Scan for Capital Harvest

December 2016This 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 arearranged according to a framework of topics. For each article its title, author (where

available) and source are stated.

Editorial

Agriculture

A growing number of young US farmers are renting land instead of buying – the number of farmersbetween the ages of 25 and 44 who operate on rented land, increased by 9% between 2007 and2012. This is while the overall number of farmers in the US is declining – their average age is 58. Forfarmers who rent, the main problems are not being able to use the land to secure loans, and the factthat increasing land values work against them. A large percentage of new farmers grow high-valueorganic produce, and only 48% of new farmers in the US who reported profits in 2007, still did so by2012. There are three main reasons for the US trend towards renting: land prices have increased, anda significant portion of agricultural land has been converted for other uses (there is now 911 millionacres of farmland in the US, of which 40% is rented). Thirdly, more retiring farmers are choosing tohold on to their land in order to maintain a steady stream of income from leasing,

The dairy industry in China has posted average annual growth rates over 12% since 2000, asconsumers have now overcome centuries of cultural reluctance to embrace milk. The Chineseindustry is turning $40 billion per year, and boasts very large farms – some have more than 10 000cows at a single location. In New Zealand, for example, it is rare to see more than 3 000 cows on thecountry's largest farms. People in rural China are opposed to the large farms, because environmentalrules are frequently not enforced. The smell and run-off from the polluted farms affect wholecommunities, and there are some towns that tourists only go to in winter when freezing curbs thesmell. While the Chinese government has actively encouraged large farms, there are signs that it isre-thinking this policy. Disease spreads quicker on large farms, and pollution is difficult to control.Many hope that China's dairy farms will soon shrink to a more manageable size.

In Thailand unsold rice is piling up and prices are low. Rangsit University, a private university inBangkok, has decided to help by accepting rice from farmers as payment for their children’s' class

fees. The gesture is a way to acknowledge agriculture as the backbone of the economy. Thailandexports around half of its production, but there is presently too much rice worldwide. Thegovernment is encouraging farmers to switch to other crops.

Monsanto and Danish company Novozymes have teamed up to develop a coating for GM corn seedswhich is made from a friendly fungus. The fungus assists the growth of corn seeds in the early lifestages. This increases yields while reducing the use of fertiliser and CO2 emissions. Monsanto saysfarmers have been using synthetic chemical treatments for seeds for decades to deter pests, and ithas now become a mature industry. Microbial seed treatments, in contrast, are natural and havebecome increasingly popular over the last decade. Novozymes believes the new fungus coating couldbecome one of the most successful biological products in the industry.

Japan's Fujitsu has developed a monitor that alerts dairy farmers to when their cows are on heat. Butunlike other devices previously reported on here, this device fits around the cow's ankle and countsits steps. Cows in heat walk six times more than usual, often at night when staff are not there tonotice it right away. The cow pedometer system is very precise and can also be used to influence thegender of the calf. This is one example of a promising investment in technology in the agriculturalsector, but the UN’s Food and Agriculture Organisation says still far too little is being invested. Anadditional $83 billion in investment is needed to meet agricultural goals by 2050. Presently farmersare the ones investing the most – their investment in agricultural technology exceeds that fromgovernment and corporations by a ratio of more than three to one.

Cape Town-based Agri Apps was the only SA company to qualify to compete against otherinternational start-ups in the annual Slush 100 Pitching Competition in Finland in December. AgriApps builds internet-based software and hardware products to help farmers improve profitability.The company works with agri-services companies, experts in soil, and experts in disease modelling tointegrate farm data into the cloud. There is a perceived market for the technology in manydeveloping countries.

John Deere has built an all-electric concept tractor. Under the hood are stacks of battery packs thathold more energy (130 kWh) than Tesla's highest capacity battery pack (100 kWh). The tractor hastwo 150 kW electric motors, and John Deere expects they will require less maintenance than a dieselengine and will last longer. The tractor barely makes a sound, and more electric vehicles are expectedfrom the company in the near future. Thus far, there has been no indication as to when the tractorwill be commercially available.

Scientists at the Polytechnic University of Warsaw have created the first robotic bee designed toartificially pollinate plants. It takes the form of a miniature drone that is able to find a flower, collectpollen, and carefully transfer the pollen from the male to the female flower. It is hoped that therobotic bee will help to fill the gap left by the decline in the world's bee population. The beepopulation has suffered its biggest losses in countries with highly developed agriculture. The roboticbee does not produce honey, and is designed to work alongside real bees instead of replacing them.The robots can also be used to dispense fertilisers and pesticides. When their batteries run low, therobotic bees are programmed to automatically return for a recharge. The university will put the firstprototypes to work from 2017, and start mass production in two years.

Maize farmers in Southern Africa are on edge due to an infestation of army worms – a particularlydestructive type of larvae moth. In December, Zambia ordered its national air force to transportgovernment-sponsored pesticides across the country.

The invasion of Tuta absoluta moths in Africa spread to tomato plants in the Western Cape inDecember, specifically to farms in Paarl and Robertson. The pest is known to cause losses of up to100% of tomato crops if it is not effectively fought. So far there has not been any reduction in theavailability of tomatoes in SA due to the pest. This is mainly credited to the good co-operationbetween fellow farmers and chemicals companies that has allowed the outbreak to be effectivelycontrolled. The outbreak has a significant cost implication for farmers because all of the pesticidebrands registered to control Tuta absoluta are expensive. It is compulsory to report all outbreaks ofthe moth to the Department of Agriculture. In addition to tomatoes, the pest can also damagepotatoes, tobacco, aubergines, peppers and certain weeds.Tomatoes are the second-largest traded vegetable on SA's five large fresh produce markets, afterpotatoes. The drought did not have a significant impact on the availability of the crop. The warm, drywinter of 2016 favoured the production of tomatoes under irrigation. From April 2016, SA producedmore tomatoes than the average over the last three years. This put pressure on prices. Domesticconsumption levels are saturated under present economic conditions, and due to their perishabilitythere are limited opportunities to export tomatoes.

Bloomberg has documented its predictions for the wine industry for 2017, based on trends observedworldwide. Good news for the local industry is that wines from 'unfamiliar' parts of the world, suchas SA, are expected to become very fashionable in 2017. Global warming is also now allowingpreviously-too-cold parts of countries such as Germany and Canada to produce excellent wines.Lesser-known grape varieties are expected to be in particular demand this year. Sparkling wine willcontinue its journey from an occasional favourite to an every-day wine. The wine industry will seeincreased competition from the rising popularity of craft beer. In response, the stiff image of wine isbeing relaxed, and packaging is becoming more adventurous. One example is the canned winephenomenon that started in 2016. Cans allow for a single serving of wine to be easily chilled andcarried, and there's no need for a glass or corkscrew. In the UK, one company started selling qualitywine in flat plastic bottles last year – the bottle can fit through a post box in response to the trendtowards ordering wine online. Italian wine estate Dora Sarchese was one of the first to join the newEuropean trend of free wine fountains last year, when it created a fountain of red wine on the estate.Guests enter into a large barrel structure and fill their glasses from spigots above a stone basin. Thewine is free and the fountain operates 24 hours a day.

Absa's agricultural outlook for the local wine industry predicts that harvest volumes will decline inthe medium term due to the slow replacement of vineyards. Quality and volumes will come underpressure. In five years’ time 62% of SA vineyards will be 16 years and older, in contrast with thepresent 46% (if the current rate of replanting is maintained). More wine grape hectares are beingplanted with fruit trees and vegetables. In traditional areas such as Stellenbosch and Paarl, the areaplanted has declined by 3 964 hectares (11%) over the past 10 years. In the saturated internationalwine market, the US remains a growing high-value buyer of SA wine. The continued growth indomestic wine sales – together with the expected decline in local wine production – will reduceexcess stock in SA in 2017.

The traditional export markets for SA wines are the UK, Germany, the Netherlands and Scandinavia.In these countries, SA wines are mainly purchased by price-sensitive supermarkets. There has thusbeen little opportunity to establish premium status for SA's wines. Despite the drive to sell morebottled wine to the export market, the revenue earned in this way is still comparatively small. Theindustry still generates 20% more revenue from domestic sales than from bottled wine salesoverseas. Gauteng is believed to account for 60% to 65% of the national premium trade, the WesternCape for 15% to 20%, Durban for 5% to 8% and the other provincial capitals for about 2% to 4%. TheWestern Cape statistics are overstated, because cellar door sales and shipments are included, manyof which are purchased by people from elsewhere. An analysis shows that the Gauteng market is

three times larger than SA’s biggest premium export market, the UK. KZN buys the same volume ofpremium SA wine as the entire US. The same can be said for PE and East London, if their sales areadded together. For premium SA wines, Nelspruit is a bigger market than Canada, and also biggerthan China. This analysis has lead Business Day's wine writer, Michael Fridjhon, to contend that mostSA wine marketers are focussing their primary efforts on entirely the wrong markets. Much moreeffort should go into boosting premium wine sales inside SA, which is by far the most eager market.

Nedbank says through its partnership with the WWF, the bank has invested R18 million over six yearsin the advancement of sustainable agricultural practices in a number of areas. These include wine,fruit, beef, dairy and sugar. A strong focus of the WWF Nedbank Green Trust programme is theconservation of water. At the 2016 Nedbank Green Wine Awards some of the notable winners wereLa Motte, Paul Cluver and Earthbound.

The table grape industry is working to develop cultivars that are less labour-intensive. The averageage of a vineyard planted with table grapes is eight years compared to the average age of 15 yearsfor wine grapes. Consequently, the replacement cost for table grape farmers is double that of winegrape producers. But table grape vineyards tend to break even earlier than wine grape vineyards.Absa says that except for the Olifants River region, the production of table grapes has not beenaffected by the drought. Grape farmers have reported excellent gross incomes over the past fouryears. Growth in volume is expected to continue, and will reach 70 million cartons or 315 000 tonneswithin five years. Namibia has an export cost advantage over SA, in that our regulatory restrictionsincrease the cost of exports. Peru is a fierce competitor, and its table grapes are ready to go tomarket before those from SA. Absa says the emphasis in the industry should be on market access:retaining existing markets and gaining new markets.

Absa says the area planted with apples in SA increased by 3 000 hectares over the last ten years, to23 600 hectares. Most of the growth took place in Ceres. Around 31% of the country's apple orchardsare under ten years old. The young orchards, together with more high-density plantings, will likelyincrease production to 1.05 million tonnes over the next ten years. More packing and coolingfacilities will be needed. The production of pears is expected to grow by 18% between 2014 and2020. SA exports 43% of its apples, helped by the weak rand. Some export markets may come underpressure, but consumption is increasing in developing countries and Africa remains an attractivegrowth market.

Absa's agricultural outlook suggests that producing tree nuts will remain highly profitable in thecoming year. The marketing of macadamias can be boosted by more research into the health benefitsof the nuts, and by promoting an awareness of such benefits.

As far as the outlook for livestock is concerned, Absa predicts sluggish demand for sheep meatproducts in the short term due to pressure on consumers, but over the long term expectations arepositive. The long-term domestic outlook for pork is also positive, and China is an attractive exportmarket. The beef sector will recover from the drought, but high prices may be met with someresistance from cash-strapped consumers.

SA's wheat industry is in distress, and it is working to improve the domestic market. SA is a netimporter of wheat and import tariffs are levied in an attempt to protect the local industry. Wheatplantings may continue to decline – plantings in the Free State in particular, have declinedconsiderably over the years. In 2016 the price of wheat reached a record of nearly R5 000 per tonne.Supply chain members will have to collaborate in order to increase the industry's competitiveness.Imports will decline in line with any increases in local production.

Absa's outlook for 2017 is mostly positive for farmers who produce maize, soybeans and wool.Producers of oranges are expecting the next five years to be positive, and domestic prices will likelyfollow the rise in export prices.

The local poultry industry may be helped by outbreaks of bird flu in other parts of the world. In theUK, all birds have been ordered indoors for at least one month in order to curb the outbreak. Theaim is to prevent kept birds from coming into contact with wild birds that carry the disease.Preventative measures have also been implemented to control the bird flu outbreak in France, wherethe flu was detected in November. In addition, an outbreak in the Netherlands has been confirmed.SA has blocked poultry imports from Germany because of the presence of the virus in the EU, whichmay have a direct positive impact on local suppliers. One of the main obstacles for SA poultryproducers who sell to the domestic market, is that they compete with low-cost products importedfrom the EU. EU consumers prefer white breast meat cuts and pay a premium for these, whichmeans the rest of the chicken can be shipped from the EU and sold to SA consumers at a very lowprice. The trade union Fawu came out in support of the local poultry industry in December. It hasasked government to clamp down on dumping by overseas countries and to negotiate market accessfor SA chicken in the EU. SA has had some recent success in establishing export markets for wholechickens in the Middle East.

There is presently an oversupply of eggs, leaving producers with little power when negotiating aprice with supermarkets. There has been a slight increase in egg prices, but medium-sized and smallproducers remain under pressure. The norm in the broiler industry is that break-even occurs at apoultry-to-maize cost ratio of 8.5. With the present high feed costs, this ratio is under pressure.Farmers who produce their own maize and soy for feed will likely do better in 2017. Domesticdemand for both poultry meat as well as eggs, is expected to remain reasonably flat throughout thisyear.

