Scan for Capital Harvest February 2016

Scan for Capital Harvest
                                    February 2016
   This is a monthly environmental scanning document with extracts from a range of press
  articles deemed to be of possible strategic importance to Capital Harvest. The articles are
     arranged according to a framework of topics. For each article its title, author (where
                               available) and source are stated.

Editorial
Agriculture
NASA's astrobiology team is testing one hundred potential potato varieties in experimental plantings
in Peru, to determine which type of potato may one day be able to grow in a dome on Mars. The
tests are done in Peru's Atacama Desert, one of earth's driest places. Although an unmanned mission
to Mars is likely still some time away, scientists hope the experiment will have the additional benefit
of identifying potato varieties suited to harsh conditions and rapid reproduction on earth. NASA
hopes to eventually build a research centre in the Peruvian desert that closely replicates the Martian
landscape and atmosphere. The space farming research facility can in future provide food for
manned missions to Mars and other planets.

The RMax drone helicopter, manufactured by Yamaha of Japan, has become the first to be granted
certification in the US for use as an agricultural aircraft. Yamaha’s drones have been spraying Japan's
rice paddies for over two decades, and are also in active use in South Korea and Australia. RMax is
the size of a scooter and has two 2.1-gallon petrol tanks. It sprays crops approximately five times
faster than a tractor. Yamaha has introduced the RMax to the Napa wine valley in the US, where
vineyards are often difficult to reach by tractor. The drone service is being offered to Napa farmers at
$250 per hectare, which is 40% cheaper than using human labour to spray the same vineyards.
China's DJI, the world's largest drone manufacturer, recently entered the agricultural market and is
set to become Yamaha's main competitor.
Japan has long been a leader in agricultural robotics due to its ageing population, which makes farm
labour scarce (the average Japanese farmer is 66 years old). Now Japanese fresh produce company
Spread is constructing a mechanised vegetable farm. It is set to open next year and will use robots
for all tasks except for the planting of seeds. The farm will allow Spread to increase its lettuce
production from 21 000 heads of lettuce per day, to 50 000. The company's labour costs will be
halved. The robotic system consists of conveyor belts with arms that can water, trim, harvest and

transplant crops. Researchers predict that almost half of all jobs in Japan could be done by robots
within 20 years.

The UN has announced that world food prices fell to a seven-year low in January. This is due to a
general decline in agricultural commodity prices, with sugar having the most significant impact.
The US predicts that its farmers will see lower profits for the third consecutive year, mostly due to
surplus inventory. US government pay-outs to farmers will likely increase by 31% in 2016, while
farmers' expenses are predicted to decline by 1%. US farm debt-to-equity ratios will likely increase
for the fourth year in a row, but despite this debt levels remain healthy and few farms are at risk of
foreclosure. This year many US farmers are in the difficult position where they have to choose which
crop is likely to lose the least money. It is predicted that around $70 will be lost on each acre of corn
and soy, but at the same time these are the most attractive crops to plant – for those farmers who
achieve above average yields, there is a chance of profit. Due to increased wheat output from Russia
and the Ukraine, US wheat farmers face bleaker export opportunities and many are turning away
from wheat. About 70% of US wheat is the winter variety planted in September and harvested in
June. The remainder is spring-wheat sown in April and May.

In California the dispute over water between farmers, residents and environmentalists continues to
intensify. Newly released data shows that California farmers recorded record revenues totalling $53.5
billion in the 2014 calendar year, infuriating residents and environmentalists who have been
subjected to harsh water restrictions. The record revenues are mainly due to strong sales of (water-
intensive) almonds, and technological advances that allow farmers to easily access underground
water. Despite high revenues all farmers did not necessarily make healthy profits in 2014 (the cost of
accessing water weighed heavily on some), but many farmers – especially almond producers –
appear to have done well despite the drought. The University of California Davis estimates that more
expensive water and other drought-related expenses cost farmers $2 billion in 2014. Almond
producers have thus far been able to pass costs on to consumers, but the economic downturn in
China may put an end to this. Meanwhile environmentalists complain that California's endangered
fish species like the Chinook salmon are dying in record numbers due to dry rivers and unfair water
allocations.

In February Florida announced that it has successfully eradicated the Oriental fruit fly, which was
responsible for citrus greening and almost caused the state's citrus industry to collapse. A
government programme had placed 250 square kilometres of farmland under quarantine and
managed to eliminate the invasive fruit fly. As previously reported, the Florida citrus industry is
facing the less controllable problem of a domestic and global decline in demand for its orange juice.

In Canada's Quebec province the Federation of Quebec Maple Syrup Producers places limits on the
volume of maple syrup that each farmer in the province may produce. Quebec produces 71% of the
world's maple syrup, and the Federation's output rules have brought price stability for the province’s
13 500 maple syrup farmers. The Federation meets annually with buyers to set bulk prices, and
unsold production is sent to a strategic reserve. But over the last decade other North American
farmers have been taking significant market share away from Quebec. This has happened amid rising
global demand as more food manufacturers turn to 'natural sugars' such as maple syrup and honey.
Many Quebec farmers are demanding that the output restrictions be lifted. While the Federation has
succeeded in keeping prices stable and quality high, it is accused of stifling growth and creating an
incentive for black market sales. Competitors are closing in on Quebec: in the US, Vermont is the
state with the biggest production, and only 6% of its 200 million easily available maple trees are
being exploited. Canada's Ontario province has a tapping potential of about 108 million trees, while
43 million of Quebec's 100 million trees are already being tapped.

Farmers in Greece blocked roads with tractors intermittently for more than a month over January
and February, hoping to force their government to back down from proposed reforms to pensions
and taxes. Repeated blockades by Greek farmers at the Bulgarian border angered Bulgarian truckers,
who retaliated with their own protests. In February the Greek government said that it would not stop
its proposed reforms as demanded by the farmers, but it did announce new support measures for
agriculture.
France also saw heavy protests in February at its biggest annual farm fair. Farmers heckled the French
President and tore down the agricultural ministry's pavilion at the fair. This followed months of
nationwide protests that have enjoyed broad support from the public, despite the inconvenience
caused by farmers' blocking of roads and the dumping of manure outside government offices. More
than 40 000 French farmers are said to be in extreme distress, and approximately 5 000 farmers quit
the industry each year. Suicides have reportedly risen in the livestock industry, where prices have
collapsed due to declining sales to China and especially the Russian embargo.

