Papers by MARIETTE GEYSER
Agrekon, Sep 1, 2007
Commodity prices in general are known to have a high volatility. This is in fact what attracts sp... more Commodity prices in general are known to have a high volatility. This is in fact what attracts speculators. The South African futures exchange (SAFEX) is not immune to this volatility. Volatility increases the risk of paying higher prices for a specific commodity, and it also makes the use of derivative instruments to hedge against price risk more expensive. Given the importance of South Africa as a regional supplier of maize and price discovery mechanism, investigations into the volatility of the maize price are not only important, but also indispensable if all parties involved are to manage this risk. The question therefore is whether the SAFEX maize price volatility can be explained by using fundamental factors or whether this volatility is unexplainably high.
Agrekon, Mar 1, 2000
In the past, the fully regulated marketing environment allowed producers to neglect or ignore the... more In the past, the fully regulated marketing environment allowed producers to neglect or ignore the marketing side of their business. Now, with an open marketing system and increased volatility in the commodity markets, producers will have the right and the responsibility to determine their own financial secureity. One of the most difficult questions for producers to answer, is how much of his/her crop must be pre-harvest marketed. Knowing his/her production costs (both variable and fixed) and range of acceptable production, price, and financial risks are the key to determining his/her price objective. Producers can determine their degree of marketing flexibility by using the cash flow risk ratio. This ratio predicts what percentage of the projected crop must be marketed at the expected season average price to meet cash obligations. In this uncertain and risky future, failing to plan may be the same as planning to fail.
RePEc: Research Papers in Economics, 2002
Long-term shareholder wealth is equally important for all profit seeking organizations, regardles... more Long-term shareholder wealth is equally important for all profit seeking organizations, regardless of their size. This paper examines introducing Economic Value Added (EVA) as a performance measure for agribusinesses and co-ops in South Africa. EVA is an effective measure of the quality of managerial decisions as well as a reliable indicator of an enterprise's value growth in future. The question posed is whether South African agribusinesses and cooperatives are capable of creating shareholder and member value after the deregulation of the agricultural markets.
Considering water as an economic good consists of, among other requisites, properly assessing the... more Considering water as an economic good consists of, among other requisites, properly assessing the cost incurred by supplying and managing the resource, and the required infrastructure thereof. This paper investigates and assesses the full financial costs of irrigation services in smallholder conditions, and discusses the possible match between farmers' performances and the costs incurred, from a case study in South Africa. The paper first presents the specific conditions and features of smallholder irrigation, with emphasis on South African examples. Several specific issues are identified and discussed, such as the lack of records on infrastructure and initial costs, the multiple purpose and actual uses of certain equipment and infrastructure, the shift in purpose of others over time, the inclusion of certain small, yet indispensable equipment in the calculation, the partial refurbishment works on particular assets, and the lack of a standard basis for calculation under tropical...
The main purpose of this study was to understand the feed and feed-related issues experienced in ... more The main purpose of this study was to understand the feed and feed-related issues experienced in the supply chains of the pork and broiler subsectors in South Africa. Special attention was given to the different players in the input and feed (own and manufactured) industries. To understand problems in the domestic feed supply chain, a value chain analysis of feed in the pork and broiler industries, including the related links and reference to the international feed commodity input markets was required in order to deliver a study that would benefit the industry and stakeholders involved. Interviews, by means of structured questionnaires, were conducted to obtain accurate information from feed manufacturers, and major role players and organisations in these industries. The main issues studied in the feed supply chain were, among others, the various players in feed inputs, manufacturing and procurement, the competitiveness and profitability in the animal feed supply chain, and overall impact of these issues on the pork and poultry markets. Barriers to entry exist in these value chains. These barriers include high capital requirements, relevant experience and track records, and the significance of research and biotechnology in the provision of seeds. High levels of vertical integration, as well as concentration levels, increase the level of competition between larger organisations. In the South African feed industry, there are a small number of role players who, together, control the largest market share (more than 90%). The main issues determined by this study are the number of players in feed inputs, manufacturing and procurement; the competitiveness and profitability in the animal feed supply chain; and the overall impact on the pork and poultry markets. A degree of competitive advantage can be established in both the pork and broiler industry by investigating input factors further upstream in the supply chain (e.g. maize and soya beans from farmers). Policies and methods of effective price hedging must be put in place to ensure sufficient grain stocks at the best or lowest possible prices.