Banking & Capital Markets

The IDC's confidentiality policy presently does not allow the organisation to disclose details of loansgranted to politically exposed individuals. The IDC can only provide macro-data on the number oftransactions involving politically exposed persons. In December, Economic Development MinisterEbrahim Patel asked the IDC to review this policy. The request for more transparency follows themove towards greater scrutiny of state-owned enterprises' corporate governance practices andtransparency.

Government is working to amend the National Credit Act to allow for the criminal prosecution of thedirectors of credit-provider companies that contravene the Act. The aim is to put an end to recklesslending. In SA in 2016, 40% of credit-active consumers had impaired credit records (this is defined asan account that is in arrears by three months or more). In discussing the proposed amendments, itwas mentioned that the PIC ought to put pressure on credit provider companies in which it has astake (such as Capitec and Lewis) to ensure that proper lending criteria are applied in order toprotect consumers. There is also a view that all creditors should not be treated equally under the Act– those who lent money last (when they should have noticed the dire financial position of the client),should stand the chance to lose the most.

Nigeria's Bank of Agriculture was established in 1972 and is owned by the state. The government hasannounced that it will soon capitalise the bank with $3.2 billion and allow it to take deposits, in orderto boost agricultural output in the country. Farming makes up more than 25% of Nigeria's GDP. TheBank of Agriculture will now make money available for farming projects at an interest rate of lessthan 10%, which is lower than half of commercial market rates. Critics say that the bank's non-

performing loan percentage is too high, and that the government should also ensure the bank isproperly managed instead of only giving it money. As part of the Nigerian government's drive toreduce food imports, it is also distributing 110 rice mills across the country at a subsidy of 40%.

In the finance industry alone, the adoption of blockchain technology can create a multi-billion-dollarmarket within the coming decade. The use of blockchain technology in the financial sector is meantto ease the long wait times involved in post-trade processing. Blockchains use open-source code, andbecause open-source code is freely available to the public, legal disputes have cropped up over whoowns the rights to the innovations built using the code. Worldwide, companies applied for patentsfor 356 families of blockchain-related patents during the month of November 2016, up from 180 inJanuary. Companies that now hold patents include Goldman Sachs, Bank of America and Mastercard.Some legal experts are worried that established companies will use the patents to assert exclusiverights over blockchains. The fact that blockchains use open-source code, doesn't necessarily restrictthe ability to patent the underlying innovation.A consortium named R3, consisting of some of the world's largest banks, has recently said that itsinitial expectations of blockchain were unreasonably high. The industry says technology firms haveplaced too much emphasis on trying to disrupt the system, and that an all-out revolution should notbe expected. Founding members Goldman Sachs and Banco Santander are two of the R3-membersthat recently quit the consortium. R3 has since unveiled its new platform named Corda, adecentralized database that does not use a blockchain. Notable open-source alternatives to Cordaare Chain and Hyperledger (the latter was designed by a consortium of companies including IBM,Accenture and Intel). While the industry is still working hard towards a distributed ledger that willstreamline the transaction process, it is now more likely that the eventual change will be slow andcautious, which may be better suited to the nature of the banking industry.

Contents

AgricultureA new generation of farmers rents to cope with soaring American cropland pricesChina's giant cow farms leave neighbours up milk creekThis private university is accepting rice for tuition feesMonsanto says next breakthrough for farmers is a friendly fungusThe appliance of agricultural scienceAgri start-up aims to improve profitability of farmersJohn Deere unveils latest all-electric tractor prototype for zero-emission agricultureCreation of robot bee to pollinate cropsZambia drafts air force to combat pestsSamewerking keer tamatieplaag soverTomato leaf miner spreads to Western CapeExtract from Absa Agricultural Outlook 2017: Section 3.4.2 TomatoesFree wine fountains and other bold ways wine will change in 2017Extract from Absa Agricultural Outlook 2017: Section 3.3.4 Viticulture: Domestic trendsLocal sales still hold sway despite wine sector’s export driveHow Cape vineyards have kept their dams full through the droughtExtract from Absa Agricultural Outlook 2017: Section 3.3.3 Table grapes: Domestic trendsExtract from Absa Agricultural Outlook 2017: Section 3.3.1 Pome Fruit: Domestic trendsAbsa se vooruitsigte vir die landboujaarExtract from Absa Agricultural Outlook 2017: Section 3.1.3 Wheat: Domestic trendsSó sien Absa die komende landboujaarBritse pluimvee vir ’n maand gehokVoëlgriep onder eende in FrankrykProtes, voëlgriep gee hoenderbedryf hoopExtract from Absa Agricultural Outlook 2017: Section 3.5.1 Poultry and eggs: Domestic trends

Banking & Capital MarketsPatel asks IDC to rethink confidentiality of politically exposed clientsState wants to go after directors of reckless lendersNigeria plans $3.2 billion capitalization for farming lenderBig banks are stocking up on blockchain patentsWhat happened to the financial blockchain revolution

Agriculture

A new generation of farmers rents to cope with soaring American cropland prices

Helena and Matthew Sylvester would love to plant fruit trees and blackberries on their Bay Areaorganic farm, but they’re holding off because they don’t own the land. Like a growing number ofyoung farmers across the country, they lease it year-to-year. That means the Sylvesters must weighevery improvement carefully. “Last year, a week before my husband and I were going to get married,our landlord told us they were going to pave over 2 acres of our farm,” says Helena, 29. Although sheand her husband were able to block those plans, the experience “makes me hesitant to think wecould financially invest, because that could happen again,” she says.The overall number of farmers in the U.S. has been shrinking steadily, but the number of tenantfarmers age 25 to 44 climbed almost 9 percent from 2007 to 2012, according to the latest U.S.Department of Agriculture (USDA) census. In California, the country’s leading agricultural producer, itrose 22 percent; in Washington and Oregon, it was up 9 percent and 11 percent, respectively.Many of the new tenant farmers identify with the locally grown food movement and are cultivatinghigh-value organic produce. U.S. sales of organic food climbed to a record $43.3 billion in 2015, andthere’s still plenty of room to grow: The category accounts for only about 5 percent of all food sales,according to the Organic Trade Association. “I had a general feeling of distrust in the industrial foodsystem, and I wanted to be able to provide good-quality food to my community, especially to ourfamilies and friends,” says Helena.Young tenant farmers like the Sylvesters are often wary of sinking money into land they don’t own.They’re also limited in their ability to borrow because they can’t pledge the acreage they cultivate ascollateral. And unlike the preceding generation of farmers, they’re hurt by rising land values.Adam Calo, a Ph.D. candidate in the University of California at Berkeley’s Department ofEnvironmental Science, Policy, and Management who studies beginning farmers, cites the case ofone young tenant in Hollister, Calif., who spent $20,000 to dig a well only to have the landowner putthe property up for sale. Another was evicted after planting an acre and a half of strawberriesbecause his landlord feared he would exhaust her water supply. Calo says a neo-feudal system hasemerged: “Wealthy landowners reap private long-term benefits with an underclass ofsemipermanent farm operators.”The Sylvesters pay almost $4,000 a year to rent 2.5 acres in Sunol and $1,500 a month for a nearbyhouse. They have scant savings and are $16,000 in debt. USDA data show that sales at farmersmarkets may have peaked, though the couple say they haven’t felt the effects in their part of thecountry, which has a high concentration of locavores. Their Community-Supported Agricultureprogram has 40 members who each pay $600 for a season’s worth of fresh produce. The CSAprovides about a third of their revenue; farmers markets and restaurants each contribute anotherthird. After operating expenses, “this will be the first year we’ll be able to set a little aside forourselves,” Helena says. She wants to have a child in the near future but isn’t sure there will beenough money to support a family. For many of their peers, there isn’t: Just 48 percent of beginningfarmers who reported positive sales to the USDA in 2007 also did so in 2012.Some are banding together in formal co-ops and informal partnerships to spread risk and poolresources. Two years ago, Middlebury College graduate Eric Harvey, 29, joined Our Table, a farm co-op in Sherwood, Ore. The 10 members farm 6 acres of vegetables, 11 acres of blueberries, and a half-acre of flowers and herbs. “I was looking for a model of agriculture that provides a better livelihoodfor farmers and builds community around the farm,” Harvey says. “Rising land costs due todevelopment, viticulture, nurseries, and now cannabis are making land access prohibitive.”

The average price of an acre of cropland soared from $1,590 in 2002 to $4,090 as of August,according to the USDA. Seventy-six million acres of farmland have disappeared in the past 30 years,snapped up by investors and developers and converted into pasture and parks. About 40 percent ofthe remaining 911 million acres is rented, as more aging and retired farmers are choosing a steadyincome stream over the windfall from an outright sale. Only 10 percent of America’s total acreage isexpected to change hands through 2019, and most of that will do so through gifts, trusts, and wills,rather than sales, the USDA says.The land-succession issue and the graying farmer population (the average age is 58) have spurred theUSDA to pour almost $130 million into beginning-farmer education and training programs since2009. Also, 75 percent of funding through the Farm Service Agency, the USDA’s lending arm, isreserved for beginning farmers. In fiscal year 2016, the agency made or guaranteed almost 6,000landownership loans to beginning farmers, totaling about $1.5 billion, roughly double the dollarfigure in 2010.The Sylvesters may never be able to buy land in their area, where demand for luxury homes nearSilicon Valley has bid up prices to stratospheric levels. But they believe their diversified approach willenable them to get by. “If we have a poor tomato harvest, we can lean on our lettuce,” saysMatthew, 31. “If we have a poor winter squash harvest, we lean on our onions.”They’ve given themselves a five-year deadline to see if they can earn a big enough profit to makefarming worth their while. One advantage of their situation, Helena says, is that winding down theoperation would be a cinch: “If we decide this is too much for us, we can sell what assets we haveand walk away.”

Karen Angel, Bloomberg, 8 December 2016

China's giant cow farms leave neighbours up milk creek

Giant piles of black manure towering over cornfields, while rancid-smelling effluent from thousandsof cows spills onto the land -- this is the price of a glass of milk in China today.Large-scale dairy farms have boomed in the Asian giant, as its near 1.4 billion consumers overcamecenturies of cultural reluctance to embrace the white fluid.An economic boom and government backing transformed dairy into a $40-billion-a-year industry,shifting production away from small-scale producers towards massive megafarms with up to 10,000cattle -- and a lot more waste."The smell of the manure... in the summer it's very intense," said Ren Xiangjun, a farmer in Gannancounty.Pointing at a stream of green water escaping from under a grey brick wall at the giant farm owned byagro-conglomerate Feihe International, he added: "You can see how it flows right out of the farm.Dodging packets of animal medicine and syringes littered nearby, he explained: "The rubbish leftafter injections is just thrown here. My land is directly affected."When the Feihe farm opened in 2012 in the grassy hills of the northern province of Heilongjiang itsaid it had 10,000 cows.In Daxing village next door, a woman also surnamed Ren said: "You can see the manure piled up likea mountain. There are no advantages for us. There is just pollution and noise."The dairy industry in China has posted average yearly growth rates over 12 percent since 2000, dueto rising wealth and desire for the health benefits of calcium.The ruling Communist party fanned the expansion, with former Premier Wen Jiabao in 2006expressing a "dream" that Chinese children should enjoy a daily 0.5 kilograms of dairy products.But a 2008 scandal over baby formula tainted with the industrial chemical melamine saw six childrenkilled and more than 300,000 others affected, shaking confidence in the industry.

The crisis was blamed on small-scale farmers using chemicals to inflate the protein content of theirmilk as they scrambled to meet demand.The Chinese government responded by demanding the creation of large-scale milk production units."They thought if we have scale farms they are easier to regulate and inspect," said David Mahon,founder of a Beijing-based investment firm specialising in dairy.There are large scale farms in other countries, such as New Zealand, but rarely with more than 3,000cows at a single facility.By 2014 China boasted 56 farms with 10,000 cows or more, according to state media -- 80 percent ofthe global total -- creating a string of pollution problems in several provinces.Estimates say that just 3,500 cows can produce 100,000 tonnes of fluid waste and effluent a year.Chinese farms are required to process it into fertiliser, but regulations are often flouted."There are some areas of China that it's better to visit in winter, because of the small hills of effluent.Once it thaws it's unbearable," said Mahon."China is learning about dairy farming and the lack of experience has resulted in such things."In Gannan residents alleged that local officials profited from the farm and took no action againstpolluters. AFP was not able to verify the claims and local food officials could not be reached forcomment.But attitudes may be starting to shift. The vice-head of China's state-backed Dairy Association, YangLiguo was cited in 2014 as saying "The bigger the scale, the bigger the environmental, pollution andbiosecurity problems".Mahon said there had been a "genuine rethink" in Beijing and the Chinese government was "lookingmore and more to 350 head farms".Packing more animals together increases the risk of illnesses such as brucellosis, which can spread tohumans and cause arthritis.Feihe employee Wang Dali, who once mucked out cowsheds at the farm in Gannan, contractedbrucellosis in 2012, leaving him unable to work, and now suffers near-constant pain in his joints.He blames his infection on poor sanitation."The cows were packed very close together," he said, estimating each had about 12 square metres."There was no way to treat the manure. We dug a big hole close to the facility... now it has piled uplike a mountain".Feihe denied the residents' allegations, with a woman who answered the phone at its Gannan officesaying: "These things are impossible."Dismounting from a tractor a stone's throw from the manure piles in Daxing, one farmer said: "Thepollution hasn't been cleaned up well. Of course it has an impact."Pointing to corn stalks growing beside syringes, he added: "We don't eat these ourselves. We sellthem to the market".