February was also the month in which the ban of food waste took effect in France. Supermarkets can
now be fined up to €75 000 for throwing away unsold, edible food. The food must be sent to
charities or food banks instead. A food bank receives food from supermarkets and distributes it to
organisations that feed the poor. In SA, where no similar laws are in place, Food Bank South Africa
receives food voluntarily donated by Pick 'n Pay, Shoprite and Cambridge Food. Woolworths and Spar
donate unsold food directly to charities. French politicians are pressuring the EU to adopt a similar
ban on food waste, and activists say that poor nations such as SA should also make supermarket food
donations mandatory.

Like dairy farmers in many countries, those in New Zealand – the world's biggest dairy exporter – are
seeing low profitability due to falling prices. Auckland-based Fonterra almost halved payments to its
New Zealand suppliers in the season ended May 2015, and four out of five dairy farmers in the
country will likely operate at a loss this season. Some farmers in the picturesque dairy heartland near
Waikato are now slaughtering their cows and cashing in on tourism instead. Nearby Hobbiton, the
village created as location for the Lord of the Rings and Hobbit movies, is a popular tourist
destination and has spawned a tourist industry in the surrounding rural area. Hobbiton itself
presently receives around 2 000 visitors per day. In 2015 the tourism industry officially overtook dairy
as New Zealand's biggest foreign-exchange earner. As more farmers choose tourism over dairy,
support services such as veterinarians and agricultural retailers suffer. Despite the decline in the
dairy industry, New Zealand is still home to an estimated 5 million cows and only 4.5 million people.

Sydney-based a2Milk Company is developing a strong international following after capturing 10% of
the fresh milk market in Australia since the company's debut in 2003. Founded in 2000 in New
Zealand by a team consisting of a scientist and a prominent farmer, a2Milk’s market value has more
than tripled to NZ$1.2 billion over the past year. This year, the company is predicting a 126% rise in
profit for the year ending June 2016. This is despite its milk costing twice as much as regular milk.
The milk is sourced from cows that produce only the A2 type of beta-casein protein, whereas most
dairy contains both A2 and A1. Popular Holstein-Friesian cows typically produce milk that’s 50% A1
protein. Proponents of A2-only milk say A1 protein can trigger inflammation in humans, potentially
leading to ailments from irritable bowel syndrome and eczema to schizophrenia and autism. But
research in the European Journal of Clinical Nutrition, as well as the Dietitians Association of
Australia says there is no convincing evidence of this. However, 25% of customers in Western markets
and 85% of Chinese say they feel some discomfort after drinking regular milk. The a2Milk company
has managed to generously cash in on this by marketing its infant formula in China. Every tanker-load
of milk received by a2Milk is individually checked to make sure there is no A1 protein, and tissue
samples from each cow on each farm are tested by the company. Around 90% of Guernsey cows
have a gene that allows them to produce A2-only milk. The breed is scarce and has been long-

overlooked because it yields less milk than Holsteins, but Australian Guernsey breeders say they are
now battling to keep up with demand due to the popularity of a2Milk. There are still only 1 300
Guernsey cows registered in Australia, compared with 40 000 Holsteins being registered in the
country each year.

In February Egypt's wheat import policy continued to cause confusion in the market. As previously
reported the country – which is the world's biggest wheat importer – announced a zero-tolerance
policy towards ergot. Ergot occurs naturally in wheat and is widely accepted as toxic, but global
standards allow for small traces (up to 0.05%) to be present. The zero-tolerance announcement was
made by Egypt's Agricultural Ministry, which recently sent back three shipments (one French and two
Canadian) that contained internationally allowable traces of ergot. The ministry's stance conflicts
with the policy of the country's government-controlled wheat buying agency, which supports
international standards. In February Egypt cancelled a tender to buy wheat because few suppliers
were willing to take the risk, and the ones that did inflated prices. The country later also cancelled
tenders to buy soybean and sunflower oil, citing high prices. Egypt's economy is weak and it has been
struggling to secure credit guarantees from banks. Egypt recently tried to negotiate with Russia to
buy wheat on credit. The country has been buying wheat at a premium due to the risk perceived by
suppliers, and as a result towards the end of February the Agricultural Ministry seemingly reversed
its policy and decided to accept traces of ergot according to global standards.

Meanwhile Egypt has announced plans to launch an agricultural-focused commodities trading
exchange, the first of its kind in the Middle East, by the end of 2016. Farmers will be able to have
their agricultural output tracked by the market, electronically linking their crops to the exchange. The
exchange will offer spot, derivative and futures trading, and initially six agricultural commodities will
form part of the exchange.

Half of the world's population relies on rice as its staple food. Scientists – lead by a team from China
– recently completed the DNA sequencing of more than 3 000 of the most important varieties of rice.
This means farmers will soon be able to produce higher-yielding varieties more quickly and under a
variety of conditions. Breeders have long used cross-breeding to manipulate the characteristics of
rice, but they did not know which genes controlled which traits and thus far had to rely on a
significant amount of guesswork. They will now be able to design rice according to the properties
that would be most desirable. For example, scientists can add nutrients to promote the health
benefits of rice.

Research conducted at UCT calls for African countries to consider genetic modification of crops in
order to feed populations under conditions of drought. Some crops, such as teff grass, can benefit
sufficiently from conventional breeding and do not need genetic modification to resist drought. This
route may need to be followed in the case of teff grass because of the strong opposition to GMOs in
many African countries. Genetic modification would, however, result in teff grass being improved in a
faster and simpler manner.
Zimbabwe announced in February that, despite severe food shortages, it would not allow millers to
import genetically modified crops such as maize. The aim is to protect the local environment from
the presence of GMOs.
SA, on the other hand, is willing to relax some rules on GM maize in order to avoid a food crisis.
Almost 90% of SA's own maize is GM, but strains not approved by the government are banned. Rules
stipulate that GM imports may not to be stored and have to be transported immediately from ports
to mills. However, importers are presently permitted to store imported maize in order to allow for
bigger import volumes. The government is also considering applications to register additional GMO
varieties that may boost maize trade between the US and SA.

