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According to the latest VinPro Production Plan survey, production levels of primary wine grape producers remain high. By Andries van Zyl & Funzani Sundani
VINPRO PRODUCTION PLAN SURVEY 2015 (PART 1)
and the impact on primary wine grape producers’ financial sustainability
The 2015 crop
2015
-CRO
P (P
ART 1
)
PHO
TO: J
AN
A L
OO
TS.
1
21
According to the latest VinPro Production Plan survey, production levels of primary wine grape producers remain high. By Andries van Zyl & Funzani Sundani
VINPRO PRODUCTION PLAN SURVEY 2015 (PART 1)
and the impact on primary wine grape producers’ financial sustainability
The 2015 crop
2015
-CRO
P (P
ART 1
)
PHO
TO: J
AN
A L
OO
TS.
2
The findings of the VinPro Production Plan survey which was conducted in 2015 for the 12th consecutive year in the wine industry, show that in the wake of the 2014 record crop, primary wine grape producers have maintained high production levels and are trying to counter the pressure of cost inflation despite the ongoing decrease in surface planted to grapevines.
The income that was realised still does not comply with sustainable guidelines, but it is encouraging that despite the season’s risks, some producers in each of the nine wine districts manage to surpass these guidelines annually and realise excellent returns.
INTRODUCTION
VinPro Agricultural Economic Services conducted comprehensive analyses in all nine wine districts in 2015, with the support of Winetech, the National Agricultural Marketing Council (NAMC), Standard Bank, Absa, Land Bank, FNB, Nedbank and Capital Harvest. The primary objective is still to determine the production structure, cost structure and profitability per district so as to determine the financial wellbeing of the producers.
Altogether 226 farming units from nine wine districts participated in the 2015 Production Plan survey. In 2015 the sample consisted of 22 545 ha (22% of the total South African area planted to grapevines in 2014), which produce 380 998 tons (26% of the total South African crop in 2015). The sample comprised 62% white and 38% red wine grapes and 59% of the tons were harvested mechanically.
The analysis applies to overall grapevine production (bearing and non-bearing hectares) and the cost analysis makes no distinction between cultivars and specific blocks. The greater majority of participants are diversified and differ with regard to farm size. The report represents industry average figures, calculated by determining the weighted average of all the participants. The Malmesbury district is always evaluated separately and does not form part of the industry average figures because this study group cultivates a large percentage of dryland vineyards which require an alternative production, cost and capital structure.
THE COST OF WINE GRAPE PRODUCTION
The annual cost incurred to prepare the 2015 crop comprised cash expenditure and provision for replacement, and excluded tax, interest and entrepreneurial remuneration. The industry average total production cost (excluding Malmesbury) has increased by 8% since 2014 to R41 635/ha in 2015.
CASH EXPENDITURE
Cash expenditure is specified as direct cost, labour, mechanisation, fixed improvements and general expenses. Total cash expenditure indicates a 9% increase since 2014 to R31 944/ha in the 2015 production year.
This increase is driven mainly by labour which is exceedingly higher than the other cost elements. This contributed to the increased component of wine grapes which were harvested mechanically, as well as increasing mechanisation of practices such as pruning. High production for the fourth consecutive year also
contributed to the increase due to the need for increased inputs, so that wine grapes could be produced profitably for a specific wine style objective. Depending on the amount of mechanisation, the cost composition differs in certain areas, but the total production cost does not differ notably from one area to the next. Stringent cost management, with a balance between wine style objective and input requirement for each block, remains critical in cycles of sub-inflationary increases in income. Agricultural cost inflation was nevertheless clearly higher than the average South African inflation.
PROVISION FOR RENEWAL
Production cost is not restricted to cash expenditure, capital items also have to be replaced in due course so as to maintain the business as a running concern and ensure a sustainable business model. Tractors, tools, other means of production, vineyards and buildings deteriorate and have to be renewed, therefore the purchase value of the item has to be recovered over a specific lifetime. By using the principle “provision for renewal” a larger amount is recovered than in the case of depreciation. To a certain extent this addresses the problem of rectilinear depreciation.