Tom Hancock, AFP, 26 December 2016

This private university is accepting rice for tuition fees

A private university in Thailand has begun accepting rice in payment for tuition fees as the nationstruggles under a grain glut that’s hurting farm incomes.Students enrolled at Rangsit University in Bangkok’s northern suburbs can pay all or part of nextsemester’s costs with rice, said Worachat Churdchomjan, a dean who helped set up the program.The goal is to help farming families, and the university will put a higher-than-market value on thegrain since prices for some strains are near a decade low, according to Worachat.The university’s step is part of wider efforts to help the 16 million Thais who depend on rice farmingbut are struggling to cover costs because of oversupply at home and in export markets. While

Thailand’s military rulers have unveiled more than $2 billion of support to ease agrarian hardship,farmers are also resorting to everything from sales via Facebook to using stalls at gas stations.The state’s current rice stockpiles in Thailand are about 8 million metric tons -- equivalent to roughly20 percent of projected global trade of 40.6 million tons, based on Thai government and U.S.Department of Agriculture data.Southeast Asia’s second-largest economy exports about half its annual output. Production is poisedto climb in the current season through September 2017 for the first time in five years, adding to aglobal glut.Witsanu Sukmoonsiri, a 22-year-old studying at the university’s social innovation school, is one of 19students using the rice-for-fees program."My parents might have had to go to a loan shark otherwise," said Witsanu, who plans to pay the20,620 baht ($574) fee for the January-April semester with rice from his family’s farm.Thai jasmine rice averaged 8,294 baht per ton in November, the lowest since February 2007,government data show. Another type, unmilled white rice, was at the weakest level since May 2014. "The university has a policy to support farmers to reduce their expenses, as they are the backbone ofthe country," Worachat said.In Ubon Ratchathani province in Thailand’s northeast, 25-year-old farmer Suphatson Chanthamon istrying to sell rice at gas stations operated by state-run PTT Pcl, the country’s largest oil and gascompany.Suphatson said she can earn more by milling rice herself to sell at the gas station kiosk.“At current prices, if we sell to rice mills, we wouldn’t get money to cover production costs,” saidSuphatson. “But selling directly to buyers, we could have small profits. For sure, we won’t be losingmoney.”Rice remains a sensitive issue in Thailand as the junta weighs a return to democracy next year. Overthe past decade, northern farming heartlands voted for political leaders the generals ended upousting.Thaksin Shinawatra and Yingluck Shinawatra -- the sibling leaders of the governments toppled incoups in 2006 and 2014 -- took to social media this week to say they’re handing out rice as New Yeargifts and urging fellow Thais to do the same. The Shinawatras and their allies have accused themilitary government of not doing enough to help farmers, thereby hurting the economy."You have to create purchasing power for the poor," said Watana Muangsook, a former minister andvocal critic of the junta. "You have to let the agricultural products be sold at a good price. Marketintervention is needed."The junta is encouraging farmers to switch to other crops, as well as to delay sales to bolster prices.None of that is of much help presently for Witsanu, the university student."I have to cook and sell food to earn extra money," he said. "Rice prices are so low."

Supunnabul Suwannakij, Bloomberg, 20 December 2016

Monsanto says next breakthrough for farmers is a friendly fungus

Monsanto Co., a lightning rod for critics of modern agricultural techniques, is introducing a newfeature next year for its genetically modified corn seeds that it says will not only boost yields but cutdown on fertilizer use and carbon-dioxide emissions.The seed giant, together with Danish company Novozymes A/S, has developed a coating for seedsmade from a friendly fungus that helps corn plants in their earliest growth stages.St. Louis-based Monsanto, which earlier this year agreed to be acquired by Germany’s Bayer AG, ishailing the product as a breakthrough for microbial technology, in which scientists look to fungi andother organisms such as bacteria to help farmers.

Corn crops treated with the new Monsanto-Novozymes microbial -- officially known as Acceleron B-300 SAT -- had better yields than those without the treatment, the companies said in a statementMonday. The product stays on seeds longer and is compatible with other chemical treatments, unlikeprevious versions. It could be applied to more than 90 million acres (36 million hectares) by 2025.The seed treatment could “become one of the biggest biological products in the ag industry,” saidColin Bletsky, vice president for Novozymes’ BioAg unit. “Harnessing the power of nature’s microbes,farmers will be able to produce more crops.”Farmers have been using synthetic chemical treatments for seeds for decades to protect plants frompests as they take root, and it’s a mature industry, Monsanto spokesman John Combest said byphone. Microbial seed treatments, in contrast, are niche products that have only boomed in the pastdecade, he said. The agricultural microbial market currently has about $1.8 billion in sales, whiletraditional chemicals and pesticides is a market valued at about $240 billion, Combest said.The new microbial coating, derived from a fungus called Penicillium bilaiae, works by growing alongthe roots of plants and helping them to access nitrogen and phosphorus in the soil. In trials, cropsusing the microbial boosted yields by more than 3 bushels an acre on average, according to therelease.The spores will stay on the seeds for two years. That compares with 120 days for the previous versionof the product, called JumpStart, which has meant farmers face a time limit on planting the treatedseeds.Furthermore, farmers took care of applying JumpStart to seeds themselves, since it wasn’tcompatible with traditional chemical treatments, including insecticides and fungicides. Now,Monsanto says it can include the microbial along with other coatings before shipping them toretailers and farmers.

Lydia Mulvany, Bloomberg, 5 December 2016

The appliance of agricultural science

The cows on the Kimotsuki Daichi farm in Kagoshima on the southern tip of Japan lookunremarkable, save for their ankles.Attached to the slender limbs, just above the foot, are bright orange devices. As they wander around,these pedometers measure the number of steps taken and feed the rate of activity into a datasystem, which analyses it every hour.Unlike human fitbits, the purpose of this device is not to monitor bovine endurance or agility —instead its aim is to let the farmer know, via cellphone, when the cow is ready to breed. The system,developed by Fujitsu, the Japanese IT equipment and services company, is known informally as theConnected Cow project.Fujitsu says when a cow is on heat, or begins oestrus, it walks on average six times more than usual.The optimal period for insemination only lasts 12-18 hours every 21 days. But two-thirds of the timeoestrus begins at night, when the farmer is asleep. Missing this window can result in a low pregnancyrate and another 21-day wait before the next cycle, adding to farmers’ costs.The system is just one example of how the deployment of technology is boosting farmers’ outputand profits.Karl Verhulst, head of internet-of-things solutions in Fujitsu’s digital technology services business,says: "This is quite ground-breaking because our algorithms are quite precise. It’s accurate and weare also able to influence the gender of the calf."So far, 5,000 cows are using the Fujitsu Connected Cow service in Japan, Turkey and Poland. Thecompany has embarked on a "proof of concept" trial with the University of Reading to encourage itsuptake in the UK.

The leap from millennia of dairy farmers observing their cows for signs of oestrus to using cloudcomputing and wearable technology is pronounced and relatively sudden.Such advances in technology will be needed to drive efficiency and yields in order to meet thegrowing demand for food over the next decade.The world’s population is projected to rise from 7.4-billion currently to 8.1-billion in 2025, accordingto the UN’s Food and Agriculture Organisation (FAO).Agriculture already accounts for 40% of the world’s total land area. The FAO says there is some scopeto increase land for agriculture in parts of sub-Saharan Africa and Latin America. But it expectsdemand for food to be met overwhelmingly by productivity gains.“To encourage commercial investment, reliable statistics are needed to evaluate, monitor andmeasure farming activities”The UN food agency’s latest annual agricultural outlook, produced alongside the Organisation forEconomic Co-operation and Development, forecast that 80% of the increase in crop output wouldcome from yield improvements.Such technological advances do not come cheap. But the agricultural sector is suffering from ashortfall in investment. The FAO estimates that $83bn of additional investment is needed to meetthe goals for 2050.That is equivalent to an annual rise of 50% from current levels. Farmers are already by far the biggestinvestors — their capital exceeds that from governments and domestic corporations by a ratio ofmore than three to one, says the FAO.But to encourage commercial investment, reliable statistics are needed to evaluate, monitor andmeasure farming activities, says Sara Menker, founder and CE of Gro Intelligence, an agricultural datafirm.Menker became interested in agriculture in her former job as a commodities trader at MorganStanley. "Agriculture is a very fragmented industry and information about it has been captured in afragmented, disorganised way," she says. "There’s a lot of inefficiencies in markets today that I thinkcan be eliminated once people have a much better understanding of them."She quit managing her multibillion-dollar options trading portfolio to establish her venture, whichaims to provide that information, with backing from former colleagues at the bank.Gro Intelligence has developed subscription-service software called Clews, which acts as a type ofsearch engine to provide data analytics across a broad range of agricultural data. These includeenvironmental data based on satellite imagery, crop production, trade flows and demographics.The target audience is not so much the farmer as potential investors, insurers and policy makers. "Itis the ecosystem around the farmer that is not as well-informed as people think," she says. "If youdon’t get policy makers, investors, corporates, the nonprofit sector, all to use the same classificationsystem in a common language, you will not solve some of these fundamental problems around foodsecurity," Menker says.New technologies and better analytic tools can help attract the investment needed to boostagricultural supplies. Achieving behavioural change is another way of securing food security.Reducing waste is one aspect of much-needed change, given that up to one-third of food eitherspoils or is thrown away, according to the FAO.Another is to eat less meat. Looking to 2025, the FAO says this is when demand will be greatest formeat, fish and dairy products, which in turn will lead to additional demand for animal feed, includingcoarse grains and protein meals.Proagrica, the farming informatics business of Relx group (the former Reed Elsevier), says thatprotein intake has risen by 43% in the daily diet, from an average of 355 calories a day in 1965 to 507in 2014.Keeping up that rate of growth will put enormous pressure on natural resources.Aside from the amount of feed and land use involved, livestock produces 14.5% of all greenhouse gasemissions, according to the UN.

This has encouraged investment in plant-based alternatives as a way of reducing demand for animalsas food.Perhaps the most eye-catching and radical approach is that taken by Soylent, the nutritional mealreplacement drink that became a Silicon Valley hit after its 20-something inventor Rob Rhinehartwrote a blog entitled How I Stopped Eating Food.However, widespread embrace of functional food is some way off. More promising, for the timebeing, are meat alternatives that seek to emulate the look, texture, sizzle and taste of meat. They areaimed not so much at vegetarians, but at keeping carnivores satisfied enough to cut back on meat intheir diet.So far, high-profile names, including Bill Gates, the former Microsoft chief, and Sergey Brin, Googleco-founder, have invested in the sector.But more recently, Tyson Foods, one of the world’s largest meat processors, took a 5% stake inBeyond Meat, a California-based meat substitute company, saying its investment "underscores thegrowing market for plant protein"."Beef" burgers without cows would also be one way of resolving bovine breeding problems.

Scheherazade Daneshkhu, Financial Times, 5 December 2016

Agri start-up aims to improve profitability of farmers

Cape Town-based company, Agri Apps, is one of 100 early-stage startups from all over the world whois pitching for a 500 000 euro prize at the annual Slush 100 Pitching Competition in Helsinki, Finland.Agri Apps builds internet-based software and hardware products to help farmers improve theirprofitability.Its co-founder, Attie Lotz, joins me now.Attie, how did the idea for Agri Apps come about?Attie Lotz: Hi Ingé. I think to answer that question I first need to talk about how we started, how wejoined forces – my partners and me. So myself and Justin [Zondagh] studied MBA together where werealised our shared passion to pursue our childhood dream, which was always farming. I come from amanagement consulting background. He is a software engineer. So heading into the world ofagriculture, how do we take advantage of the skills that we have to make a difference in agriculture?And we thought analytics would be the best way to go about this. The problem we found is that thedata isn’t relevant. If it is available, it is not great at all and digging into that problem of why can’t weget the data, we found that it is due to the telemetry in agriculture – getting the information fromthe ground on the farm all the way into the palm of your hand – is prohibitively expensive andproprietary. So this is the problem that we target now.Ingé Lamprecht: Your products help farmers to improve their profitability. Practically, how do you dothat?Attie Lotz: So they are the end-user who experiences our solution. However they are not our directcustomers. So we work with agri-services companies, experts in soil, experts in disease modelling. Sothey integrate our system. We give a cost effective solution. We give a solution that integrates data,cloud services and a dashboard for mobile or PC use which then brings the cost down, which makesit easier for people who are soil experts to then do the analysis of the soils for farming. For instanceI’m using the soil example. Disease modelling. In South Africa disease modelling I mean for theWestern Cape most of it is done in Stellenbosch and then they just aggregate it out to other placesand these things are very specific. They need it per valley. They need it per specific area. So our goalis to enable the other players in the service industry to farmers to do their job better, easier andcheaper.Ingé Lamprecht: Agri Apps is the only South African finalist in the Slush 100 Pitching Competition thisyear. How does a Cape Town-based start-up get the attention of international investors?