Research from Washington State University shows that glyphosate-based herbicide (marketed as
Roundup) is now the most widely and heavily applied weed killer in the history of agriculture.
Monsanto first introduced the weed killer in 1974. Glyphosate use has increased almost 15-fold since
genetically modified maize, soybean and cotton, also developed by Monsanto, were introduced in
1996. In 2015 the World Health Organisation classified the weed killer as 'probably carcinogenic to
humans'.

The Institute for Security Studies says SA's gap between water supply and demand has to be
addressed as a matter of urgency, as it is not sustainable. There is a projected gap between supply
and demand for every year until 2035, and the gap remains even after taking into account all the
plans that the government has committed to from now to 2035. In addition to existing plans, SA will
have to make greater use of groundwater, treat more wastewater and conserve more water. About
25% of municipal water is lost through leaks and 55% of municipalities cannot provide accurate
water statistics.
Some desperate SA farmers have reportedly drilled boreholes beyond 500m deep, while most
boreholes are usually 60m to 150m deep. The Water Research Commission has warned that it is not
sustainable to simply turn to groundwater when surface water is threatened. In SA the regulating
and licensing of groundwater is poorly monitored. It is thought that farmers may be drilling to
unusual depths because groundwater levels are increasingly depleted in certain areas.

Santam says this year about 80% of the maize in SA's summer rainfall areas was planted after the
optimum planting period, and is vulnerable to extreme heat and dust storms. Fallow lands and a lack
of natural vegetation because of the drought, contribute to the development of dust storms this
year. A major problem is that El Niño seems to be weakening at a slower rate than expected, and
poor maize yields are virtually inevitable in the 2015/2016 production season.

Insurance companies may emerge relatively unscathed from SA's drought. Both Mutual & Federal
Agri and Santam say few crops were planted in hard-hit areas in the 2015/2016 season within the
prescribed planting window, resulting in a small chance of claims. Both insurers confirmed that the
effects of the drought will only be known after August 2016. The impact of weather-related disasters
on insurance premiums is to a large extent determined by farmers’ actions to mitigate risks. Santam
operates an experimental farm near Bloemfontein, where it studies the impact of extreme weather
conditions on the different stages of various crop cultivars. This helps the company to assess and
underwrite agricultural risks.

The impact of the drought is already being felt by a number of agricultural businesses in SA. Kaap
Agri has warned that its profit will be affected by the drought to the extent of millions of rands,
mainly due to the impact of the drought on Swartland wheat. Diversification has shielded the
company from further losses, and it maintains a positive outlook due to plans to expand its fuel
depots into service stations with convenience stores. By 2020 Kaap Agri expects to have 230
operating points (it presently has 177). Like Kaap Agri, Pioneer is predicting unimpressive results due
to the drought and its knock-on effects.

SA's cotton harvest for the 2015/2016 season is predicted to be 41% lower than the previous season.
The dryland area planted with cotton has declined 80% due to the drought. Globally the area under
cotton is 9% lower in the 2015/2016 season because of lower cotton prices, with China, the US and
Pakistan reporting the biggest declines in plantings.

Some experts warn that all businesses dealing with SA's fruit and seed production industries should
be taking deliberate steps to save honeybees, in order to protect their own future profits. Bees are
suffering due to pollution, pesticides, loss of forage, disease (particularly American Foulbrood) and

the drought. Meanwhile the demand for bee pollination is growing by 10% to 20% per year. SA's bees
have historically proven to be tough, but this may have led to their plight not being taken seriously.
The problem presently experienced with American Foulbrood disease now poses a serious threat to
all agricultural produce pollinated by bees.
The UN recently reported that global populations of bees, butterflies and other species important for
agricultural pollination, are declining. Animal pollination is directly responsible for 5% to 8% of global
agricultural production by volume, amounting to between $235 billion and $577 billion worth of
annual output.

The damage caused by fire and drought in the Western Cape’s wine and fruit industries has been
estimated at R720 million. The wine industry has suffered R20 million in fire damage, and in addition
international demand for SA wines has declined due to fears of smoke damage. Some international
customers were seemingly not aware that local winemakers have the facilities to treat grapes for
smoke damage. Affected Stellenbosch farms lost about R240 000 per hectare due to fire, and it will
take years to get the hectares in question back to standard.
On the positive side, Vinpro says SA's wine industry has the potential to more than double in size by
2025. The country becomes increasingly attractive as a wine tourism destination due to the falling
rand. SA's wine tourism is presently growing at a rate of 7% per year.

Faure Wine Farms outside of Somerset West was recently purchased by a Chinese company which
plans to develop the estate. A hotel, cellar and houses are planned, as the farm offers beautiful views
over False Bay. The development is likely some time off, as environmental impact studies are
required. The farm's vineyards are presently leased to Kleine Zalze, and part of the harvest is sold to
Boschendal. While a number of SA wine farms are now in Chinese hands, SA lags behind the
winelands of Sonoma (California), Hawke's Bay (New Zealand) and Barossa (Australia) which have all
seen significant Chinese investment.

Farmers in the Witzenberg Valley started producing wine grapes 15 years ago, when Distell decided
to source wine from the region. The Ceres Plateau was incorporated into SA's Wine of Origin scheme
not very long ago, but is fast developing a reputation for excellent wine quality. The area is primarily
apple country and has just 40 hectares are under vineyards. Vineyard establishment and production
costs per hectare are only a third of that of apple production in the Witzenberg Valley and vineyards
are less labour intensive, but gross income per hectare is almost three times higher for apples than
for wine grapes. With production averaging around 70 tonnes per hectare, the Witzenberg Valley is
one of the best apple-producing regions in the world. Vineyards are therefore mostly planted on
farms with little water, because vineyards use less than a third of the water used by apples. Farmers
in the area choose grape varieties carefully, to make sure the grapes do not ripen too close to peak
apple harvesting time.