When calculating provision for renewal, items are written off at renewal value over different periods:
Buildings 60 years
Grapevines 20 years
Moveable assets/means of production 7 - 15 years
Total provision for renewal in the 2015 harvest year amounted to R9 691/ha – an increase of 3% since 2014.
PRODUCTION STRUCTURE
The average surface planted to grapevines was 97 ha – the other enterprises were not taken into account. Economies of scale play a considerable role in the broader agriculture and this trend is increasingly common, with many producers aiming for scale benefits.
The average production for bearing and non-bearing grapevines for the 2015 production year was 17.48 ton/ha. Over the past 10 years it has been an obvious trend that producers attempt to increase average yields in order to counter the effect of increasing costs, as well as to increase profitability.
CULTIVAR STRUCTURE
During the 2014 harvest a cultivar analysis was also conducted to indicate the production variance between the most planted white and red cultivars. This was continued in 2015 and will assist producers with precision farming over the next few years and show how the cultivars in their business differ and can contribute to greater profitability.
BREAK-EVEN
The impact of increased production is significant on the break-even price of the total production cost in rand per ton. The total production cost per hectare, which has increased by 8% since 2014, caused the break-even in terms of rand per ton to increase from R2 186/ton to R2 382/ton in 2015. In other words: The first R2 382 for a ton of grapes received by the producer during the 2015 harvest, should be applied for total production cost. No entrepreneurial remuneration, interest or tax has been taken into account yet.
3
MECHANICALLY HARVESTED
FIGURE 1. Tons harvested mechanically per district.
TOTAL PRODUCTION COST
FIGURE 2. Total industry average production cost.
FIGURE 3. Movement of direct cost – industry average.
4
FIGURE 4. Movement of labour cost – industry average.
FIGURE 5. Movement of mechanisation cost – industry average.
FIGURE 6. Movement of general cost – industry average.
5
% COMPOSITION OF ANNUAL CASH EXPENDITURE
FIGURE 7. Percentage composition of annual cash expenditure – industry average.
AREA UNDER VINES PER PARTICIPANT
FIGURE 8. Surface planted to grapes per participant (bearing and non-bearing hectares) – industry average.
TON/HA
FIGURE 9. Average yield (bearing and non-bearing hectares) – industry average.
66
The average yields differ considerably among the districts, as well as among the various cultivars, while the production cost does not differ to the same extent. This gives rise to large differences in break-even price in terms of total production cost in the respective districts and among the various cultivars.
Due to financial pressure capital maintenance has been neglected in many districts. This is reflected in the decline of the average age composition of grapevines since 2006. It is nevertheless positive to see that certain districts apply replacement diligently and even expand in total plantings. More than 14% of the surface planted to grapevines is older than 20 years and 11% of the grapevines in the sample are three years old and younger. The general norm is that 15% of grapevines should be three years old and younger and the component older than 20 years should not be more than 15%.
PROFITABILITY
The profitability, or net farming income (NFI), is calculated as total income (R/ton x ton/ha) minus total production cost. The latter consists of cash expenditure and provision for renewal, but excludes entrepreneurial remuneration, interest obligations and tax. The total income is calculated for a specific production year and although the majority of producers realise their income at different stages, no time value of money is taken into account.
It is positive to see how total income per hectare has increased over the past year, but above-inflation cost increases have exercised pressure on the NFI. For the 2015 production year the average total income amounted to R49 108/ha – just 3% more than in 2014 – whereas the NFI decreased to R7 473/ha. As a guideline for economically sustainable production, the average income and the NFI for the 2015 harvest year should in fact have realised R64 115 and R22 480/ha respectively.
The average income hampers producers in respect of implementing sufficient capital renewal, with the result that production occurs based on gross margin, not NFI. Consequently producers remain under financial pressure, which compromises long term financial sustainability.TA
BLE
1. Y
ield
per
cul
tiva
r per
dis
tric
t (20
15 p
rodu
ctio
n ye
ar).