Attie Lotz: How to get their attention? I spent the whole week trying to understand the Europeanmarket or investors better. My background has always been in emerging markets. Their appetite forthe African risk isn’t really there, but it is good that they are starting to understand that there arereally good ideas coming from South Africa, from African countries. There are a couple of Africanstart-ups here. So it is a start. To offshore? I don’t know. We are not specifically looking forinvestment right now.Ingé Lamprecht: What was your first a-ha moment? When did you realise but this could be aprofitable business?Attie Lotz: First a-ha… when people from New Zealand and Lebanon and where was it… France… westarted getting e-mails from people from everywhere and when we realised that this isn’t a littleWestern Cape problem. This problem goes much bigger and there is a much larger market for us togo and play in.Ingé Lamprecht: One entrepreneur jokingly said the life of a start-up owner basically sucks 98% of thetime. Is it really that tough out there?Attie Lotz: I’ve never worked this hard, never been this poor and I’ve never been this happy.Ingé Lamprecht: What opportunities have you identified for expansion, potentially?Attie Lotz: Mostly other third world nations. There is surprisingly enough a lot of Lebanese interest.They can make good use of our products. Israel themselves make very good sensing solutions andthey’ve also got the expensive telemetry problem.Ingé Lamprecht: What advice do you have for other South African start-ups?Attie Lotz: Dream bigger. Just dream bigger than anybody else. When people say dream big, go abovethat. We have the potential. We have the energy. We have the know-how. We understand problems(from my experience) much deeper than people from developed nations.Ingé Lamprecht: Thanks Attie. That was co-founder of Agri Apps, Attie Lotz.

Ingé Lamprecht, Moneyweb, 2 December 2016

John Deere unveils latest all-electric tractor prototype for zero-emission agriculture

At Electrek, we firmly believe that all forms of ground transport will start to transition to electricpropulsion relatively soon. That includes large tractors for agriculture, as demonstrated by JohnDeere’s latest all-electric tractor concept. The iconic American machinery manufacturer showcased the new prototype ahead of the Sima showin France next month.While the company dabbled in alternative fuel sources for its full-size agricultural tractors in the past,including a hybrid electric version, this concept called SESAM (Sustainable Energy Supply forAgricultural Machinery) is the first fully powered by a battery pack.Where you would normally find a large diesel engine under the hood, there are stacks of batterypacks adding up to 130 kWh of capacity.That’s more energy than in Tesla’s highest capacity battery pack (100 kWh). SESAM needs it to towlarge tools and to perform other tasks, which it can do while in “off mode” without having a largediesel engine running as highlighted by the company in a video released last week (embeddedbelow).As for power, the vehicle is equipped with two 150 kW electric motors for a total power output of upto 300kW (402hp).John Deere expects that the electric motors will require much less maintenance than a diesel engine.They will also provide redundancy and last longer.John Deere didn’t release any detail about the availability of the new machine, but it also announceda new development group focused on the electrification of its machinery. We could soon see moreelectric machines.

It’s impressive to see the tractor perform demanding tasks while barely making a sound.

Fred Lambert, Electrek, 5 December 2016

Creation of robot bee to pollinate crops

Scientists at the Polytechnic University of Warsaw have created the first robotic bee designed topollinate artificially; a miniaturised drone that is able to find a flower, collect its pollen, and transfer itcarefully from the male to the female flower to fertilise it.This robotic insect has already been successfully tested in the field and its ability to pollinate isoffered as a "hopeful alternative" to address the steady decline in the world bee population, asstated by its creator, engineer Rafal Dalewski."Last summer, we carried out a test and we already have the first seed obtained through this artificialpollination, so it has been proven that our robot can do almost the same as real bees," explainsDalewski.Dalewski, however, acknowledges that he has not been able to design a drone that can producehoney, "although technology development is moving increasingly fast and can at times besurprising," he jokes.In any case, the pollinator robot "is not intended to replace insects, but to help their work andcomplement it," explains the engineer, who refuses to assess whether the drone can pollinate betterthan real bees.The truth is that this biodrone not only helps nature, but also does so in a clever way, since it can beprogrammed to focus on a particular area and look for flowers of a particular type to pollinate, allthrough a computer program.The Polytechnic University of Warsaw has created two types of pollinating drones, one flying and oneterrestrial, both armed with a kind of duster that is impregnated with pollen to later distribute itamong other flowers.The terrestrial one has more autonomy and its battery is more durable, "so the grower can go homewith his/her mind at ease and leave the drone working until it returns autonomously to its energysource."Its creator claims that these robots can also be used for "precision agriculture, as intelligentdispensers of fertilisers or pesticides," since they can be programmed to deposit certain amounts,depending on the type of plant or location.The university wants to put the first prototypes to work from 2017, and start their mass productionin two years.The invention is especially significant when one considers that the mortality of pollinating insects, onwhich most crops depend, is greater each year, without the causes being known.Two decades ago, a group of French farmers drew attention for the first time to a phenomenon thatwas unusual at that time: the depopulation of hives because of the disappearance of bees, whosepollination makes most of the world food production possible.This phenomenon is already global, especially in countries with highly developed agriculture, and hascaused many scientists to warn of the consequences of a world without bees.In 2014, the EU carried out its first study on bee mortality, which showed figures ranging between3.5% and 33.6%, depending on the country.The bee is a pollinator for both crops and nature; if this does not happen, yields in agriculture wouldfall, and the survival of plant species which rely on bees as a means of pollination would beendangered.

Farmingportal.co.za, 10 December 2016

Zambia drafts air force to combat pests

Zambia has ordered the national air force into action to fight a plague of pests that has invadedmaize crops and threatened vital food supplies.The air force is transporting pesticides across the country so that fields can be sprayed in an attemptto combat infestations of "army worms", a type of larvae moth that can decimate crops."The Zambia Air Force has since begun to airlift chemicals," President Edward Lungu’s spokespersonsaid in a statement. "The president has directed that the chemicals that were purchased underemergency operations should be distributed to all parts of the country."Agriculture ministry permanent secretary Julius Shawa told reporters that army worms had damagedcrops in four of the country’s ten provinces – Copperbelt, Luapula, Central and Lusaka."It is not the entire province. It’s only some districts in the four provinces," said Shawa.Lungu’s spokesperson said the president was concerned that harvest volumes would be badlydamaged "if the outbreak of the worms is not controlled speedily". No details were available on thenumber of aircraft involved in the operation.Maize – or corn – is a staple crop across much of Africa, used to make dishes such as pap.

AFP, 29 December 2016

Samewerking keer tamatieplaag sover

Die blaarmyner-mot Tuta absoluta is los in Suid-Afrika, maar daar is nog nie ’n afname in die aanbodvan tamaties nie. Die gevaarlike tamatieblaarmyner-motspesie Tuta absoluta het onlangs sy opwagting ook in Wes-Kaapse tamatielanderye gemaak. “Ons is maar bekommerd, want jy het net soveel chemiese middelsen skietgoed om te gebruik. Ons weet nie wat ons gaan doen as ons patrone opraak nie. As jy nie dieplaag bestuur nie, gaan dit alles uitroei. Jy kan 100% verliese hê,” sê mnr. Grant Smuts, ’ntamatieboer van Robertson.Tuta absoluta is aanvanklik in Augustus in Mpumalanga opgemerk, maar volgens mnr. Cobus Vorster,bestuurder van die Tamatieprodusente-organisasie (TPO), is die insek reeds landwyd geïdentifiseer.Plase in die Paarl en Robertson het die jongste slagoffers en die eerste in die Wes-Kaap geword.Dit is ’n aggressiewe plaag wat die hele plant – van die blare tot die vrugte – aanval. Danksyvoorkomende plaagbestryding is oeste darem nog nie beskadig nie, sê Vorster. “Geen algemeneafname in die aanbod van tamaties op die nasionale varsproduktemarkte, waar meer as 80% van dieland se tamaties bemark word, is tot dusver waargeneem nie.”Smuts sê hulle het onlangs lokvalle vir Tuta absoluta op die plaas uitgesit en die volgende dag mottegevang. Dit is visueel én op DNS positief geïdentifiseer.“Daar is gelukkig baie goeie samewerking met al die chemiese maatskappye en ons het reeds ’nstrategie vir ons streek uitgewerk. Die boere in die omgewing sal moet saamstaan en chemiesemiddels op gesinchroniseerde wyse gebruik, anders sal daar skade intree,” sê hy.Die plaagbestrydingsmiddels wat vir tamatie-bladmynermot geregistreer is, het ’nonthoudingsperiode van een tot drie dae. “Al die middels wat vir Tuta geregistreer is, is ongelooflikduur. Dit is ’n nuwe uitdaging, wat ook bestuursgewys baie moeilik is, maar ons doen wat ons kan,”sê Smuts, wat ook bekommerd is dat Bactrocera dorsalis, ’n Oosterse vrugtevlieg waarvan tamatiesook ’n gasheerplant is, in hul rigting op pad is.Mnr. Johan Janse van Rensburg van Dow AgroSciences skryf op die TPO se webwerf dat die motvining aanteel en sy lewensiklus binne 24 tot 38 dae voltooi. Dit is 12 nuwe generasies per jaar.Sy raad is om chemiese middels uit verskillende groepe af te wissel en dit herhaaldelik toe te dien,soos nuwe groei plaasvind. Hy sê die insekbestrydingsmiddel Delegate, met Spinetoram as aktiewe

bestanddeel (registrasienommer L8392 ingevolge Wet 36 van 1947), het onlangs ’n noodregistrasieontvang om die plaag te probeer bestry.“Ander aktiewe bestanddele wat besonder doeltreffend is, is Rynaxapyr en metoksiefenosied(methoxyfenozide).”

Lucille Botha, Landbou.com, 22 December 2016

Tomato leaf miner spreads to Western Cape

The first cases of tomato leaf miner (Tuta absoluta) were recently reported on farms near Paarl andRobertson in the Western Cape.Jan Hendrik Venter, manager of the Early Warning Systems Division of the Department of Agriculture,Forestry and Fisheries (DAFF), said that tomato leaf miner was a quarantine pest, so suspect caseshad to be reported to DAFF.The best way to identify the moths is by hanging out pheromone traps and having the contentanalysed, according to Venter. He explained that tomato leaf miner and potato tuber moths, bothfrom the Gelechiida family, looked almost the same.The moths are inconspicuous, dull brown and about 7mm long, while the larvae are seldom seenoutside the plant on which they are feeding.DAFF had been monitoring the spread of the pest across the world and had proactively registeredagrochemicals for rapid response to an outbreak in SA, said Venter.The chemicals need to be rotated according to active ingredients to prevent resistance. “Croprotation should also be used to break the pest cycle and all infected plant material should bedestroyed,” said Venter.The pests have the potential to obliterate tomato production and also threaten production of othermembers of the Solanum family, such as potatoes, tobacco, aubergines and peppers and certainweeds.

Glenneis Kriel, Landbou.com, 12 December 2016

Extract from Absa Agricultural Outlook 2017: Section 3.4.2 Tomatoes

The value of the tomatoes traded on the fresh produce market for the 2015/16 (September/August)marketing year amounted to R1,47 billion. In value tomatoes are the second-largest traded vegetableon the five large fresh produce markets.From September 2015 to August 2016 a total of 233 701 tonnes of tomatoes were sold on the fivelargest fresh produce markets compared to 232 097 tonnes during the previous 12 months. Thedrought did not have a significant impact on the production of tomatoes compared to potatoes,which declined by 6,4 % in volume. The production of tomatoes has increased since February 2016so that consistently greater volumes have been produced than the three-year average production.Production increased substantially, namely by 48%, from May 2016 from 17 706 tonnes to 26 143tonnes in August 2016. After declining from R8 106/t in April 2016 prices reached a low of R3 488/tin August 2016 compared to R5 875/t in August 2015.The total import value of tomatoes for the first and second quarter of 2016 totalled R1 427 655compared to R1 061 876 year on year. The total export value of tomatoes for the first and secondquarters of 2016 totalled R68 736 354 compared to R55 801 791 year on year. The export value oftomatoes increased by 23%. Given the weakening of the rand by 29% over the same period thevolume of exported tomatoes may not have increased. It is mainly their value, supported by theweak rand that has increased.

It should be noted that the warm, dry winter favoured the production of tomatoes under irrigation,leading to higher inventories of this perishable product. The volumes produced increasedsignificantly from April 2016 onwards to exceed the average production levels over three years. Thesubsequent increase in the production of tomatoes impacted directly on prices, causing them tohead south. Tomatoes are a perishable product with limited opportunities for increasing exports. TheSouth African economy is not robust enough to support higher consumption levels of tomatoes toclear the surplus stock of July and August. The weakening rand did not provide underlying support totomato prices but impacted negatively on the cost of input and tomato seed. This may have added tothe cost squeeze experienced by producers.