Farmer's Weekly visited Darling Cellars, which this year is hoping to make the Nielsen's Top 20 list of
bottled SA wine brands. Its Chocoholic Pinotage is presently the best-selling pinotage by volume in
local supermarkets. Historically a bulk-wine producer, the cellar started bottling in 1996 and now
focusses on this. Darling Cellars is supplied by 25 farms that have low-yielding (6 to 9 tonnes per
hectare) bush vines growing on unirrigated land. The cellar receives 7 500 tonnes of grapes per
season, which gives six million litres of wine. Approximately four million litres are bottled or used
for bag-in-box wine. The remaining two million litres are sold under various brands in SA and
overseas (Denmark is its main export market). Mechanisation is not a priority and cartons are still
packed and unpacked by hand, in an effort to create local jobs. The cellar believes a key driver of its
success is the quality of its management information systems upon which decisions are based.

Drought in Limpopo and Mpumalanga has made avocados difficult to find in supermarkets, and has
driven up their price in SA. But IOL reports that the fruit can still easily cost four times more
overseas. Mexico, traditionally home to avocado-based foods, is the world's biggest supplier.
Demand in the US has grown to 2kg per capita per year, and Australians consume 15 avocados per
capita per year. The world-wide the trend is one of higher demand and higher prices.

SA's peanut crop is expected to see a year-on-year decline of 48% due to drought, and it is likely that
peanuts will have to be imported. The Free State and Northern Cape are the main growing areas,
together producing 70% of SA's peanuts. Most of SA's imported peanuts usually come from
Mozambique, Malawi, India and the US, while exports go to the Netherlands, Mozambique, Belgium,
Egypt, the UK and Japan.

SA is considering safeguard measures on imports of frozen bone-in portions of chicken from EU
member states. This follows a complaint from the South African Poultry Association that the imports
can cause a serious disturbance in the SA market. Last year, SA imposed anti-dumping duties of 3.9%
to 73% on imports of frozen bone-in chicken from some companies in Germany, the Netherlands and
the UK.

A mobile land claims bus was launched in KZN in February. The bus travels to different districts to
make it easier for people in remote areas to lodge land claims, and is equipped with technology to
process their applications. The bus will operate until April.

The deputy agriculture minister has praised GrainSA for its development of new farmers. The
GrainSA programme includes mentorship, education and on-site training. He also complimented the
Citrus Growers Association on sending emerging farmers to the Fruit Logistica show in Berlin.
Government recently re-instated the Service Delivery Forum to monitor the agricultural industry's
contribution to the development of new farmers.

The long-standing dispute at Zebediela citrus farm has been settled: the Bjatladi community (which
obtained the land in 1999 through a land claim), will buy out Henley Farming Property, the estate's
management firm. The two parties agreed to a 15-year management contract in 2003, but the
partnership soured over time and culminated in a management lock-out during the peak harvest
season last year. As previously reported, the delay placed operations under pressure and uncertified
citrus ended up in a shipment to the EU. The Bjatladi accused three Henley managers of
mismanagement and fraud, and the managers appeared in court in December. The Bjatladi have
since asked for the matter to be settled out of court, and the parties have agreed that a buy-out will
be concluded by 30 June this year. As part of the settlement the parties may not bring any further
charges against each other.

SA has set aside R2 billion to build 44 agri-parks over ten years. The aim is to uplift rural communities
and to add value to primary agricultural products. In the State of the Nation Address it was put
forward that construction has started on five of the parks. Landbouweekblad investigated the
progress made at these locations. At Ncora in the Eastern Cape a dairy has been established that can
house 1 200 cows on 300 hectares, supporting 36 small-scale farmers. At Springbokpan in the North
West, silos have been repaired and plans for a food bank and mills are being finalised. It is said that
150 small-scale farmers will be supported there. A fresh produce market in Kameelpoort,
Mpumalanga is 80% complete and in Bushbuckridge a maize mill has been completed. A plant is
being constructed at Witzenberg in the Western Cape which will provide electricity to agricultural
centres and to farm workers' houses. In Gauteng's West Rand 20 tunnels, boreholes and a packing
facility have been constructed.

Agricultural Colleges for Africa (ACA) is an organisation that aims to establish at least five private
agricultural colleges in SA. The first college will be built in Tzaneen, and each college will focus on the
skills needed in that particular area. A number of prominent businessmen and farmers in the area
are working on ACA's Tzaneen project, and it is hoped that the first intake of students will be at the
beginning of next year. Mohammad Karaan has been approached to help with the formulation of
syllabi. Four types of programmes are envisaged: a one-year diploma in agricultural science and a
more advanced two-year version thereof, a three-year specialised programme, and a masters'
course. As soon as the company is officially registered, 10 000 shares will be issued at R30 each to
obtain the R3 million needed to build the Tzaneen college on land that used to be the Tzaneen show
grounds.

Afgri's Unigro Insurance Brokers and Indwe Risk Services have formed a working relationship. Unigro
offers a range of short-term and life insurance products, and will benefit from Indwe's risk advisory
services. Indwe, in turn, will have access to the agricultural expertise of Unigro. The product range on
offer will expand as a result of the relationship, and the branch network will be optimised. The
collaboration will allow Unigro to expand into Africa through Indwe’s integrated network of
independently African-owned short-term insurance brokers.

Capespan has acquired a 35% stake in one of India’s largest fruit distributors, the family-owned
Yupaa Group. This is in line with Capespan's strategy to expand operations in India, where most
people are vegetarians. Yupaa distributes fresh produce to 32 Indian cities. Its fruit is sold to
wholesalers and indirect dealers that operate in all 29 Indian states. Capespan presently exports
mainly apples and pears to India, and sees growth opportunities for citrus exports.