YIEL
D P
ER C
ULT
IVA
R (T
ON
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) K
LEIN
KA
ROO
RO
BERT
SON
WO
RCES
TER
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DEK
LOO
FO
LIFA
NTS
RIV
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RAN
GE
RIVE
R PA
ARL
STEL
LEN
BOSC
HM
ALM
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RY
CHEN
IN B
LAN
C 2
5.14
2
6.18
2
6.15
2
5.95
2
9.43
3
6.04
1
5.27
8
.36
10.
97
COLO
MBA
R 2
3.00
2
0.80
2
2.39
2
4.50
3
2.86
3
1.23
1
9.86
1
3.18
6
.71
SAU
VIG
NO
N B
LAN
C 1
1.83
1
7.68
1
7.44
2
0.59
1
9.20
2
1.09
1
1.45
9
.85
9.7
6
CHA
RDO
NN
AY 1
4.08
1
6.32
1
6.03
1
5.70
1
6.69
1
8.91
1
2.74
8
.64
9.1
3
MU
SCAT
D'A
LEXA
ND
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17.
29
22.
04
20.
79
27.
34
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85
35.
04
19.
79
6.8
0 -
SÉM
ILLO
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42
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28
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63
18.
59
– 1
8.68
1
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1.90
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GN
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23.
84
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79
22.
09
9.8
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14.
64
11.
02
7.6
1
OTH
ER W
HIT
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8.11
1
6.41
2
7.03
2
1.54
2
7.09
3
1.26
1
0.14
9
.71
8.8
1
YIE
LD P
ER C
ULT
IVA
R (T
ON
/HA
) K
LEIN
KA
ROO
RO
BERT
SON
WO
RCES
TER
BREE
DEK
LOO
FO
LIFA
NTS
RIVI
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RAN
JERI
VIER
PA
ARL
STEL
LEN
BOSC
HM
ALM
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RY
CABE
RNET
SAU
VIG
NO
N 7
.40
13.
23
11.
19
13.
67
15.
59
15.
45
9.2
0 6
.26
6.5
2
SHIR
AZ
9.8
7 1
6.07
1
7.39
1
7.77
1
6.61
1
2.93
1
1.10
9
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7.8
7
PIN
OTA
GE
8.4
0 1
5.63
1
5.32
1
4.31
1
9.20
–
10.
64
8.9
8 9
.52
MER
LOT
10.
72
12.
88
11.
73
15.
85
13.
65
15.
13
11.
59
9.1
7 1
0.52
RUBY
CA
BERN
ET 1
4.64
1
5.30
1
3.74
1
5.67
1
7.48
2
4.16
1
5.21
6
.37
–
CIN
SAU
T–
22.
87
27.
80
25.
65
––
15.
79
7.7
0 8
.85
PIN
OT
NO
IR–
16.
63
19.
84
7.3
1 1
1.49
–
11.
37
9.2
8 7
.43
OTH
ER R
ED 1
7.19
1
5.34
1
3.10
1
4.42
1
5.59
2
3.10
1
3.15
8
.81
8.8
5
YIEL
D P
ER C
ULT
IVA
R (T
ON
/HA
) K
LEIN
KA
ROO
RO
BERT
SON
WO
RCES
TER
BREE
DEK
LOO
FO
LIFA
NTS
RIV
ER O
RAN
GE
RIVE
R PA
ARL
STEL
LEN
BOSC
HM
ALM
ESBU
RY
CHEN
IN B
LAN
C25
.14
26.1
826
.15
25.9
529
.43
36.0
415
.27
8.36
10.9
7
COLO
MBA
R23
.00
20.8
022
.39
24.5
032
.86
31.2
319
.86
13.1
86.
71
SAU
VIG
NO
N B
LAN
C11
.83
17.6
817
.44
20.5
919
.20
21.0
911
.45
9.85
9.76
CHA
RDO
NN
AY14
.08
16.3
216
.03
15.7
016
.69
18.9
112
.74
8.64
9.13
MU
SCAT
D’A
LEXA
ND
RIE
17.2
922
.04
20.7
927
.34
11.8
535
.04
19.7
96.
800.
00
SÉM
ILLO
N0.
0019
.42
17.2
823
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18.5
90.