Wessel Lemmer, Absa Agricultural Outlook 2017, December 2016

Free wine fountains and other bold ways wine will change in 2017

Care for a “corta” bottle of Rosso di Napa?If there are two words for wine in 2017, they’re experimentation and exploration. An unquenchablethirst for the new means wines made from less well-known grapes, such as Verdejo, and unfamiliarregions in Portugal, South Africa, and Arizona will gain buzz. (Hey, a wine from the Azores made mytop 10 list for 2016.) The days when wine drinkers stuck with familiar brands, easy-to-pronouncegrape names, and the standard bottle are gone forever.That doesn’t mean, however, that we’ll give up what we’ve already embraced—for example,prosecco and rosé, which have moved from fads to wine-world fixtures, with a few stumbles. Moreluxury versions of all, especially pink vino, are coming, which will, hopefully, put a quick end to thefrosé (rosé slushie) eruption.Climate change remains high on my vinous radar. Scientists say 2016 was the hottest year on record,and while global warming may doom polar bears, a modest side benefit is the expanded boundariesfor growing such grapes as finicky pinot noir. Think Germany, where spatburgunder (pinot noir) isbetter than ever, Canada, and Oregon, where the past few vintages produced top quality.Despite competition from craft beer (up 14.1 percent, according to Beverage Information group),cider (up 10 percent), and now flavored whiskey (ugh), wine will still be going strong in 2017.But I have a host of questions. With Brexit and other political turmoils, how much will exchange ratesinfluence what we buy? Will wine sales from President-elect Donald Trump’s Virginia winery soar orslump? Will Bordeaux finally lower prices for the promising 2016 vintage, which I’ll be reporting onthis spring? And will the love affair with smoky foods cooked over a wood-fired grill bring zinfandelback big time?Here’s what I see in my crystal glass for 2017.Sparkling wine is positively effervescent in the U.S., the U.K., and even China, partly thanks toprosecco, but also because bubbly is rapidly becoming a drink for everyday celebration (andconsolation). Champagne sales in the U.S., for example, were up 10 percent for the 52 weeks endedSept. 10.The quest for more affordable fizz will lead restless drinkers to new choices beyond prosecco andpét-nat. Regions from Italy’s Franciacorta to Tasmania have begun to crack the Champagne code withnew spins on the classic recipe. (Last year I predicted English fizz would go global, and nine brandswere launched in the U.S. this fall, or will be by early next year.)In 2017, I expect two sparkling categories to increase big time. Spanish cava, made by the samemethod as Champagne, is going upscale. A new designation to identify higher-quality bottles, Cavade Paraje Calificado (single-estate Cava), has just gone into effect. Watch for my report on the best,coming soon. Also poised to grab attention is dry lambrusco from Italy. Like pét-nats, these are fun,crisp, and refreshing workday stress relievers—and white and red versions are beginning to show upon restaurant wine lists.

Burgundy is still hot but ever more expensive, so the Loire will be the next cool-climate region tocapture attention. Exports to the U.S. were up 10 percent last year, and that number is sure to climb.There’s a lot to like at reasonable prices in the region: elegant and distinctive reds from cabernetfranc and popular gamay as well as stylish, complex, dry and sweet whites from chenin blanc andlively, zingy sauvignon blanc. You may know Chinon, but lesser-known Loire areas Touraine, Anjou,Saumur, and Vouvray are set to shine.Interest in wines from France’s cool northern regions is higher than ever—the first trade showdevoted to them will be held in Paris in February—but because of 2016’s dismal weather, there willbe much less Burgundy and Beaujolais available (and it will be pricier than ever). In the Loire, mostwinemakers harvested a plentiful crop with smiles on their faces.A couple of converging trends will boost light reds from everywhere. First, they tap into the rosécraze because they can be served lightly chilled, just like rosé, and offer pink-vino fans a way toexpand their drinking horizons. In fact, all light fruity reds, such as Beaujolais and some pinot noirs,actually taste better chilled, because that points up their bright fruit and violet scents. (Some peoplewill pour them over ice, but for me that’s going too far.)Light reds are also part of the growing trend to cool-climate wines (see the Loire Valley above),perfect for everyday, year-round drinking: They don’t require aging, are highly versatile with food,and have plenty of flavor. Next year look for lively frappato from Sicily, tangy schiava and lagrein fromnorthern Italy’s Alto Adige, pinot noir from Alsace, and zweigelt from Austria to hit by-the-glass listsin restaurants.The popularity of craft beer has encouraged stuffed-shirt wineries to take a more relaxed,unbuttoned approach to wine. So be prepared for more jazzed-up packaging.Case in point: The canned wine phenomenon boomed in 2016. Sales increased 125.2 percent in the52 weeks ended on June 18, according to Nielsen. Although sparkling wine in cans has been aroundfor a few years, now such wineries as Oregon’s Union Wine Company are putting the sameUnderwood pinot noirs they sold in bottles into single-serve cans for customers’ convenience.They’re easy to tote and chill, you don’t need a glass or a corkscrew, and they’re eco-friendly, too.Here are other new bottle types you’ll see next year, from the wacky to the luxurious.London entrepreneur Joe Revell of startup Garçon Wines has designed a plastic Bordeaux-style bottlethat’s flattened like a flask so it can fit through an English letterbox for easy delivery to consumers.In California, several top wineries—Sonoma’s Scribe, Napa Valley wineries Ca’ Momi and La Sirena—are introducing a new, short, fat bottle called the “corta,” inspired by ancient hand-blown vessels, forsome of their wines. Look for Ca’ Momi’s brand-new everyday red and white, Rosso and Bianco diNapa, and Scribe’s skin-fermented chardonnay.This trend isn’t just for everyday wines. Jay-Z’s Armand de Brignac champagne introduced the luxuryfizz mini-bottle: 1,000 “purse-size” 187 ml bottles ($150 each) of its expensive flagship Gold Brut.(Les Petites d’Armand de Brignac has the same pewter label as the original.) Santa didn’t put one inyour stocking? There’ll be more luxury Champagne in this format for the holidays next year.Restaurant wine lists have improved mightily over the past decade or so. Gone are the leather-boundtomes with unreadable Gothic script. We’ve had the shorter, 100-name lists and the digital tabletlists that take so long to figure out how to use them that you finally just ask the waiter for advice.In 2017, I predict more restaurants will go even more anti-snob with hip, superfun wine zines, suchas the luxury list at June’s All Day in Austin, Texas. At June’s, master sommelier June Rodil uses aformat with a zany handmade, comic-book look—handwritten wine names in loopy cursive, cartoonballoons, arrows, crazy drawings, quirky details, and color to liven it up. When a wine is gone, shejust blacks it out with magic marker. In October, the Dora Sarchese winery in Ortona, in Italy’s Abruzzo wine region, created a fontana delvino, a "fountain" that flows with free red wine. The idea was to offer refreshment to those walkingthe popular 196-mile Cammino di San Tommaso pilgrimage route between Rome and the OrtonaCathedral. People enter into a large barrel structure and fill their glasses from spigots above a stonebasin.

In Spain, Bodegas Irache in the Navarra region maintains one on a wall facing the pilgrimage routeCamino de Santiago. Thousands have visited to serve themselves a free glass of wine. But the newItalian one in Ortona has captured the world’s attention: It’s the first to be open 24/7.

Elin McCoy, Bloomberg, 29 December 2016

Extract from Absa Agricultural Outlook 2017: Section 3.3.4 Viticulture: Domestic trends

A smaller wine harvest was recorded in South Africa for the 2016 harvest (1,07 million litres). In thepreceding three years record harvests resulted in the biggest stock levels in the history of SouthAfrican wine. In view of the smaller 2016 harvest, carry-over stock is expected to decrease by 8%.In the medium term, harvest volumes are expected to begin a continuous decline as too fewvineyards will be replaced, resulting in ageing vineyards. Quality and volumes will come underpressure. In five years’ time 62% of the vineyards planted with wine grapes will be 16 years andolder, compared to the current 46% if the current rate of replanting is maintained. The biggest futurethreat for wine sellers in South Africa could be the inability to ensure a large enough volume.However, this is not necessarily a bad thing. For producer wine cellars it would be a challenge tomaintain current profitability, unless there is an increase in the international price of wine. Theprofitability of the South African wine producer is under pressure due to increasing cost inflation andwine prices only increasing marginally. This is reflected in lower plantings and more hectaresreplaced by fruit trees and vegetables. In traditional areas such as Paarl and Stellenbosch, the areaplanted for wine has declined by 3 964 ha over the past 10 years (11%). Even in higher-producingwine areas such as those around Robertson, more and more fruit trees are being planted on landpreviously used for producing wine.For the 12-month period between July 2015 and June 2016 wine exports amounted to 421 millionlitres compared to 429 million litres the previous year (a decrease of 2%). Of the exports, accountingfor 42% of total natural wine sales, 60% were in bulk. Packaged wine showed a declining trend. TheUK and Germany continue to be the main bulk and packaged wine markets for South Africa. In a verycompetitive global bulk wine market, bulk wine trade is responsible for ±38% of international winetrade in volume but comprises only 10% of the total wine trade value. Spain continues to be thedominant market player in the bulk wine trade market.Over the past five years wine grape hectares in South Africa have declined by 1 971 ha as a result ofmore vines being uprooted than planted. At present 48% of red wine grape varieties are 16 years andolder and 44% of white wine cultivars are 16 years and older. If the current trend of the past fiveyears continues, the vineyards of 73% of red wine cultivars and 54% of white wine cultivars will be 16years and older. This should result in a decline in production over the medium term. The continuedgrowth in sales in the local market should reduce pressure on the current high volumes, togetherwith the expected decline in wine production in the future. In the saturated international winemarket the US remains a growing high-value market destination. Trade agreements are important toopen up and support export markets.

Adri Esterhuyse, Absa Agricultural Outlook 2017, December 2016

Local sales still hold sway despite wine sector’s export drive

SA’s arrival on the world wine stage after the 1994 elections has long been promoted as a textbookcase of a properly managed export achievement.In 1991 wine exports totalled 23-million litres. By 1994 this had grown to 50-million litres.International sales reached almost 500-million litres 20 years later — a volume which exceeded the

total domestic market. The industry’s success was earned mainly on the back of the ampleinvestment of producers’ boot leather and the ever-falling rand.This achievement owed nothing to the Department of Trade and Industry, which makes a limited(and largely affirmative action) investment in the trade show circuit.Wines of SA, the industry’s mainly self-funded export generic body, co-ordinated efforts in majormarkets and spent a considerable amount of money bringing influential (and sometimes not-so-influential) writers to the Cape on a regular basis.Some of these critics have now started to carve out their own little niches as Cape wine experts ontheir home stage. One of them, Tim Atkin, produces an annual report which is targeted at domesticas well as foreign readers and buyers.South African wine now enjoys an enhanced reputation abroad. In the early post-apartheid days themajor focus of most producers was the UK, followed by Germany, the Netherlands and Scandinavia.These were the places where Cape wine had been selling before the isolation era, they were in acomfortable time-zone, and the demand — especially in the early days of the Nelson Mandelapresidency – seemed insatiable.The more thoughtful producers recognised the limitations of this strategy. These European marketswere all price sensitive, trade customers were mainly supermarket chains buying in the commoditysegment, and opportunities for premiumisation were limited.Over the past 15 years many estates, and the big brand owners, have also spent heavily in NorthAmerica.The industry compiles remarkably detailed statistics on what wines are sold where, and in what kindof packaging, so interrogation of this achievement is possible. All figures cited are from 2015. Thefirst and most revealing figure is the disproportion between sales in bulk, and sales in a containerdestined for purchase by the consumer in that format.It would come as no surprise to most players (and, in fairness to the department which has beenarguing strongly against the trend) that bulk to the UK is twice the volume of packaged goods, almostfour times the volume of packaged goods in Germany (the next most important market by volume),and 10-fold in Russia.France is the third largest importer of South African wines, but its purchases of bottled wine are sosmall they don’t even feature on the table of statistics.Bulk wine sales are generally destined for contract bottlers (there are many in France servicing theEU) supplying supermarkets and multiples — clients who seek their stock-in-trade from the lowest-cost suppliers. Most of what they sell is under a label unknown in the home market, and its primaryappeal (at the price point) is probably that it comes with a Fairtrade certification.Goods that leave SA in bag-in-box or plastic are still considered packaged, though this hardlyconstitutes a premium sale. More than 80% of exports to the UK arrives in glass. In Germany lessthan 50% is in glass, and in Sweden bag-in-box exports are three times larger than in bottle.Of our vaguely major markets, the only one that is a buyer of bottled wine is Canada – at about850,000 cases.Wines sold abroad in glass is a smaller business than the domestic trade, by roughly 20%. Severalsmaller centres in SA are more important markets than most of our major trading partners. Whilethere are no accurate figures showing the breakdown of the local wine business, there is a generaltrade consensus. Gauteng is believed to account for 60%-65% of the national premium trade; theWestern Cape 15%-20%, Durban 5%-8% and the other provincial capitals about 2%-4%.Included in the Western Cape statistics are cellar door sales, and estates’ mail and rail — usuallypurchases by South African (non-Cape) tourists.It is probable that many of these buyers hail from areas other than Gauteng as Sandton or Pretoriawine lovers have no difficulty finding the beverage of their choice.It makes more sense to attribute the bulk of this trade to regional capitals. It’s also more realistic toexclude most of the on-consumption sales which take place over the tourist season.

If these assumptions are correct, then consumers in the Western Cape account for no more than13%-15% of the market, while provincial capitals would range about 3% for Bloemfontein to about6.5% for Durban and Pietermaritzburg.So the Gauteng market is three times larger than SA’s biggest premium export market, the UK.KwaZulu-Natal (and Port Elizabeth together with East London) account for the same volumes as theentire US.Nelspruit, bulked up by the Maputo Corridor and strong local tourism, is a bigger market than thewhole of Canada or China. Bloemfontein probably sells more bottled Cape wine than Sweden orBelgium.It’s not certain whether any of the key decision-makers in the industry want to digest this message.Some of the bigger players have offices (where staff are paid in hard currency) in severalinternational capitals.The marketing professionals love their trips abroad. Most wine makers are on the roadinternationally for at least a month every year — and yet they try to delegate to someone else themandatory visits to Gauteng. Almost all of them would never dream of putting in three days on theroad in the Eastern Cape.They have been doing it wrong for years, seduced by rising bulk wine sales, an increasingly warmresponse from journalists who love jolly trips to the Western Cape, and the illusion that there mustbe a pot of gold because someone once glimpsed a rainbow.