Banking & Capital Markets
Farmer's Weekly has interviewed Prof Middelberg of North-West University, who says the demand
for alternative production finance in agriculture is increasing due to the drastic rise in input costs.
Commercial farmers can obtain finance from agricultural companies (the former agricultural co-
operatives), commercial banks, the Land Bank or other privately-owned institutions offering either
agricultural finance or corporate farming initiatives. As a general rule, credit vetting centres on a
farmer's cash repayment ability. Three other criteria play a supporting role: financial history,
management profile and collateral. A problem experienced by commercial farmers, is that their land
no longer necessarily provides sufficient collateral for rising input costs. The situation is worsened by
the drought. There is therefore a need for alternative forms of collateral to be accepted from both
commercial as well as emerging farmers, although the two groups are very different. The biggest
change that agricultural finance will likely see in the near future, is a shift in focus from land as
collateral. In many other African countries the concept of value chain financing (VCF) works well for
emerging farmers. VCF relies on relationships between farmers, input suppliers, processors, traders,
exporters and retailers. It reduces risk and lowers the cost of financing, but it requires a holistic
approach from a financier. In SA emerging farmers can also turn to the Land Bank, micro agricultural
financers, the IDC or the National Empowerment Fund for finance. These institutions often accept
movable assets as collateral. The professor says one of the main mistakes farmers make when
applying for credit, is that they are not sufficiently conservative and realistic in cash flow projections,
which then increases their chances of defaulting on loans.

Livestock farmers who are forced to sell animals due to the drought, can defer the tax on the sale if
they invest the money in a special Land Bank scheme. The scheme has been in existence since 1983
and is administered by Land Bank on behalf of the government. Conditions apply and farmers should
ensure that they understand the scheme in order to utilise its tax benefits.

The IDC needs to restructure R20 billion of debt, in part due to falling commodity prices in the
mining sector. Restructuring could entail payment holidays and converting debt into equity. A record
level of impairments will likely be reported by the IDC in the year ending March 2016. The IDC holds
about R100 billion worth of debt and equity investments.

Barclays was recently fined by the US for processing transactions with links to President Mugabe.
Since then, international banks have been terminating their corresponding bank partnerships with
Zimbabwean banks to avoid potential fines. Analysts say there is a growing risk perception on
Zimbabwe and the country's liquidity situation is worsening. Zimbabwean banks are changing
intermediary banks from those in Germany to those in countries such as SA and China. Zimbabwe's
government encourages usage of the Chinese yuan, saying the US dollar is driving down
competitiveness because it is stronger than major trading partner currencies such as the rand, yen
and yuan.

Contents
Agriculture
      NASA to simulate growing potatoes on Mars in Peru
      Will drones become the toast of Napa?
      Robot revolution down on the farm
      World food prices start 2016 at near seven-year low
      U.S. farm income will drop for third year in commodity slump
      Dilemma for U.S. farmers: Which crop will lose the least money?
      California farmers reap record sales in record drought
      Tiny fly rattling Florida fruit industry 'eradicated'
      OPEC of maple syrup under fire as farmers turn to black market
      Greek PM offers olive branch to protesting farmers
      Cocks crow, farmers protest as Paris farm expo kicks off
      France bans supermarket food waste, should SA?
      Can hobbit tourism save these troubled dairy farmers?
      How one dairy stock became a cash cow
      Golden guernsey cows shine again amid healthier milk claims
      Egypt said to cancel wheat tender as traders shun top buyer
      Egypt said to reject 8,000 tons of Canadian wheat a second time
      Egypt's wheat reserves to last until June
      Egypt to launch agricultural commodities bourse by year-end
      DNA rice breakthrough raises 'green revolution' hopes
      GM crops could help save lives: researcher
      Zim govt says no to genetically modified food despite food shortages
      South Africa to ease some GM crop rules to avert food crisis
      Glyphosate most widely and heavily used weed-killer ever
      Worse water crisis looms in 2035 ‒ ISS
      Drought and poor control of boreholes add to crisis
      Heat and dust storms hit crops
      Insurers may avoid drought claims
      Drought hits the bottom line
      Droogte eis groot tol by katoen
      Time for SA to take the decline of the honeybee seriously, experts warn
      Decline of bees, other pollinators, poses crop risks
      Cape’s R720m fire damage
      Wine tourism in South Africa may double by 2025 as rand tumbles
      Chinese aandeel in SA wynbedryf groei
      What’s good for apples, is good for wine
      The darling of bush vine wine
      In pursuit of the elusive avo
      South Africa's peanut crop failure is seen boosting imports
      South Africa to consider EU poultry-import safeguard measures
      New mobile land claims bus
      Cele prys Graan SA oor nuwe boere
      Zebediela lê strydbyle neer
      So lyk vordering met agriparke
      Private landboukolleges aan die kom
      Afgri’s Unigro joins forces with Indwe
      Capespan moves into India
Banking & Capital Markets
      Agricultural financing and its challenges
      Land Bank help veeboere met belasting
      IDC must restructure R20bn worth of debt
      Zimbabwe’s banks scramble to escape US fines