0018
.68
14.1
311
.90
VIO
GN
IER
16.0
223
.84
16.7
922
.09
9.85
0.00
14.6
411
.02
7.61
OTH
ER W
HIT
E18
.11
16.4
127
.03
21.5
427
.09
31.2
610
.14
9.71
8.81
YIE
LD P
ER C
ULT
IVA
R (T
ON
/HA
) K
LEIN
KA
ROO
RO
BERT
SON
WO
RCES
TER
BREE
DEK
LOO
FO
LIFA
NTS
RIVI
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RAN
JERI
VIER
PA
ARL
STEL
LEN
BOSC
HM
ALM
ESBU
RY D
ROËL
AN
D
CABE
RNET
SAU
VIG
NO
N7.
4013
.23
11.1
913
.67
15.5
915
.45
9.20
6.26
6.52
SHIR
AZ
9.87
16.0
717
.39
17.7
716
.61
12.9
311
.10
9.56
7.87
PIN
OTA
GE
8.40
15.6
315
.32
14.3
119
.20
0.00
10.6
48.
989.
52
MER
LOT
10.7
212
.88
11.7
315
.85
13.6
515
.13
11.5
99.
1710
.52
RUBY
CA
BERN
ET14
.64
15.3
013
.74
15.6
717
.48
24.1
615
.21
6.37
0.00
CIN
SAU
T0.
0022
.87
27.8
025
.65
0.00
0.00
15.7
97.
708.
85
PIN
OT
NO
IR0.
0016
.63
19.8
47.
3111
.49
0.00
11.3
79.
287.
43
OTH
ER R
ED17
.19
15.3
413
.10
14.4
215
.59
23.1
013
.15
8.81
8.85
TABL
E 1.
Ave
rage
yie
ld p
er c
ulti
var (
ton/
ha).
7
TABLE 2. Production cost per district – 2015 harvest.
Industry average Stellenbosch Paarl Robertson Breedekloof Olifants River Worcester Orange River Klein Karoo Industry Average Malmesbury
COST STRUCTURE
DIRECT COST
SEED 242 99 97 134 0 98 23 424 125 172
FERTILISER 958 1 065 2 306 1 737 2 563 1 897 1 983 1 557 1 687 1 338
ORGANIC MATERIAL 9 75 106 831 350 327 100 319 250 16
PESTICIDE CONTROL 3 432 1 942 2 795 2 489 1 792 2 414 995 1 919 2 428 1 864
HERBICIDE CONTROL 897 847 1 236 1 016 652 1 089 725 369 929 742
REPAIR & BINDING MATERIAL 358 203 363 339 334 417 172 519 326 100
Subtotal 5 898 4 231 6 903 6 546 5 691 6 241 3 999 5 108 5 744 4 232
LABOUR
SUPERVISION 2 755 1 489 2 282 2 393 1 758 1 854 1 812 1 362 2 081 875
PERMANENT LABOUR 10 480 7 316 5 814 8 076 6 775 8 578 7 953 7 091 7 860 4 268
SEASONAL LABOUR & CONTRACT WORK 6 284 3 664 2 199 1 306 2 153 932 9 695 1 391 3 342 4 470
Subtotal 19 519 12 469 10 294 11 775 10 686 11 364 19 460 9 843 13 282 9 613
MECHANISATION
FUEL 2 323 2 497 2 142 2 721 3 106 3 278 3 572 2 426 2 646 2 024
REPAIR, PARTS & MAINTENANCE 3 259 1 970 3 647 2 846 3 440 2 890 2 360 2 906 2 949 1 714
LICENCES & INSURANCE 528 435 538 577 1 022 510 982 412 598 447
TRANSPORT HIRED 104 570 150 99 159 235 640 101 246 1 108
Subtotal 6 215 5 472 6 477 6 243 7 726 6 913 7 554 5 845 6 439 5 294
FIXED IMPROVEMENTS
REPAIR & MAINTENANCE 1 110 690 678 1 463 511 1 092 484 219 878 580
INSURANCE 358 199 165 260 312 241 363 150 257 146
Subtotal 1 469 889 843 1 723 823 1 333 847 368 1 136 727
GENERAL EXPENDITURES