Michael Fridjhon, Business Day, 12 December 2016

How Cape vineyards have kept their dams full through the drought

The Nedbank Green Wine Awards are all about recognising and supporting South Africanwinemakers who are committed to sustainable production of quality wine, environmentalconservation and staff empowerment.In October 2016 the Nedbank Green Wine Awards honoured several Cape winemakers who areleading the way globally in the green wine movement. Two of the categories at the awards werewines made from organically grown grates, and wines from IPW producers.IPW, or Integrated Production of Wine, is the wine industry’s voluntary environmental sustainabilitycertification scheme that acknowledges winemakers who pursue integrated, environmentally friendlyproduction practices with the aim of minimising their agricultural footprint. It is the foundationalrequirement of the Nedbank Green Wine Awards.Winemakers who go beyond the minimum legal requirements and demonstrate how the SouthAfrican wine sector can be significant custodians of the globally unique Cape Floral Kingdom (a WorldHeritage Site), while also reducing their water, energy and waste footprints, are also supported bythe WWF Conservation Champion programme.They can be identified by the logo featuring the Cape sugarbird and protea, seen on many of thewine bottles in stores today.Three of the overall winners in the 2016 Nedbank Green Wine Awards were:

• Earthbound: best overall organic and best red organic for its Earthbord Cabernet Sauvignon2015.

• Paul Cluver: best overall IPW producer for its Paul Cluver Noble Late Harvest 2014; and the2016 winner of the award for leader in water conservation.

• La Motte: overall best farming practice and leader in community development.Earthbound’s "live better" ethos is all about producing quality, organic wines according to Fairtradeprinciples and ethical certification requirements, with the aim of promoting more equality andsustainability in the wine farm and wine production sector.

Paul Cluver Wines were among the first to commit to what was initially the Biodiversity and WineInitiative (BWI), established in 2004, and funded by the WWF Nedbank Green Trust until 2008. BWIhas since evolved into the WWF Conservation Champions.This family-run business in the Elgin Valley is intensely mindful of the environment, with 60% of thetotal farm committed to conservation through its stewardship agreement with CapeNature.As part of Paul Cluver’s conservation focus, it has removed vast tracts of alien vegetation andreplanted the land with endemic Cape Foral Kingdom species.It also initiated the Thandi project, one of the first agricultural black economic empowermentinitiatives, enabling workers to own their own orchards, vineyards and wine.Sustainable, ecofriendly winemakers in SA are certified by the Wine and Spirit Board (WSB) to carrythe Integrity & Sustainability Certified seal. It is a guarantee that the wine complies with the IPWcriteria.Sustainable Wine SA is the body that leads sustainable wine production in SA, and is an alliancebetween the WSB, Wines of SA and the WWF Conservation Champions."As a bank with 5-million customers we can play a part in influencing ethical consumer behaviour,"says Kerri Savin, Nedbank’s sustainability stakeholder engagement manager."One such area is green wine, and this is where the Nedbank Green Wine Awards work so well. Theawards are all about recognising a product where consumers can vote with their wallets."Savin says Nedbank is deeply invested in agriculture through its lending in the sector. "In addition,through our partnership with the WWF we have invested R18m over six years to advance sustainableagricultural practices in a number of areas, including wine, fruit, beef, dairy and sugar."The foundation of sustainable wine production, and agricultural at large, is water and watermanagement.The WWF Nedbank Green Trust programme is founded on the idea that water is a shared resourceand water stewardship is a long-term journey towards improving collective water use, reducingwater impacts and partnering on big water issues.Shelly Fuller, manager of the WWF Fruit and Wine Programme, says: "Water availability has beenidentified as an enormous risk in SA, exacerbated by the prolonged drought. The Western Cape hashad with 300mm less rainfall in 2016 than its average winter rainfall, and most dams are atworryingly low levels."The Western Cape is also experiencing unseasonal summer rain that is falling too intensely overshort periods, instead of the characteristic soaking winter rains over longer periods."To help mitigate this, good water catchment management is essential at all levels: from on-farm andnature reserves to provincial, municipal and industrial levels."Being a good water steward is one of the WWF Conservation Champion criteria, and these industryleaders have already come a long way in implementing good practices with regard to water.Founded in 1685, WWF Conservation Champion Boschendal is one of the oldest wine estates in SA.Since 2003 it has cleared more than 500ha of alien vegetation, including acacias, hakeas and pines,and replaced them with more than 7,500 indigenous fynbos plants.The alien clearing and fynbos restoration has freed up water on the farm, with rivers and streamsthat used to dry up by November or December now flowing throughout the summer — even in thesummer of 2015, one of the region’s driest and hottest years."Our landscape and river systems are becoming healthy, functioning ecosystems again, with habitatdiversity, more available water and better absorption, and lower risks such as flooding," says AndréLambrechts, the estate’s environmental manager.The 2016 Nedbank Green Wine Awards winner for overall best farming practice and leader incommunity development went to La Motte, which is conserving water in a number of ways:

1. Conserving important river and catchment areas: all alien vegetation has been removed andthe areas re-established with indigenous fynbos, ensuring increased runoff. Despite the lowrainfall this year, La Motte’s dams are full.

2. Implementing many biological farming practices to increase soil health to retain water forlonger: making mulch and compost (no artificial fertilisers are used), and planting a variety ofcover crops to form an organic layer on the soil that retains moisture.

3. All irrigation is done with drippers and soil moisture is measured with continuous loggers.Flow meters have been installed in each vineyard block and are linked to computer softwareto ensure water use is accurately measured and applied when necessary;

4. All cellar effluent or grey water is treated with "bioreactors" before it enters the dam. In thedam a process of reverse osmosis removes all algae before the water is reused for irrigation;

5. Farm manager Pietie le Roux is involved in water conservation beyond the farm gates in theKastaiing River Water Scheme. Alien vegetation on neighbouring farms and CapeNatureareas all contribute to a decrease in run off, which affects water availability for all.

"Science is showing the wine and fruit-producing sector in the Western Cape will be confronted withincreasing, extreme climate variability and we need to focus our efforts on understanding theseimpacts at the farm, regional and catchment level, and which activities can reduce these risks andimpacts," says Fuller."As part of this we are helping growers to better manage their water and production so that they canmitigate or adapt to these risks, now and into the future."

Heather Dugmore, Business Day, 4 December 2016

Extract from Absa Agricultural Outlook 2017: Section 3.3.3 Table grapes: Domestic trends

The deregulation of agricultural marketing in South Africa has offered opportunities for South Africanproducers to pool their resources and jointly export their grapes. Fruit breeding has developed inaccordance with consumer needs and, since deregulation, a couple of table grape varieties havebeen commercialised. They include a range of varieties, of which several have highly unusual flavoursand shapes. These varieties are mainly seedless with a good eating quality. The aim is also to developcultivars that require less labour. Two of the interesting new cultivars include Cotton Candy andCandy Hearts. Cotton Candy is a white seedless variety tasting like candy floss and Candy Hearts is amidseason red seedless variety tasting like butterscotch. The other cultivars attracting attention areJoy Bells with bell-shaped berries and other varieties with elongated shapes. Increased obesity in thepopulation has created an opportunity to market table grapes as a healthy substitute to curb theconsumption of sugar. The innovative breeding of new cultivars to meet consumer demands or tointroduce cultivars consumers cannot imagine going without has introduced a higher replacementrate in the table grape industry compared to the wine industry. Led by innovation, the average age ofa vineyard planted for use as table grapes is eight years compared to the average age of 15 years fora vineyard planted for making wine. Consequently, the replacement cost is double that of wine grapeproducers. Nevertheless it is worthy to note that, in terms of years, a block of table grapes breakseven with cost earlier than a block of vine. Some analysts are concerned that the industry isdeveloping fashionable cultivars with a short demand cycle of say five years, while investment mayrequire a period of 15 years. Since deregulation, individual producers in the table grape industry havelearned to innovate in order to survive ever-changing market conditions and domestic competitionamong individual producers introduced by deregulation. Except for the Olifants River region, theproduction of table grapes has not been affected by the drought which occurred during the 2015/16production season. Producers in the Loskop region allocate water in favour of permanent cropscompared to annual crops. Despite the drought, the producers of table grapes have experiencedexcellent gross incomes over the past four years. The industry grew over the past two years fromabout 51 million cartons to packing between 60 million to 65 million cartons. Growth is expected tocontinue to reach 70 million cartons or 315 000 tonnes within five years.

The industry is challenged by particular circumstances. Second to the vegetable industry, the tablegrape industry has the highest potential for employment and is therefore exposed to uncertaintyregarding labour policies. It is not possible to mechanise the harvesting of grapes.Compared to Namibia as a competitor, our regulatory restrictions raise the transaction costs ofexports. Our competitors such as Peru are aggressively changing the composition of cultivars offeredfor exports to our export markets. If they succeed, our future exports can be hurt. Peru is a largeproducer of table grapes and their product is ready at an earlier stage for exports to compete withSouth Africa. The future research capacity in the public sector may fail to keep up with the researchand demands for technological development in the industry, enabling it to stay abreast of competingexporter countries. To achieve this, the existing experience of the relevant government departmentsneeds to be used optimally and its capacity increased.In the past the table grape industry experienced a number of favourable seasons leading tounprecedented growth. To continue on this growth path led by new, innovative cultivardevelopment, we need to increase preferential trade agreements and market access to existing andnew markets. We therefore need to retain our existing markets but also need to gain new marketswhile striving to optimise production.

Wessel Lemmer & Napier de Kock, Absa Agricultural Outlook 2017, December 2016

Extract from Absa Agricultural Outlook 2017: Section 3.3.1 Pome Fruit: Domestic trends

Over the past 10 years the area planted with apples in South Africa increased by ±3 000 ha, withcurrent plantings standing at 23 600 ha. Apple hectares mainly increased in the Ceres area, whichwas responsible for ±2 000 ha new orchards in the past 10 years. Some 31% of apple orchards arenot yet 10 years old. These young orchards, together with more high-density plantings, will result inproduction increasing over the next 10 years to an expected 1,05 million tonnes from the present 0,9million tonnes. This increase will put pressure on the present packing and cooling infrastructure. Theproduction of pears in South Africa is also expected to grow by 18% between 2014 and 2020. Thearea planted under pears is not as big as that of apples.With the Russian ban continuing, more European apples will be exported to Africa, Eastern Europeand the Middle and Far East. These destinations are also important for South African exports. Appleexports represent 30% of South Africa’s exports to Africa and 24% of its exports to the Far East. Asmany of these countries’ economies depend on their oil industry, their buying power will be underpressure. With the expected increase in world production, prices will be under greater pressure. Thiswill also have an impact on South African exports even though it is a southern hemisphere producer.South Africa exports 50% of the country’s pears to the EU and Russia. Russia imports 7% of the pears,countries in the Middle East 18% and those in the Far East 15%.Over the past five years the rand weakened year on year against the dollar by an average 17%,resulting in good returns for apple producers. In view of this, producers will continue their high focuson the export market. In 2015, ±43% of the total crop was exported. Local fresh consumption is ±28%of the normal crop. With increased production, exports as a percentage of the South African crop areexpected to increase. Africa will continue to be a major export destination for South Africa.Consumption is growing in developing countries. This is mainly owing to positive population growthand growth in the economic well-being of the consumers. In Africa, consumption has grown from0,26 kg per capita in 1990 to 1,73 kg per capita in 2011.Over the past five years South African exports to Africa have grown by 96% and exports to the FarEast and Asia by 38%, while exports to the UK, Europe and Russia have declined.

Adri Esterhuyse, Absa Agricultural Outlook 2017, December 2016

Absa se vooruitsigte vir die landboujaar

Hier is nog van Absa se vooruitsigte vir die komende landboujaar. • Wynbou: Internasionaal word slegs marginale groei in verbruik verwag. Amerika bly vir Suid-

Afrika ’n groeiende hoëwaarde-markbestemming. In Suid-Afrika word daar opmediumtermyn verwag dat oesvolumes sal aanhou daal omdat te min wingerde vervangword. Voortgesette groei in plaaslike verkope en die verwagte afname in produksie behoortdruk op die huidige hoë volume te verminder.

• Makadamias: Die marges in neutboerdery sal na verwagting baie winsgewend bly.Makadamias bly taamlik onbekend – navorsing oor gesondheid en verbruikerbewustheid isbelangrik. ’n Toekomstige skuif na die gebruik van makadamias as bestanddeel word verwag.

• Groente: Die handel in groente, soos wortels en uie, met die res van Afrika sal voortgaan omte ontwikkel en geleenthede aan produsente bied.

• Pluimvee en eiers: ’n Oorvloed vleisproteïen op die mark en ander faktore sal markpryseinternasionaal en plaaslike in ’n dalende neiging hou. Pluimveeboere in Suid-Afrika sal kleinwinsmarges bly beleef totdat voervoorraad volgende jaar begin herstel. In die plaaslikeeierbedryf moet die huidige aanbod daal vir pryse om te kan styg.

• Suiwel: Die onlangse versterking van die wêrelduitvoerprys van afgeroomde envolroommelkpoeier kan op vroeë fases van herstel dui. Plaaslik sal produsentepryse naverwagting die onlangse styging in kleinhandelpryse vir melk volg. Die plaaslike vraag namelk sal verder verhoog namate melk ál meer in townships bekombaar raak.

• Beesvleis: Internasionaal plaas prysdruk van mededingende proteïene weens oorvloedigevoorrade druk op die mark. Plaaslik behoort die kuddeboufase ná die droogte pryse teondersteun, maar hoër pryse sal weens ekonomiese druk met ’n mate vanverbruikersweerstand begroet word.

• Skaapvleis: Verwagte swak ekonomiese groei is slegte nuus vir die vraag na skaapvleis, maarlangtermyn-vraagvooruitsigte lyk goed.

