmers questioned said they were willing to invest.

Investor confidence of farmers in South Africa might be curbed by more restrictive credit terms. Eighty per cent of the surveyed farmers rated access to bank credit as “difficult to not possible”. The uncertainties of the discussed land reform, which means growing risks for the banks involved in agriculture, are leading to greater difficulties in obtaining investment capital.

Among the cash crop farms surveyed 33 per cent are planning investments in their operations in the coming twelve months. The focus lies mainly on investments in irrigation technology in order to be prepared for further drought periods.

Furthermore, tractors with more than 100 hp, fertilisation and crop protection technology are on the list of investments to secure agricultural production.

Thai farmers most eager to invest

In Thailand, 67 per cent of the cash crop producers surveyed intend to invest in the coming twelve months. Thai farmers therefore hold the top position among the countries surveyed.

At 90 per cent, the highest investor confidence is among dairy cattle farmers, the DLG-Agrifuture Insights study shows. Investor confidence among cash crop producers is high, too: Almost three thirds of them intend to invest in the next twelve months.

On cattle farms, 47 per cent of the investments will be in indoor livestock systems and 44 per cent in outdoor livestock systems. Dairy cattle farmers intend to expand their production capacities.

In contrast, only one third of the pig farmers interviewed said they intended to invest in the coming twelve months.

 

Dr Achim Schaffner, Head of Agricultural Economics, Competence Centre Agriculture, German Agricultural Society (DLG e.V.)
a.schaffner(at)dlg.org

 

For more information:

DLG-Agrifuture Insights project website