ELECTRICITY 2 117 1 822 2 961 2 982 3 265 2 743 1 580 1 775 2 498 819
WATER COSTS 815 635 920 201 2 200 1 742 1 257 2 248 1 034 529
LAND-, PROPERTY- & MUNICIPAL TAXES 384 226 177 247 326 307 246 160 270 117
ADMINISTRATION 2 595 1 596 1 016 1 147 1 426 1 436 1 312 878 1 541 737
Subtotal 5 911 4 278 5 074 4 577 7 218 6 228 4 395 5 061 5 343 2 203
TOTAL CASH EXPENDITURES 39 011 27 339 29 592 30 865 32 145 32 079 36 254 26 227 31 944 22 068
PROVISION FOR RENEWAL 9 239 8 444 9 971 10 187 11 502 9 644 9 448 9 541 9 691 7 367
VINEYARDS 5 298 5 399 5 309 5 546 5 103 5 517 5 291 5 361 5 357 4 663
FIXED IMPROVEMENTS 1 058 657 856 1 032 1 232 1 085 645 689 935 598
LOOSE ASSETS or PRODUCTION MEANS 2 883 2 388 3 807 3 608 5 167 3 041 3 512 3 491 3 398 2 106
TOTAL EXPENDITURES 48 250 35 783 39 563 41 051 43 647 41 723 45 702 35 767 41 635 29 435
AVERAGE AREA PLANTED (HA) 109 112 100 117 63 110 19 55 98 165
AREA IRRIGATED (%) 92% 88% 100% 100% 100% 100% 100% 100% 96% 34%
AVERAGE AGE COMPOSITION (%)
3 YEARS & YOUNGER 8.72 8.22 14.36 13.63 10.01 36.62 8.42 14.88 13.54 6.56
BETWEEN 4 & 7 YEARS 14.91 13.08 22.08 15.27 11.76 16.95 19.38 15.58 15.95 7.38
BETWEEN 8 & 15 YEARS 39.03 48.29 33.78 36.11 40.22 34.73 38.58 39.07 39.07 60.90
BETWEEN 16 & 20 YEARS 19.53 22.91 18.15 18.76 18.99 17.32 20.10 22.35 19.63 18.62
OLDER THAN 20 YEARS 17.81 7.50 11.85 16.53 19.01 15.67 14.16 8.13 14.12 6.54
AVERAGE YIELD (TON PER HA) 8.82 12.22 18.51 21.00 24.18 19.90 31.68 19.49 17.48 8.67
CASH EXPENDITURES (RAND PER TON) 4 423 2 237 1 599 1 470 1 329 1 612 1 144 1 346 1 828 2 545
TOTAL EXPENDITURES (RAND PER TON) 5 471 2 928 2 137 1 955 1 805 2 097 1 443 1 835 2 382 3 395
RAND PER HA
8
Industry average Stellenbosch Paarl Robertson Breedekloof Olifants River Worcester Orange River Klein Karoo Industry Average Malmesbury
COST STRUCTURE
DIRECT COST
SEED 242 99 97 134 0 98 23 424 125 172
FERTILISER 958 1 065 2 306 1 737 2 563 1 897 1 983 1 557 1 687 1 338
ORGANIC MATERIAL 9 75 106 831 350 327 100 319 250 16
PESTICIDE CONTROL 3 432 1 942 2 795 2 489 1 792 2 414 995 1 919 2 428 1 864
HERBICIDE CONTROL 897 847 1 236 1 016 652 1 089 725 369 929 742
REPAIR & BINDING MATERIAL 358 203 363 339 334 417 172 519 326 100
Subtotal 5 898 4 231 6 903 6 546 5 691 6 241 3 999 5 108 5 744 4 232
LABOUR
SUPERVISION 2 755 1 489 2 282 2 393 1 758 1 854 1 812 1 362 2 081 875
PERMANENT LABOUR 10 480 7 316 5 814 8 076 6 775 8 578 7 953 7 091 7 860 4 268
SEASONAL LABOUR & CONTRACT WORK 6 284 3 664 2 199 1 306 2 153 932 9 695 1 391 3 342 4 470