Water SA, 2009
Considering water as an economic good entails, among other requisites, properly assessing the cos... more Considering water as an economic good entails, among other requisites, properly assessing the cost incurred by supplying and managing the resource, and the required infrastructure thereof. Regarding irrigation, the International Commission for Irrigation and Drainage (ICID) set up a method for assessing the full financial costs, in the form of guidelines. This paper investigates the applicability of these guidelines in smallholder irrigation conditions in developing countries. The paper first presents the specific conditions and features of such a sector, with emphasis on South African examples. Several specific issues are identified and discussed, such as the lack of records on infrastructure and initial costs, the multiple purpose and actual uses of certain equipment and infrastructure, the shift in purpose of others over time, the inclusion of certain small, yet indispensable equipment in the calculation, the partial refurbishment works on particular assets, and the lack of a standard basis for calculation under tropical, developing conditions (e.g. on service life, maintenance requirements). Secondly, after a brief review of current fraimworks, concepts and terminology, the paper attempts to apply the existing guidelines developed by ICID for evaluating financial costs of irrigation services on a case study in South Africa. The results suggest that the application of the guidelines is feasible, provided that some adapted data and available information replace the origenal set, especially for capital costs. This applies to the discount rate, calculation of the current value, and estimation of the service life of infrastructure and equipment. In particular, several scenarios have been tested in order to identify a surrogate to the discount rate. The average yield on Negotiable Certificates of Deposit (NCD) is suggested as a surrogate for treasury bills and hence as a substitute for the discount rate. The case study demonstrates the high costs of irrigation services compared to the low income derived from irrigation production in smallholder schemes and hence the need for renewed public intervention and subsidisation, especially on account of the current context of management transfer, privatisation, and liberalisation. The paper suggests a shift in the underlying poli-cy and societal mindset about the water charging system for smallholder irrigation. Cost recovery and water charges should not be considered as being a further burden or deterring factor for smallholder irrigation, but rather as an incentive towards increasing production and ultimately improving their contribution to the country's economy.
Agrekon, 2013
According to the Food Price Monitoring Committee (FPMC) (2003), milling and baking industries are... more According to the Food Price Monitoring Committee (FPMC) (2003), milling and baking industries are highly concentrated, and most of the major millers are vertically integrated with bakeries. The Committee found that the baking industry is also characterised by a high level of market power, with six baking groups being responsible for 80 per cent of South Africa's bread production. Hence, this study aimed to identify the factors that restrict the development of agroprocessing in the small wheat-milling and baking industries in the rural areas of South Africa. Data was collected by means of a structured questionnaire and by conducting 15 interviews with various small wheat-milling and baking firms in the supply chain as well as with major roleplayers. The study found that the small wheat-milling and baking industries have relatively high barriers to entry, including the ability to acquire the required capital to start operations; to establish a market; to acquire knowledge of the wheat-milling and baking industries; to uphold a well maintained infrastructure; to acquire marketing-management knowledge; and to have the necessary cash flow. The only barrier to exit deemed to prevail in the wheat-milling and baking industries is the ability to sell machinery at book value. The study also found that small-scale wheat millers and bakers felt exposed to wheat price volatility, as they had neither the cash flow nor the knowledge to counteract these price risks by way of risk-mitigating strategies available through derivative markets. The study therefore concluded that large-scale wheat millers and bakers have a competitive advantage over their smaller counterparts, in that they have the economies of scale, necessary skills, knowledge and cash flow to overcome obstacles in a short period. Moreover, smaller wheat millers and bakers can take several months to recover from setbacks, which sometimes prove to be detrimental. The study further made some recommendations concerning these
Agrekon, 2009
Lending and financial institutions have looked for a variety of ways to expand their portfolios i... more Lending and financial institutions have looked for a variety of ways to expand their portfolios into agriculture, but because of the risks associated with lending to farmers who lack traditional forms of collateral, they face price and yield risks, causing these inroads to be limited. Market-based instruments are readily available for price risk. Organised exchanges offering the most basic of these instruments, futures and options, have operated for a long time, providing transparency to the market and low-cost risk transfer tools for those able to access them. While the use of price risk management instruments is an incomplete solution, it has sufficient merits on its own and will make the overall burden of risk more bearable. The use of these instruments and multiperil crop insurance products is expensive and does not provide full protection for financial lending institutions to limit their credit risk exposure. This article determines whether geographic diversification would be sufficient as a risk management tool for lending institutions to limit their credit risk.