• Varkvleis: Internasionaal bied groeiende handelsvooruitsigte met China uitvoergeleenthede.In Suid-Afrika is die langtermynvooruitsigte optimisties.

• Wildbedryf: Pryse het oor die algemeen in die afgelope jaar gedaal. Meer diere was opformele veilings te koop. Die bedryf se teelsegment beleef prysdruk van vraag- énaanbodkant. Die mark vir wildsvleis is nog onontwikkel en bied geleenthede. Groei sal in diekomende jare waarskynlik matiger wees.

Landbou.com, 23 December 2016

Extract from Absa Agricultural Outlook 2017: Section 3.1.3 Wheat: Domestic trends

South Africa’s wheat industry has been declared an industry in distress. The main role players inSouth Africa are collaborating in order to improve the domestic wheat market. A factor that has beenimplemented in the wheat industry is the import tariff. The main wheat-producing regions in SouthAfrica are the Western Cape with 51% of the wheat produced, followed by the Northern Cape with16% and the Free State with 14%. Over the years the amount of wheat planted in the Free State hasdeclined considerably. In the 2015/16 marketing season 482 150 ha of wheat was planted, which is1,2% more than in the 2014/15 marketing season. The final wheat crop in 2015/16 reached 1 440000 tonnes, which is 21,5% less than in the 2014/15 season. The producer deliveries reported by theSouth African Grain Information Service (Sagis) from October 2015 to March 2016 reached 1 374 169tonnes, which is 22% lower year on year. The estimated further deliveries from April 2016 toSeptember 2016 are estimated to be 31 931 tonnes, which is 30% lower year on year and theretentions for farm use are estimated to be 33 900 tonnes, which is 3% lower year on year. The total

demand for wheat in South Africa over the 2015/16 season was 3 221 600 tonnes, which is 6,7% lessthan in 2014/15. The total supply for wheat in South Africa over the 2015/16 season was 3 862 923tonnes, which is 4,5% less than 2014/15. South Africa is a net importer of wheat. The import tariff forthe most of 2016 was R1 224,3/t. The revised wheat tariff of R1 591,40/t was published on 22 August2016 in the Government Gazette. The adjustment to the wheat tariff was delayed by three months.In the 2014/15 marketing season South Africa imported 1 832 441 tonnes of wheat. South Africa isexpected to import 1 850 000 tonnes in the 2015/16 marketing year.Over the 2014/15 season the average wheat price was R3 795/t and in 2015/16 the average wheatprice increased to R4 279/t. The increase in the wheat price was a result of the weaker rand and theeffect of drought on the final yields. In 2016 the wheat price reached a record of nearly R5 000/t.The long-term outlook for wheat prices points to a sideways movement in international prices assufficient amounts of wheat are expected to be produced. Excess wheat supplies are expected tocontinue into the 2016/17 season, and production is expected to remain steady until 2021. In thedomestic market, the previous few years have seen a declining trend in wheat-planted areas, andthis trend is expected to continue if there is too little industry and government support. The lack ofsuch support will somewhat limit the growth of wheat production in a country which is a netimporter of wheat, which will increase the risk to South Africa to be food insecure. The rand to USdollar exchange rate is expected to decline moving into 2017, which will add support to future localwheat prices. Given the declines in global wheat prices, domestic wheat prices can be expected totrade at least sideways owing to the efficient tariff measures that are in place. In South Africa theproduction of wheat is expected to increase while imports decline. South Africa needs to becomemore self-sufficient. However, to increase the local industry’s competitiveness, successfulcollaboration by all role players in the wheat supply chain is important. Continuous support bygovernment for the present tariff regime is equally important to ensure the sustainability of wheatproduction.

Wessel Lemmer & Julie Hayward, Absa Agricultural Outlook 2017, December 2016

Só sien Absa die komende landboujaar

Absa gee sy vooruitsigte vir die nuwe landboujaar.• Mielies: Wêreldwye mielieproduksie sal in 2016/’17 na verwagting 7% hoër wees.

Internasionale pryse sal effens styg. Die swakker rand sal ondersteuning bied aan die uitvoervan mielies na lande in Suider-Afrika.

• Suikerriet: Internasionaal sal suikerrietverbruik in 2016/’17 na verwagting steeds produksieoortref. Die plaaslike bedryf sal oor die volgende vier seisoene na die vorige produksievlakkeherstel.

• Koring: Langtermynvooruitsigte vir koringpryse dui op ’n sywaartse beweging ininternasionale pryse. In Suid-Afrika sal die invoer van koring na verwagting afneem namateproduksie toeneem. Volgehoue steun deur die Regering vir die huidige tariefstelsel is egterbelangrik.

• Oliesade: Die invoer van sonneblomsaadolie uit die Europese Unie en oliekoek uit Argentiniëkan nog duurder word indien die rand, soos verwag, van November vanjaar tot einde Meivolgende jaar met 7% teen die euro verswak. Produsente wat beoog om sojaboonproduksiete verhoog, behoort ’n goeie prysaansporing te hê.

• Wol: Internasionaal kan wolpryse in 2016/’17 deur ’n laer wêreldaanbod en sterkerverbruikersvraag ondersteun word. Plaaslik kan die voorspelde normale tot bonormalereënval die gehalte van produksie verbeter en help met die herbou van die nasionaleskaapkudde, wat produksie sal ondersteun.

• Appels: Met die toenemende appelproduksie sal uitvoer as persentasie van Suid-Afrika seopbrengs na verwagting bly styg. Afrika bly ’n belangrike uitvoerbestemming.

• Lemoene: Vooruitsigte vir die volgende vyf jaar lyk goed. Binnelandse pryse sal naverwagting uitvoerpryse na ’n hoër vlak volg.

• Suurlemoene: Plaaslike produksie sal na verwagting met 2,7% per jaar styg.• Tafeldruiwe: Toekomstige mededingende uitbreiding na lande in die Verre-Ooste is kritiek,

maar ondersteunende bilaterale handelsooreenkomste is nodig. Groeiende vetsug skepgeleenthede vir tafeldruiwe as suiker-vervanger.

Landbou.com, 23 December 2016

Britse pluimvee vir ’n maand gehok

Die hoofveearts van Brittanje het alle Britte wat voëls aanhou – of dit ’n braaihoenderfabriek of ’npaar hoenders in die agterplaas is – beveel om hul voëls ’n maand lank binnenshuis te hou om dieland te beskerm teen die hoogs aansteeklike voëlgriepvirus H5N8, wat tans ’n chaos saai in Europa.Dr. Nigel Gibbens het Britte gemaan om te keer dat hul voëls met wilde voëls in aanraking kom.Soortgelyke maatreëls is in Frankryk afgekondig nadat die siekte by pluimvee in die suide van die landen wilde-eende in die noorde gevind is.Brittanje se departement vir omgewing, kos en landelike sake het monitering vir dié siekteopgeskerp, en Gibbens het gesê die 30 dae lange voorkomingsmaatreël sal dalk verleng moet word.

Landbou.com, 23 December 2016

Voëlgriep onder eende in Frankryk

Die H5N8-virus het Frankryk se voëlgriepvrye status gekelder. ’n Uitbreking van die H5N8-voëlgriep op ’n eendplaas in die foie gras-produksiegebied in diesuidweste van Frankryk beteken die land kon homself nie, soos beoog, op 3 Desember as vry vanvoëlgriep verklaar nie.Dié hoogs aansteeklike virus is die eerste keer op 27 November in Frankryk opgespoor, in wilde-eende in Pas-de-Calais. Dié gebied se foie gras-bedryf is swaar getref deur vorige uitbrekings vanvoëlgriep.Die virus het 2 000 eende op die plaas by die dorp Almayrac in die Tarn-streek uitgewis. Dieoorblywende 3 000 voëls op die plaas is ook van kant gemaak. Verder is ’n 3 km-beskermingsone en10 km-waaksone ingestel.Die Wêreld-dieregesondheidsorganisasie maak voorsiening daarvoor dat uitvoer op ’nstreeksgrondslag geskied, wat beteken Frankryk sal pluimvee uit ander streke mag uitvoer.

Landbou.com, 12 December 2016

Protes, voëlgriep gee hoenderbedryf hoop

Die vakbond Fawu het die stryd teen ingevoerde hoendervleis betree. Die pluimveebedryf se voortgesette stryd teen ingevoerde hoendervleis het nou nuwe momentumgekry met die toetrede van die Food and Allied Workers’ Union (Fawu).

Dié vakbond het verlede week ’n beroep op die Regering gedoen om ’n handelsoorlog te verklaar omdie ongelyke speelveld waarop die Suid-Afrikaanse pluimveebedryf met Europese lande moetmeeding, gelyk te maak.Fawu het ’n petisie aan die Parlement oorhandig waarin hy onder meer eis dat:

• Die Parlement die Kabinet en die Ministerie van Handel en Nywerheid ondersteun in hulpogings om die storting van hoendervleis uit die Europese Unie (EU) te keer.

• ’n Ooreenkoms met die betrokke uitvoerlande aangegaan word wat sal verseker dat Suid-Afrikaanse hoenderprodukte die EU-mark betree en dat die Suid-Afrikaanse Regeringterugslaan met soortgelyke tegniese versperrings en tariefvrye beskermingsmaatreëls as watdie EU gebruik.

• Onderhandelinge vinnig moet geskied om meer werksverliese te voorkom.Intussen het die Regering verlede week ’n verbod op hoendervleis uit Duitsland ingestel ná ’nwaarskuwing deur die internasionale organisasie vir dieregesondheid (OIE) oor ’n uitbreking van diehoogs aansteeklike H5N8-voëlgriep in die EU. Daar is hoop dat dié maatreël tydelike verligting virSuid-Afrikaanse hoenderprodusente kan bring.Die pluimveebedryf se aansoek vroeër vanjaar by die Kommissie vir InternasionaleHandelsadministrasie (Itac) om ’n beskermingsmaatreël teen ingevoerde hoenderstukke aan diebeen uit die EU te kry, het louwarm reaksie by die tariefowerheid ontlok.Die Itac het ’n tarief van slegs 13,4% by dr. Rob Davies, Minister van Handel en Nywerheid,aanbeveel. Die pluimveebedryf sê egter ’n teenstortingstarief moet 30% of meer wees om ’n invloedte hê. “Ons glo nie enige tarief laer as 37% sal werk nie,” sê mnr. Kevin Lovell, uitvoerende hoof vandie Suid-Afrikaanse Pluimveevereniging (SAPV).Hy sê die EU-kommissie het bevestig dat Davies reeds aan hom geskryf het, maar teen druktyd hetDavies nog nie sy besluit oor ’n tarief aangekondig nie. Lovell het verwag dat dit binnekort sougebeur. Hy sê vorige ervaring het gewys die enigste teenstortingstariewe wat gewerk het, was die30% of meer wat teen Duitse maatskappye ingestel is.Fawu en die genoteerde hoenderprodusent RCL Foods het die Regering se verbod op hoendervleisuit Duitsland verwelkom. Suid-Afrika se reaksie is soortgelyk aan talle ander lande s’n, sê RCL Foodsin ’n verklaring.Volgens die maatskappy is die hoogs aansteeklike H5N8-stam die afgelope weke in agt Europeselande geïdentifiseer. Hoewel die meeste voorvalle onder wilde voëls was, is maatreëls getref om tekeer dat dit na die voedselbedryf versprei. Ten spyte daarvan is H5N8 op ’n pluimveeplaas inNederland gevind en 190 000 eende is toe van kant gemaak.

Carien Kruger & Joylene van Wyk, Landbou.com, 7 December 2016

Extract from Absa Agricultural Outlook 2017: Section 3.5.1 Poultry and eggs: Domestic trends

The poultry industry faces specific challenges in the short term which includes priority-wise, low-costimports, high feed costs and the development of an export market.Poultry producers compete with lower-quality and lowerpriced broiler meat imports from the EU.Poultry is imported from the EU (including the UK) at very competitive prices. The industry iscontinuously lobbying Government to provide import protection. EU consumers prefer white breastmeat cuts at a premium price to bone-in dark meat cuts. The premium received on white breastmeat enables the EU to export bone-in dark meat cuts at very low prices. The South Africanconsumer prefers bone-in dark meat to white meat. Consequently, South Africa is the largest exportdestination of bone-in dark meat from the EU. South Africa imports about 57 000 tonnes from theEU a month compared to the annual limited import quota of 65 000 tonnes from the US. The importsfrom the EU are unlimited and can continue to grow in future. According to the South African PoultryAssociation (SAPA) imports amounting to 10 000 tonnes of poultry meat replace a thousand jobs.