Subtotal 19 519 12 469 10 294 11 775 10 686 11 364 19 460 9 843 13 282 9 613
MECHANISATION
FUEL 2 323 2 497 2 142 2 721 3 106 3 278 3 572 2 426 2 646 2 024
REPAIR, PARTS & MAINTENANCE 3 259 1 970 3 647 2 846 3 440 2 890 2 360 2 906 2 949 1 714
LICENCES & INSURANCE 528 435 538 577 1 022 510 982 412 598 447
TRANSPORT HIRED 104 570 150 99 159 235 640 101 246 1 108
Subtotal 6 215 5 472 6 477 6 243 7 726 6 913 7 554 5 845 6 439 5 294
FIXED IMPROVEMENTS
REPAIR & MAINTENANCE 1 110 690 678 1 463 511 1 092 484 219 878 580
INSURANCE 358 199 165 260 312 241 363 150 257 146
Subtotal 1 469 889 843 1 723 823 1 333 847 368 1 136 727
GENERAL EXPENDITURES
ELECTRICITY 2 117 1 822 2 961 2 982 3 265 2 743 1 580 1 775 2 498 819
WATER COSTS 815 635 920 201 2 200 1 742 1 257 2 248 1 034 529
LAND-, PROPERTY- & MUNICIPAL TAXES 384 226 177 247 326 307 246 160 270 117
ADMINISTRATION 2 595 1 596 1 016 1 147 1 426 1 436 1 312 878 1 541 737
Subtotal 5 911 4 278 5 074 4 577 7 218 6 228 4 395 5 061 5 343 2 203
TOTAL CASH EXPENDITURES 39 011 27 339 29 592 30 865 32 145 32 079 36 254 26 227 31 944 22 068
PROVISION FOR RENEWAL 9 239 8 444 9 971 10 187 11 502 9 644 9 448 9 541 9 691 7 367
VINEYARDS 5 298 5 399 5 309 5 546 5 103 5 517 5 291 5 361 5 357 4 663
FIXED IMPROVEMENTS 1 058 657 856 1 032 1 232 1 085 645 689 935 598
LOOSE ASSETS or PRODUCTION MEANS 2 883 2 388 3 807 3 608 5 167 3 041 3 512 3 491 3 398 2 106
TOTAL EXPENDITURES 48 250 35 783 39 563 41 051 43 647 41 723 45 702 35 767 41 635 29 435
AVERAGE AREA PLANTED (HA) 109 112 100 117 63 110 19 55 98 165
AREA IRRIGATED (%) 92% 88% 100% 100% 100% 100% 100% 100% 96% 34%
AVERAGE AGE COMPOSITION (%)
3 YEARS & YOUNGER 8.72 8.22 14.36 13.63 10.01 36.62 8.42 14.88 13.54 6.56
BETWEEN 4 & 7 YEARS 14.91 13.08 22.08 15.27 11.76 16.95 19.38 15.58 15.95 7.38
BETWEEN 8 & 15 YEARS 39.03 48.29 33.78 36.11 40.22 34.73 38.58 39.07 39.07 60.90
BETWEEN 16 & 20 YEARS 19.53 22.91 18.15 18.76 18.99 17.32 20.10 22.35 19.63 18.62
OLDER THAN 20 YEARS 17.81 7.50 11.85 16.53 19.01 15.67 14.16 8.13 14.12 6.54
AVERAGE YIELD (TON PER HA) 8.82 12.22 18.51 21.00 24.18 19.90 31.68 19.49 17.48 8.67
CASH EXPENDITURES (RAND PER TON) 4 423 2 237 1 599 1 470 1 329 1 612 1 144 1 346 1 828 2 545
TOTAL EXPENDITURES (RAND PER TON) 5 471 2 928 2 137 1 955 1 805 2 097 1 443 1 835 2 382 3 395
RAND PER HA
9
FIGURE 10. Influence of production on break-even of total production cost – industry average.
FIGURE 11. Production and break-even per district (2015 harvest).
FIGURE 12. Age composition – industry average.