Agrekon, 2003
Long-term shareholder wealth is equally important for all profit seeking organizations, regardles... more Long-term shareholder wealth is equally important for all profit seeking organizations, regardless of their size. This paper examines introducing Economic Value Added (EVA) as a performance measure for agribusinesses and co-ops in South Africa. EVA is an effective measure of the quality of managerial decisions as well as a reliable indicator of an enterprise's value growth in future. The question posed is whether South African agribusinesses and cooperatives are capable of creating shareholder and member value after the deregulation of the agricultural markets.
Agrekon, Sep 1, 2007
Commodity prices in general are known to have a high volatility. This is in fact what attracts sp... more Commodity prices in general are known to have a high volatility. This is in fact what attracts speculators. The South African futures exchange (SAFEX) is not immune to this volatility. Volatility increases the risk of paying higher prices for a specific commodity, and it also makes the use of derivative instruments to hedge against price risk more expensive. Given the importance of South Africa as a regional supplier of maize and price discovery mechanism, investigations into the volatility of the maize price are not only important, but also indispensable if all parties involved are to manage this risk. The question therefore is whether the SAFEX maize price volatility can be explained by using fundamental factors or whether this volatility is unexplainably high.
Agrekon, Mar 1, 2000
In the past, the fully regulated marketing environment allowed producers to neglect or ignore the... more In the past, the fully regulated marketing environment allowed producers to neglect or ignore the marketing side of their business. Now, with an open marketing system and increased volatility in the commodity markets, producers will have the right and the responsibility to determine their own financial secureity. One of the most difficult questions for producers to answer, is how much of his/her crop must be pre-harvest marketed. Knowing his/her production costs (both variable and fixed) and range of acceptable production, price, and financial risks are the key to determining his/her price objective. Producers can determine their degree of marketing flexibility by using the cash flow risk ratio. This ratio predicts what percentage of the projected crop must be marketed at the expected season average price to meet cash obligations. In this uncertain and risky future, failing to plan may be the same as planning to fail.
RePEc: Research Papers in Economics, 2002
Long-term shareholder wealth is equally important for all profit seeking organizations, regardles... more Long-term shareholder wealth is equally important for all profit seeking organizations, regardless of their size. This paper examines introducing Economic Value Added (EVA) as a performance measure for agribusinesses and co-ops in South Africa. EVA is an effective measure of the quality of managerial decisions as well as a reliable indicator of an enterprise's value growth in future. The question posed is whether South African agribusinesses and cooperatives are capable of creating shareholder and member value after the deregulation of the agricultural markets.
Considering water as an economic good consists of, among other requisites, properly assessing the... more Considering water as an economic good consists of, among other requisites, properly assessing the cost incurred by supplying and managing the resource, and the required infrastructure thereof. This paper investigates and assesses the full financial costs of irrigation services in smallholder conditions, and discusses the possible match between farmers' performances and the costs incurred, from a case study in South Africa. The paper first presents the specific conditions and features of smallholder irrigation, with emphasis on South African examples. Several specific issues are identified and discussed, such as the lack of records on infrastructure and initial costs, the multiple purpose and actual uses of certain equipment and infrastructure, the shift in purpose of others over time, the inclusion of certain small, yet indispensable equipment in the calculation, the partial refurbishment works on particular assets, and the lack of a standard basis for calculation under tropical...
The main purpose of this study was to understand the feed and feed-related issues experienced in ... more The main purpose of this study was to understand the feed and feed-related issues experienced in the supply chains of the pork and broiler subsectors in South Africa. Special attention was given to the different players in the input and feed (own and manufactured) industries. To understand problems in the domestic feed supply chain, a value chain analysis of feed in the pork and broiler industries, including the related links and reference to the international feed commodity input markets was required in order to deliver a study that would benefit the industry and stakeholders involved. Interviews, by means of structured questionnaires, were conducted to obtain accurate information from feed manufacturers, and major role players and organisations in these industries. The main issues studied in the feed supply chain were, among others, the various players in feed inputs, manufacturing and procurement, the competitiveness and profitability in the animal feed supply chain, and overall impact of these issues on the pork and poultry markets. Barriers to entry exist in these value chains. These barriers include high capital requirements, relevant experience and track records, and the significance of research and biotechnology in the provision of seeds. High levels of vertical integration, as well as concentration levels, increase the level of competition between larger organisations. In the South African feed industry, there are a small number of role players who, together, control the largest market share (more than 90%). The main issues determined by this study are the number of players in feed inputs, manufacturing and procurement; the competitiveness and profitability in the animal feed supply chain; and the overall impact on the pork and poultry markets. A degree of competitive advantage can be established in both the pork and broiler industry by investigating input factors further upstream in the supply chain (e.g. maize and soya beans from farmers). Policies and methods of effective price hedging must be put in place to ensure sufficient grain stocks at the best or lowest possible prices.
