The right business mind-shift business for 2019

The year 2019 is a unique year. Who can still remember 2015? When we thought: “This is as bad as gets, with the lowest rainfall in almost 107 years.” And look where we are now, in 2019, with the national plantings being late and a season which will be 6 to 8 weeks late. Rainfall in the western areas is even lower than in 2015.

The expected rainfall did not materialise and the weather phenomenon result for 2019 ended in no or very little rain. The season is also unique in that it takes a producer approximately three years to recover from such a situation and we are only now in the third year.

It is evident that rainfall in the eastern area and parts of the western area is fairly good, but very poor in the western and far-western areas of the Free State, which impacts on the quality and quantity of grain. Current estimates are that 15% to 20% less maize will be planted. SA produces between 7 and 10 million tons of grain and the maize price broke through the R3 000 per ton level on 14 January 2019, which is positive if you have a crop. The reality is that individual producers will experience serious problems. The effect is that fewer producers will plant, in better areas and regions, which could theoretically bring about more stability. The truth is that South Africa, compared with the rest of the world, is not the very best production area.

Diversification into alternative crops or cattle is an option, but many things need to be considered. All of this has occurred in the past, but incidents such as those which we are experiencing at present, accelerate the situation. The problem is that it cannot be changed from one year to another and that you have to base an informed decision on a 20-year profit history.

A producer is therefore a risk manager who has to make risk decisions. “To say that you are going to plant if the price is right, is a price decision, but it has to be combined with a production decision.” The order of your decision-making process is also important.

This is a very important question. Senwes has the advantage of evaluating 110 years' history. In our case, specialisation is the answer for our business model. Senwes diversifies geographically, over commodities and in respect of its customer base. It is important to remember that if you perform well in one part of the value chain, it does not imply that you perform well in another area as well. If your business strategy is profit-making, it is a short-term view and a dangerous road to follow. The right strategy is to survive and to still be here next year.

In order to survive, you have to be critical of yourself and be analytical as far as your core skills, risk approach and the environment are concerned and not to be complacent. “You may not be as clever as you think.” Be focused, committed and humble. Time is important. If you need to make a decision, do it. What is important is the message that you convey, the culture you create and the character you build when you make a decision.

We find ourselves in a time with very high volatility, political incidents are the order of the day and opinions are voiced. Exchange rates, commodities and business confidence are affected - it is important to make sure that these short-term incidents and events do not detract from your long-term views. Do not become paralysed by fear and the inability to make decisions.

Be assured that there are many good opportunities: “We utilise only two opportunities from a corporate transaction point of view out of every 100 opportunities.” If the price is not right, we say no. We are in the food value chain and we support producers. The crux is that you will have to adjust to certain situations and if you do not have the courage and the confidence to carry on, circumstances will force you to make a decision. Senwes promises to continue with its investments, the consolidation of business processes and the utilisation of good opportunities.

We are committed to provide input products, market access, financial services, advice and solutions to our customers. We have a narrow and focused business portfolio, which means we know a lot about a few things, instead of the other way around.

Senwes' objective is to provide the best administration and support services to producers, to take the lead and to share fundamental knowledge with our customers. “Be assured that Senwes will continue to be a participant and not a spectator. We are part of South Africa and we accept the responsibilities which come with it.”