Agriculture

NASA to simulate growing potatoes on Mars in Peru

Do Peru's potatoes have the right stuff?
That's the question scientists will be asking in Lima next month, when a selection of tubers will begin
undergoing tests to determine whether they're fit to grow on Mars.
NASA, the US space agency, is conducting the pioneering experiment together with Lima's
International Potato Center (CIP).
They will cultivate a hundred selected varieties already subjected to rigorous evaluation in extreme,
Mars-like conditions that could eventually pave the way to building a dome on the Red Planet for
farming the vegetable.
The selection was made from a total of 4 500 varieties registered at CIP, a nonprofit research facility
that aims to reduce poverty and achieve food security.
Of the selected candidates, 40 are native to the Andes Mountains, conditioned to grow in different
ecological zones, withstand sudden climate changes and reproduce in rocky, arid terrain.
The other 60 are improved varieties able to survive with little water and salt. They are also immune
to viruses.
Those that pass the tests must meet a final criterion – they must be able not only to grow well on
Mars but also reproduce in large quantities.
"We're almost 100 percent certain that many of the selected potatoes will past the tests," said Julio
Valdivia Silva, a Peruvian NASA astrobiologist who is taking part in the ambitious project.
The scientists hope the experiment will also help address the earthly scourges of hunger and
malnutrition by identifying varieties suited to growing in harsh conditions.
"We must be prepared for the future," said virologist Jan Kreuze, a scientist at CIP. "To respond to
desertification, rising temperature and high salt content in the soil."
The soil in La Joya Pampas – a sector of the Atacama Desert in southern Peru that's considered one
of the driest places on earth – is very similar to that found on the Red Planet.
The scientists plan to transport 100kg of it to a CIP laboratory in Lima that will simulate the complex
Martian atmosphere – which contains mostly carbon dioxide – and expose it to extreme ultraviolet
radiation.
"We'll have more concrete results in one or two years, Valdivia said, adding that it will take more
than five years to launch an unmanned mission to Mars.
The potential future space crop is also one of the oldest.
Records of potato cultivation date back to 2500 BC, when the indigenous Aymara Indians farmed it in
modern-day Peru and Bolivia.
If the varieties selected for next month's experiment don't adapt to the desert soil, the researchers
will introduce nutrients and subject them to radiation.
"If that doesn't work," Valdivia said, "we'll administer a new method the CIP is using called
aeroponics."
The technique, used for cultivating plants without soil, would expose roots inside a sphere or cube
that is sprayed with nutrients and contains a system for removing toxins.
In future years, NASA plans to build a Mars research center in the Peruvian desert.
It would create a perfect replica of the Martian landscape and atmosphere for future research into
space farming that could serve manned missions to Mars and other planets in the solar system.

AFP, 28 February 2016

Will drones become the toast of Napa?

For generations, Napa Valley growers have used workers on foot or tractors to apply nutrients and
pesticides to the vines that produce grapes used in some of America’s most storied wines. Now
Japan’s Yamaha Motor thinks it has a better way: drones. After testing its helicopter-like RMax for the
past two growing seasons, Yamaha in December became the first company to win federal
certification for a drone to be used as an agricultural aircraft in the U.S.
That was a coup for a company looking to the skies for growth after conquering land with
motorcycles and the seas with boats. “The market [for drones] will expand as the agriculture industry
embraces unmanned farming,” says Osamu Ishioka, former senior general manager of the company’s
unmanned helicopter business. “Even as the population is aging and declining, no country in the
world will abandon farming. This is why our unmanned helicopters will be in demand.”
Yamaha’s drones have been dusting crops in Japan for more than two decades and handle more than
a third of the nation’s rice paddies. That’s helped farmers cope with an aging population that’s
winnowed the agricultural labor supply. Yamaha’s drones also operate in South Korea and Australia
and are used for research in France.
Although there are hundreds of rival agricultural drones, many are smaller, powered by batteries,
and work mainly collecting data, monitoring disease, and mapping. The gasoline-powered, scooter-
size RMax, which has two 2.1-gallon tanks, can fly for an hour when fully loaded with chemicals. It is
radio controlled and has an onboard GPS system to keep its flight precise. Aerial spraying can be
done as much as five times faster than with tractors, says Brian Wynne, president of the Association
for Unmanned Vehicle Systems International.
Ken Giles, an agricultural engineering professor at the University of California at Davis, who’s worked
with Yamaha’s testing program in Napa, says the technology has been reliable and that some growers
are enthusiastic to try it—especially for vineyards that are hard to reach with tractors and backpack
sprayers. Conventional crop-dusters are more suited for larger, flatter plots.
Drones also could be less risky. “There’s always concern about the exposure to the chemical,” Giles
says. “One of the things we like about the remotely piloted aircraft is the operator is away from the
actual location where the chemicals are discharged, while the tractor driver is right there when it’s
coming out.”
Yamaha eventually plans to provide drone service for about $250 per hectare (2.47 acres) for
vineyard spraying, about 40 percent cheaper than treating the same-size plot using human labor,
Ishioka says. The high value of wine grapes such as chardonnay makes Napa an ideal starting point
for the company’s plan to cover 2,000 hectares in the U.S., he says.
First, Yamaha must convince vintners such as Matthew Crafton, a winemaker at Chateau Montelena
Winery, that it can save them money. “The concept of drones is very interesting,” Crafton says, “but I
haven’t seen any data to show that they are able to deliver the product in an efficient manner for
what we need.”
Unmanned copters account for only a tiny fraction of the company’s 1.6 trillion yen ($14 billion) in
annual revenue, but Yamaha has big plans for them. It aims to double the sales and profit margin of
its drone business, to 10 billion yen and 25 percent, respectively, by 2021, Ishioka says. Besides their
use in agriculture, Yamaha drones have been used in Japan’s Fukushima prefecture for radiation
monitoring since the nuclear disaster there in 2011, as well as for geomagnetic measuring around
the country’s active volcanoes.
Yamaha probably won’t have the U.S. market to itself for long. China’s DJI, the world’s largest maker
of drones, in November introduced its first agricultural spray drone. It can carry more than 10
kilograms (2.6 gallons) of liquid and will initially be sold in China and South Korea, DJI says. Yet
Ishioka is confident Yamaha can maintain its lead, even as rivals offering battery-powered drones join
the race. “There may be major breakthroughs in the battery technologies in the next 10 to 20 years,”
he says, “but before that they are not going to match what we have.”

Jie Ma & Yuki Hagiwara, Bloomberg, 18 February 2016

Robot revolution down on the farm

Japan has an ageing population. So what does a country known for its high-tech innovation do to
combat its labour shortages? Employ robots, of course.
The average age of a Japanese farmer is 66 and a vegetable producer called Spread is hoping that by
opening the world’s first farm operated by machines, it will be able to halve its labour costs. The
robots aren’t able to plant the seeds, but can complete every other task on the farm (due to open in
the middle of next year) increasing its production from 21,000 to 50,000 lettuces a day in the
process.
They won’t look like R2-D2, however, as they will consist of conveyor belts with arms that can water,
trim, harvest and transplant crops. Researchers have predicted that almost half of all jobs in Japan
could be done by robots within 20 years.
Companies have already developed machines that pick strawberries at the rate of one every eight
seconds and use a camera to detect when tomatoes are ripe before – mechanically – picking them
from the vine.