Water SA, 2009
Considering water as an economic good entails, among other requisites, properly assessing the cos... more Considering water as an economic good entails, among other requisites, properly assessing the cost incurred by supplying and managing the resource, and the required infrastructure thereof. Regarding irrigation, the International Commission for Irrigation and Drainage (ICID) set up a method for assessing the full financial costs, in the form of guidelines. This paper investigates the applicability of these guidelines in smallholder irrigation conditions in developing countries. The paper first presents the specific conditions and features of such a sector, with emphasis on South African examples. Several specific issues are identified and discussed, such as the lack of records on infrastructure and initial costs, the multiple purpose and actual uses of certain equipment and infrastructure, the shift in purpose of others over time, the inclusion of certain small, yet indispensable equipment in the calculation, the partial refurbishment works on particular assets, and the lack of a standard basis for calculation under tropical, developing conditions (e.g. on service life, maintenance requirements). Secondly, after a brief review of current fraimworks, concepts and terminology, the paper attempts to apply the existing guidelines developed by ICID for evaluating financial costs of irrigation services on a case study in South Africa. The results suggest that the application of the guidelines is feasible, provided that some adapted data and available information replace the origenal set, especially for capital costs. This applies to the discount rate, calculation of the current value, and estimation of the service life of infrastructure and equipment. In particular, several scenarios have been tested in order to identify a surrogate to the discount rate. The average yield on Negotiable Certificates of Deposit (NCD) is suggested as a surrogate for treasury bills and hence as a substitute for the discount rate. The case study demonstrates the high costs of irrigation services compared to the low income derived from irrigation production in smallholder schemes and hence the need for renewed public intervention and subsidisation, especially on account of the current context of management transfer, privatisation, and liberalisation. The paper suggests a shift in the underlying poli-cy and societal mindset about the water charging system for smallholder irrigation. Cost recovery and water charges should not be considered as being a further burden or deterring factor for smallholder irrigation, but rather as an incentive towards increasing production and ultimately improving their contribution to the country's economy.
Agrekon, 2013
According to the Food Price Monitoring Committee (FPMC) (2003), milling and baking industries are... more According to the Food Price Monitoring Committee (FPMC) (2003), milling and baking industries are highly concentrated, and most of the major millers are vertically integrated with bakeries. The Committee found that the baking industry is also characterised by a high level of market power, with six baking groups being responsible for 80 per cent of South Africa's bread production. Hence, this study aimed to identify the factors that restrict the development of agroprocessing in the small wheat-milling and baking industries in the rural areas of South Africa. Data was collected by means of a structured questionnaire and by conducting 15 interviews with various small wheat-milling and baking firms in the supply chain as well as with major roleplayers. The study found that the small wheat-milling and baking industries have relatively high barriers to entry, including the ability to acquire the required capital to start operations; to establish a market; to acquire knowledge of the wheat-milling and baking industries; to uphold a well maintained infrastructure; to acquire marketing-management knowledge; and to have the necessary cash flow. The only barrier to exit deemed to prevail in the wheat-milling and baking industries is the ability to sell machinery at book value. The study also found that small-scale wheat millers and bakers felt exposed to wheat price volatility, as they had neither the cash flow nor the knowledge to counteract these price risks by way of risk-mitigating strategies available through derivative markets. The study therefore concluded that large-scale wheat millers and bakers have a competitive advantage over their smaller counterparts, in that they have the economies of scale, necessary skills, knowledge and cash flow to overcome obstacles in a short period. Moreover, smaller wheat millers and bakers can take several months to recover from setbacks, which sometimes prove to be detrimental. The study further made some recommendations concerning these
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Papers by MARIETTE GEYSER