AGE DISTRIBUTION
1010
INCOME & EXPENDITURE STATEMENT 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Average price per ton (rand) 2,383 1,916 1,763 1,766 1,807 2,113 2,192 2 383 2 416 2 524 2,682 2,810
Average yield per hectare (tons) 13.11 13.79 15.34 15.58 16.31 15.55 14.73 15.08 16.98 17.50 17.69 17.48
TOTAL INCOME (R/ha) 31,236 26,424 27,043 27,513 29,479 32,857 32,281 35 943 41 023 44 171 47,456 49,108
minus
Direct costs (R/ha) 2,459 2,426 2,391 2,482 2,855 3,463 3,920 3 992 4 150 4 670 5,382 5,744
Labour (R/ha) 6,317 6,590 6,878 6,949 6,956 7,905 8,477 9 111 9 630 10 639 12,001 13,282
Mechanisation (R/ha) 2,667 2,852 3,004 3,219 3,533 4,022 4,142 4 633 4 868 5 501 5,952 6,439
Other overheads (R/ha) 2,778 3,142 3,326 3,367 3,357 3,649 4,108 4 706 5 186 5 849 5,899 6,479
ANNUAL CASH EXPENDITURES 14,221 15,010 15,599 16,017 16,702 19,039 20,648 22 443 23 834 26 659 29,235 31,944
GROSS MARGIN (R/ha) 17,015 11,414 11,444 11,496 12,777 13,818 11,633 13 500 17 189 17 512 18,221 17,164
minus
Provision for replacement (R/ha) 4,779 5,633 5,733 6,108 6,876 7,541 7,937 8 140 8 606 9 080 9,439 9,691
NET FARMING INCOME (R/ha) 12,236 5,781 5,711 5,388 5,901 6,277 3,696 5 360 8 583 8 432 8,781 7,473
TABLE 3. Industry average statement of income and expenditure.
– For more information, email Andries van Zyl at [email protected] and Funzani Sundani at [email protected].
SUMMARY
The primary wine grape producer maintained high production in the 2015 season. Cost increases nevertheless kept the NFI below sustainable levels. This has been the cause of increasing mechanisation in the national grapevine plantings. There was also strong emphasis on labour productivity and alignment of production practices. Producers are encouraged to implement stringent cost management and to weigh up the benefits of certain vineyard practices and input against the final yield and payments for the season.
SPREAD OF PROFITABILITY 2015 HARVEST
FIGURE 13. S curve.
SPREAD OF PROFITABILITY 2015 HARVEST
FIGURE 13. S curve.
INCOME & EXPENDITURE STATEMENT 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Average price per ton (rand) 2 383 1 916 1 763 1 766 1 807 2 113 2 192 2 383 2 416 2 524 2 682 2 810
Average yield per hectare (tons) 13.11 13.79 15.34 15.58 16.31 15.55 14.73 15.08 16.98 17.50 17.69 17.48
TOTAL INCOME (R/ha) 31 236 26 424 27 043 27 513 29 479 32 857 32 281 35 943 41 023 44 171 47 456 49 108
minus
Direct costs (R/ha) 2 459 2 426 2 391 2 482 2 855 3 463 3 920 3 992 4 150 4 670 5 382 5 744
Labour (R/ha) 6 317 6 590 6 878 6 949 6 956 7 905 8 477 9 111 9 630 10 639 12 001 13 282
Mechanisation (R/ha) 2 667 2 852 3 004 3 219 3 533 4 022 4 142 4 633 4 868 5 501 5 952 6 439
Other overheads (R/ha) 2 778 3 142 3 326 3 367 3 357 3 649 4 108 4 706 5 186 5 849 5 899 6 479
ANNUAL CASH EXPENDITURES 14 221 15 010 15 599 16 017 16 702 19 039 20 648 22 443 23 834 26 659 29 235 31 944
GROSS MARGIN (R/ha) 17 015 11 414 11 444 11 496 12 777 13 818 11 633 13 500 17 189 17 512 18 221 17 164
minus
Provision for replacement (R/ha) 4 779 5 633 5 733 6 108 6 876 7 541 7 937 8 140 8 606 9 080 9 439 9 691
NET FARMING INCOME (R/ha) 12 236 5 781 5 711 5 388 5 901 6 277 3 696 5 360 8 583 8 432 8 781 7 473
TABLE 3. Industry average income and expenditure statement.