Daily Mail, 5 February 2016

World food prices start 2016 at near seven-year low

World food prices fell to near a seven-year low in January, weighed down by declines for agricultural
commodities, particularly sugar, the United Nations food agency said on Thursday.
Food prices have fallen for four straight years and remain under pressure from ample agricultural
supply, a slowing global economy, and a strengthening U.S. Dollar.
The Food and Agriculture Organization's (FAO) food price index, which measures monthly changes for
a basket of cereals, oilseeds, dairy products, meat and sugar, averaged 150.4 points in January
against a revised 153.4 points the month before.
The 1.9 percent decrease from December follows an almost 19 percent slide in 2015. Food on
international markets in January was 16 percent cheaper than one year ago, the FAO said.
"There are still prospects perhaps for further downward pressure on markets, but the U.S. economy,
exchange rates, and the overall macro conditions are impossible to predict and their implications
could be quite important," FAO senior economist Abdolreza Abbassian said.
Positive revisions for wheat production prompted the FAO to raise its estimate for world cereal
output in 2015 to 2.531 billion tonnes, still 1.2 percent below 2014's record harvest.
Early prospects for cereal harvests in 2016 are mixed, the FAO said, partly due to El Nino-associated
weather patterns having a particularly deleterious effect in the southern hemisphere.
Southern Africa's crop prospects have been severely weakened by the dry and hot weather El Nino
has brought, and wheat output in South Africa is likely to fall 25 percent, the FAO said.
Early-season dryness in Brazil and Argentina could also result in reduced plantings. Dry weather
forced Ukraine to cut the area under wheat, but conditions are better in Russia.

Isla Binnie, Reuters, 4 February 2016

U.S. farm income will drop for third year in commodity slump

The U.S. Department of Agriculture forecast that farmers will face a drop in profit for the third
straight year as persistent surpluses depress crop and livestock prices.
Farm net income will be $54.8 billion in 2016, the USDA said Tuesday in a report on its website, 2.8
percent less than the $56.4 billion estimated for 2015.
The hard times follow an era of record profit that peaked at $123.3 billion in 2013, when rising global
demand combined with a domestic drought that crimped supplies of corn and cattle, while a virus
devastated hog herds. Direct government farm-program payments are forecast to rise 31 percent to
$13.9 billion in 2016 with the 2014 Farm Bill’s price-loss and risk coverage accounting for almost two-
thirds of the total.
U.S. farm expenses will fall 1 percent to $376.5 billion this year, the first consecutive annual decline
since 1986. ‘The drop in expenses is expected to alleviate, but not completely offset, the drop in cash
receipts, and ultimately lead to tighter margins,” the USDA said in a report.
The 2013 boom spurred farmers to boost crop and livestock production, triggering a cycle for
surpluses in major agricultural commodities at the same time, David Anderson, a livestock economist
at Texas A&M University in College Station, said in a telephone interview. Farmland values have
dropped from all-time highs.
The U.S. farm debt-to-equity ratio will rise for a fourth straight year, indicating “a higher level of
financial stress is building” relative to recent years, the USDA said. This measure “remains low
relative to historical levels,” indicating the industry is “insulated from solvency risk associated with
declining commodity prices” and swings in farm-asset values, the agency said.
Some farmers will work through supply gluts faster than others, with chicken and dairy cattle
possibly seeing some price improvement later in the year, Anderson of Texas A&M said. For crops,
only a major improvement in trade, or a weather disaster, will soak up supplies in the near term, said
Patrick Westhoff, an agricultural economist at the University of Missouri in Columbia.
“For years, we saw rising ethanol demand and Chinese growth as sources for profit,” he said in a
telephone interview. “Ethanol growth is behind us, and China is cloudy. It’s hard to see much that will
significantly increase profit going forward.”

Alan Bjerga & Jeff Wilson, Bloomberg, 9 February 2016

Dilemma for U.S. farmers: Which crop will lose the least money?

For farmers who grow some of the biggest U.S. crops, choosing what to plant this year has become a
bet on which one will lose less money.
A three-year plunge in prices has sent farm income to the lowest in more than a decade and left
parts of the Midwest agricultural economy in recession. While growers probably would lose $70 on
every acre of corn or soybeans they sow -- the most since 1999 -- those crops offer the best chance
at profit if yields are better than average, according to AgResource Co. So, even with record global
surpluses, U.S. farmers are preparing to plant more corn and soybeans in 2016 and devote less land
to wheat, a Bloomberg survey showed.
“Nothing looks very good,” Terry Vinduska, 65, said by telephone from his 3,500-acre (1,416-hectare)
farm in central Kansas, the biggest wheat-growing state. Vinduska, who runs the farm with his son-
in-law and younger man’s father, plans to expand corn planting by 10 percent and soybeans by 5
percent on land he normally uses for wheat.
While prices for all three crops are down more than 50 percent from peaks in 2012, improvements in
seed technology to fight drought, bugs and disease have allowed farmers to collect at least 23
percent more corn and soybeans per acre since 2000, while wheat yields rose just 3.8 percent.
Increased output of wheat from places like Russia and Ukraine is sending U.S. exports to a 44-year

low, further eroding the appeal for American growers who already are mired in the longest income
slump since the 1980s.
To maximize revenue, farmers probably will expand corn planting by 1.9 percent to 89.689 million
acres, the first increase since sowing a record 97.291 million in 2012, according to a Bloomberg
survey of 32 trading firms and analysts. Soybean sowing may rise 0.8 percent to an all-time high of
83.345 million acres, the survey showed. Most will be planted in April and May and harvested in
September and October.
The U.S. Department of Agriculture on Thursday forecast an even bigger increase this year for corn,
up 2.3 percent to 90 million acres, but said farmers will cut planting for soybeans by 0.2 percent, to
82.5 million acres. The USDA will issue its first production forecasts for 2016 on Friday. On March 31,
the agency will release the results of a national planting survey of more than 84,000 growers that
begins next week.
“Maximizing yield is the new game in town, and that means corn and soybeans offer more upside
than wheat,” said Dan Basse, the president of Chicago-based AgResource, an industry adviser. “It’s
much like OPEC producers where they have to produce more to generate income when prices are
low. U.S. farmers are not going to leave land fallow.”
About 70 percent of U.S. wheat is the winter variety planted in September and harvested in June.
The rest is spring wheat sown in April and May. Total wheat planting will fall 6.7 percent to 51 million
acres, the USDA said Thursday. In Nebraska, winter seedings were the lowest on record, and fell in
the top producing states of Kansas and Texas.
At current prices and average yields, wheat would generate a loss of about $25 an acre, Basse
estimates. The loss would be bigger for corn and soybeans, which are more expensive to plant, but if
yields are anywhere near the records of the past few years, farmers would stand a good chance of
breaking even or making money, he said.
In Metropolis, Illinois, Rollo Burnett cut his winter-wheat crop in half to 500 acres, and said he will
increase soybean planting by 24 percent to 2,600 acres this year. He’ll keep corn at 2,400 acres,
partly to stick with his crop-rotation plan. Burnett, 69, said he still considered adding more corn after
fertilizer costs fell to the lowest since 2010 and seed prices declined about 10 percent, but the grain
is more expensive to grow and harvest, so he elected to reduce his financial risk by adding more
soybeans.
Farmers have been hurt by crop and livestock prices that have tumbled along with most
commodities, after a decade of rising demand and prices led to a surge in output and surpluses. Net
farm income in the U.S. will slump to $54.8 billion this year, down from a record $123.3 billion in
2013, government data show. Government subsidies will ease the burden for growers, who will get a
31 percent increase in direct payments to $13.9 billion in 2016. Still, 37 percent of rural Midwest
bankers in a Creighton University survey this month said their local economy was in recession.
CF Industries Holdings Inc., the largest U.S. producer of nitrogen fertilizer, said Feb. 17 that spring
demand will be “larger than average” as corn planting expands. Ammonia prices on average fell 18
percent in the fourth quarter, while urea ammonium nitrate dropped 13 percent. These are the two
biggest corn fertilizers. It takes about 1.2 pounds of nitrogen to produce a bushel of corn.
For Vinduska, who had grown mostly wheat in Marion, Kansas, about 170 miles southwest of Kansas
City, the decision to sow more corn and soybeans was influenced by a 15 percent drop in fertilizer
costs and similar discounts for seed. Other growers in the area are doing the same, he said.
“A few growers dramatically cut wheat acres, and most are reducing wheat to plant more corn and
soybeans,” said Vinduska, who also has been a seed-corn dealer for DuPont & Co.’s Pioneer unit for
30 years.

Jeff Wilson, Bloomberg, 24 February 2016

California farmers reap record sales in record drought

A new state report shows California farmers reaping record sales despite the epic drought, thriving
even as city-dwellers have been forced to conserve water, household wells have run dry and fish
have died.
California's 76,400 farms recorded $53.5 billion in sales in 2014, the year Gov. Jerry Brown declared
the state in a drought emergency and launched what in 2015 became mandatory conservation for
cities and towns. The sales figures are the most recent annual ones released by the state agriculture
department.
With the punishing drought entering its fifth year, the figures are sure to stoke tensions between
farmers on one side and, on the other, city-dwellers and environmentalists, who complain they are
being forced to make greater sacrifices than growers.
Experts cite two key reasons for California farms' strong showing even in dry times: a California
almond boom fed by surging demand from China and elsewhere, and farmers' ability to dig deeper,
bigger wells to pump up more groundwater when other sources run out.
The state report tracked sales, not profits. Higher costs for water and other expenses of the drought
outstripped sales for some farmers, but experts said it is clear many others made strong profits, as
evidenced by the rush by growers and corporate investors to get into the almond business and take
advantage of a run-up in prices.
Jay Lund, a water-resources researcher at the University of California at Davis and an influential voice
in water policy in the state that is America's agricultural powerhouse, said the sales figures show that
California farmers are doing what they should be doing in a dry spell.
"To me it illustrates that you can actually have a fairly good job in managing water," Lund said.
Some of those who consider themselves the losers in California's water wars see it differently.
"The water they're taking, they're also taking from communities around them — like us," said
Guillermo Lopez, a resident of Fresno County, the state's third-most productive farming county, who
was forced to haul water when his family taps ran dry. "We're the ones left with no water."
Lopez's family well was one of 2,250 household wells around the state to run out of water because of
the drought and overpumping of the state's underground water reserves, according to state figures
Wells in Lopez's neighborhood outside the city of Fresno began running dry a year ago, and his family
was forced to buy bottled water until a state relief fund paid to have a large water tank installed next
to the home. Lopez said that was about the same time he also noticed farmers nearby pumping
heavily from deep wells to irrigate their crops.
Wildlife has also suffered, including endangered fish. Federal and state water managers, trying to
balance competing demands from farms, cities and the environment, were unable to keep enough
water in rivers for California's endangered winter-run Chinook salmon, which have gone through
record die-offs.
California farmers' record sales come "at the expense of our rivers and fisheries," said Kate Poole, a
senior attorney at the Natural Resources Defense Council.
"There've been vast amounts of water taken away from the environment" by water managers in the
drought, Poole said. "It's caused many of our native fish to crash to the lowest levels ever."
California just went through its driest four-year period on record. Brown asked California cities and
towns to cut water use 20 percent in 2014, then made a 25 percent cutback for urban users
mandatory the next year. Californians learned to take shorter showers and let their lawns turn
brown.
Farmers say that they have suffered in the drought, too, and that the rising cost of irrigating their
crops is eating into their profits. Not only are their water costs higher but their power bills have shot
up because they're running their well pumps more.
"You can't assume all farmers have a new pickup and their wives all have a new Cadillac," said Pete
Belluomini, who grows potatoes, onions, almonds and other crops in Kern County, the state's No. 2
agriculture county.