Current lobbying efforts by the poultry industry are aimed at ensuring that the imported finishedproduct is at least equal to the comparable quality and packaging of domestically processedproducts. The majority of the big broiler companies are publicly known and listed on the JSE.Low egg prices are dominated by the buying power of the retail sector. While prices in the broilerindustry are impacted negatively by lower import parity prices, egg producers are failing to negotiatebetter prices for eggs from the retail sector. Consequently, the current supply of eggs needs todecline in order for egg prices to rise. The profitability of egg production is under threat becausesupply has increased too much. Under these circumstances egg producers tend to deplete their stockby shortening the productive lives of the layer hens. While the larger egg producers manage tosurvive due to economies of scale, the medium to smaller egg producers’ margins remain underpressure. However, it is important to note that egg prices have started to increase, which is positivefor the egg industry.Broiler feed consists mainly of maize (65%) and soybean (20%). The relation between the poultry andyellowmaize prices gives an indication of the economic status of the industry. The norm is that the industryshould break even with cost at a poultry:maize price ratio of 8,5. Since June 2015, profit margins inthe poultry industry have experienced increased pressure as the poultry:maize price ratio hasdropped below the break-even ratio of 8,5. The price of feed increased significantly compared to thatin the previous production season. The price of maize and soybean is expected to remain high untilstock levels for maize and soybean recover in the next production season. Until then profit marginswill remain under pressure. Those producers who have diversified into maize and soybeanproduction, as well as feed processing, should be more sustainable as they will have access to lower-cost maize and soybean for feed. Producers who successfully hedge their price risk well in advanceshould also experience more favourable margins.Since 2013, the poultry industry has focused on establishing a viable export market for the higher-quality broiler meat products. It is difficult to compete with a high-quality product in a low-endquality domestic market dominated by lower import prices. The domestic broiler industry recentlyachieved success with the export of whole birds to the United Arab Emirates and Oman. Bilateraltrade negotiations between South Africa and Saudi Arabia have not yet been finalised butdevelopments are progressing well. The region prefers whole birds as large families stay together incompounds, preparing up to eight whole birds per meal.The increased cost of fuel, electricity and labour is a concern but the impact is not comparable to theimpact of imports and the higher feed costs.According to Sapa business relations between the UK and the South African poultry industry arestrong and are better than those with the EU. Historically, the working relationship with the UK hasbeen better and the aftermath of Brexit should not change any of this.The per capita consumption of broiler meat and eggs in South Africa correlates closely with thegrowth rate of the gross domestic product (GDP) in South Africa. The current expected GDP growthrate of South Africa stands at 0,4%. This implies that the demand for poultry meat and eggs will befairly flat. Furthermore, international commodity prices are expected to trade sideways over themedium term. This implies that imports will remain a challenge to the industry with the exchangerate being the wild card that can help protect the industry and even help stimulate exports.A plentiful supply of meat will keep poultry prices bearish in the medium term. The return of the USto the export market has increased competition while future avian flu outbreaks will continue todisrupt trade. Poultry producers in South Africa will continue to experience tight margins until feedsupplies start to recover in 2017. The imports of lower-cost poultry products will continue whilehigher-cost poultry products will increasingly benefit from the export trade.

Wessel Lemmer & Karabo Takadi, Absa Agricultural Outlook 2017, December 2016

Banking & Capital Markets

Patel asks IDC to rethink confidentiality of politically exposed clients

Economic Development Minister Ebrahim Patel has asked the Industrial Development Corporation(IDC) to review its confidentiality policy, which does not allow the state-owned finance corporationto disclose details of the loans granted to politically exposed individuals and the companies withwhich they are associated.Patel said in a written reply to a parliamentary question by the DA’s spokesman on economicdevelopment, Michael Cardo, that he had asked the IDC to review the "appropriateness" of its policyhaving regard to "relevant commercial considerations; the legitimate public expectations oftransparency; as well as the rights to privacy of individuals and the need to ensure — and be seen toensure — integrity in all investment decisions".The minister’s request followed the statement by IDC CEO Geoffrey Qhena that he could not providethe information requested by Cardo because this would violate the corporation’s confidentialitypolicy, which applies to companies that it transacts with.Cardo wanted information on all the loans granted by the IDC to politically exposed persons sinceJanuary 2009, as well as the names of the companies they were associated with; and, if the loanshad not been repaid on time, the terms of the renegotiated repayment schedule."The CEO of the IDC (Quena) advised me that the requested information would be in breach of thecurrent policy. The IDC has taken a decision to provide macro-data on the number of transactionsinvolving politically exposed persons in future annual reports," Patel said in his reply."I have taken note of the IDC’s advice and have now requested the IDC to review the appropriatenessof the current policy," Patel said.He said he would engage with the IDC board on the outcome of this review during the course of2017.Cardo said he was disappointed by Qhena’s response."Last month, the IDC made a big song and dance about publicly disclosing all its loans to politicallyexposed persons. Now it seems to be dialling back," he said."This is a blow to transparency and accountability, and I welcome the minister’s request to the IDCthat it review its confidentiality policy."

Linda Ensor, Business Day, 14 December 2016

State wants to go after directors of reckless lenders

The government this week set the wheels in motion to amend the National Credit Act (NCA) to allowfor the criminal prosecution of the directors of credit-provider companies that contravene the Act.The aim is to put an end to reckless lending. The amendments are designed to provide for “simplerand more rigorous enforcement of the Act”, according to a statement issued by the PortfolioCommittee on Trade and Industry this week.Adrian Williams, the chairperson of the committee’s sub-committee on debt relief, said the changeswill “further limit the widespread abuse of consumers by unscrupulous lenders”.The announcement follows public hearings on debt relief convened by the sub-committee, andengagement with various stakeholders about the extent of over-indebtedness and its socio-economicimpact, in search of measures that could provide relief to consumers.During the hearings, the committee heard that, at the end of June, about 24 million consumers werecredit active: 14.41 million of them were in good standing with their creditors, while 9.67 million (or

40 percent of credit-active consumers) had impaired credit records. An “impaired record” refers toan account that is in arrears by three months or more, as reflected on the consumer’s credit report.It is usually an indication that the consumer is in financial trouble, if not over-indebted.The changes to the Act will also seek to provide “an effective debt-counselling framework for low-income workers” and debt relief for specific categories of debtors to promote a change in theborrowing and spending habits of an over-indebted society, the statement said.Statutory debt counselling, as provided for by the NCA, has “failed” and over-indebted consumerslack options, Clark Gardner, the chief executive of Summit Financial Partners, said in his submissionto the sub-committee.According to the latest available statistics, which Gardner said the National Credit Regulator (NCR)would neither confirm nor correct:

• Only 700 000 consumers have applied for debt counselling;• About 255 000 consumers are in debt counselling (indicating a high drop-out rate); and• Since 2007, less than 15 000 consumers who underwent debt counselling have been issued

with “clearance certificates”, which are issued once a consumer is no longer over-indebted.Summit is of the view that debt counselling doesn’t work because:

• Over-indebted consumers find it difficult to afford the debt counselling and legal fees;• There is a perverse incentive for debt counsellors to overlook reckless lending, because a

debt counsellor’s fee is a percentage of the total amount the consumer pays his or hercreditors each month; and

• The fact that all creditors in debt counselling get treated the same, when the last lendersshould be the ones paying the penalty [for pushing the consumer into a state of over-indebtedness].

In his submission to Parliament, Gardner said that over-indebtedness occurs either when aconsumer’s circumstances change for the worse (for example, he or she is retrenched) or when thereis reckless lending.“If there has been no change in the consumer’s circumstances … challenge the reckless loan or loans,and the consumer will be able to afford all his or her remaining credit obligations”.If seven million of the 10 million consumers with impaired credit reports are over-indebted becausethey were granted credit they could not afford, then seven million consumers could easily challengecredit providers for reckless lending and access the remedies available in the Act, he said. “If creditproviders are held accountable for reckless lending, less of it will occur and the cost of credit willcome down.”Gardner pulled no punches in his assessment of the NCR, stating that it was defending its “own poorbehaviour by blaming [deficiencies in] the Act”.“How is it possible that a new loan agreement provided by Capitec via an ATM, or by Capfin over thephone, does not breach the terms defining reckless lending? These are two of the biggest players inthe industry, and the regulator has failed to protect consumers from these practices.”This week, Gardner said he welcomed any amendments to the Act that will ensure that unsecuredcredit was made available “in a more responsible manner and that consumers are provided withredress and rehabilitation in a simple, cost-effective and accessible form”.With finance charges of 200 percent or more a year, as in the case of payday loans, the use of suchcredit must be limited and borrowers must be protected from themselves, in the same way that drugusers are protected from dealers, Gardner said.“It must also be emphasised that the law will be as good as it can be enforced. It therefore requiresconsumers to be empowered to enforce the law in court, to ensure they have access to justice. Assoon as the law requires clarity in the High Court in order to enforce it, we remove access to justicefor the person in the street.”Gardner said he would like the government to use all of its powers to protect consumers. He said thePublic Investment Corporation, the investment management company that is wholly owned by thegovernment and that owns a substantial stake in various credit providers, should put pressure on the

directors of companies such as Capitec and Lewis to ensure that their business practices do not harmconsumers who are financially illiterate and desperate.

Angelique Arde, Personal Finance, 10 December 2016

Nigeria plans $3.2 billion capitalization for farming lender

Nigeria plans to capitalize its state-owned Bank of Agriculture with 1 trillion naira ($3.2 billion) andwill allow the lender to take deposits as Africa’s most-populous nation seeks to boost farming outputand reduce food imports.“We are looking at 25 million farmers” as stakeholders or depositors, Agriculture and RuralDevelopment Minister Audu Ogbeh said in an interview Monday in the capital, Abuja. “We areprobably going to take a major step by the end of this year, and by February, March, have a structurein place for the changes we want to carry out.”Nigeria’s economy contracted in the first nine months of the year as output of oil, the government’smain source of revenue, dropped due to attacks by militant groups on pipelines in the Niger Riverdelta and prices remained low. Farming, which mostly consists of crops including cocoa, accounts formore than 25 percent of gross domestic product, and has expanded every quarter of 2016, whilefactory output and mining, which includes the oil industry, shrank, according to the National Bureauof Statistics.The Bank of Agriculture will start lending for farming projects at an interest rate of less than 10percent, or less than half of commercial market rates, Ogbeh said.The bank, created in 1972 to provide credit and technical support to farming projects, lent at least 41billion naira to 600 businesses across Nigeria over 10 years, according to information on its website.“It’s good to invest in the bank, but they should ensure they have proper management to improve itsperformance and efficiency," Musa Tarimbuka, the division head for agriculture at Fidelity Bank Plc,said by phone. "They have disbursed a lot of money over the past 40 years, and the non-performingloans are very high."The central bank kept its benchmark rate unchanged at 14 percent on Nov. 24 as it seeks to supportan economy forecast by the International Monetary Fund to contract 1.7 percent this year. It’s alsotrying to curb inflation, which quickened to an 11-year high of 18.3 percent in October. Food pricesrose 17.1 percent from a year earlier, partly due to the high price of imported food after the nairalost almost 40 percent of its value against the dollar following the abandonment of a currency peg inJune.The government plans to distribute 110 rice mills across the country over the next two months at asubsidy of 40 percent, Ogbeh said. These measures will help boost production and reduce foodimports, which were worth about 1.2 trillion naira last year, according to statistics bureau data, hesaid.

David Malingha Doya, Bloomberg, 7 December 2016

Big banks are stocking up on blockchain patents

In the headlong rush to revolutionize modern finance, blockchain enthusiasts are overlooking onepotentially costly problem: their applications, built on open-source code, may actually belong tosomeone else.Recently, some of the biggest names in business, from Goldman Sachs to Bank of America andMastercard, have quietly patented some of the most promising blockchain technologies for

themselves. Through mid-November, the number of patents that companies have obtained or saidthey’ve applied for has roughly doubled since the start of the year, according to law firm Reed Smith.As the blockchain -- essentially a shared, cryptographically secure ledger of transactions -- evolvesbeyond its techno-utopian roots and startups like Chain and Hyperledger open their source code tothe public, the risk is growing that patents will turn into powerful weapons in protracted lawsuitsover intellectual property, especially in the hands of trolls trying to cash in on the technology’sskyrocketing rise. Increasingly, experts warn established firms will use them to assert exclusive rightsover the work of blockchain’s pioneers.“Open-source code -- that doesn’t necessarily restrict the ability to patent the underlyinginnovation,” said Patrick Murck, a long-time blockchain legal expert who joined Cooley LLP lastmonth. “Anybody who’s investing in the ecosystem, anybody who’s interested in the technologyshould be worried about this.”Goldman spokeswoman Tiffany Galvin declined to comment, while Bank of America didn’t respondto requests for comment.Mastercard’s Justin Pinkham says, that like many other companies, it’s simply filing patents to defendits blockchain inventions -- as it always does, in all areas of its work. The company has filed for morethan 30 patents related to the blockchain and cryptocurrencies, he said.“We have expanded our patent portfolio to protect the company’s thinking, innovations andintellectual property,” said Pinkham, the head of payments innovation at Mastercard Labs.Because open-source code is freely available to the public, legal disputes have cropped up over whoactually owns the rights to the innovations built using that code. Patent wars over Linux -- a popular,open-sourced software used in phones, computers and servers -- have raged for more than a decade.In the fledgling blockchain industry, the stakes are rising fast. Originally developed to record bitcointransactions, the distributed ledger has attracted big-name backers like Blythe Masters -- a formerJPMorgan banker who’s become one if its most vocal proponents -- because of its potential toreshape how financial services, supply chain and health-care industries are run.In finance alone, blockchain’s adoption could create a multi billion-dollar market in the comingdecade, from just tens of millions today, according to Gil Luria, an analyst at Wedbush Securities.That’s prompted firms to patent their most lucrative innovations. Companies worldwide applied foror received patents for 356 families of blockchain- or cryptocurrency-related patents in November,up from 180 in January, according to Marc Kaufman, who specializes in fintech intellectual propertyat Reed Smith, and Questel, a database provider. While the figure doesn’t compare to other, moredeveloped industries, Kaufman expects the number to balloon.“We are seeing an increase in filings that’s exponential,” he said. “I predict that we’ll see in five yearsthousands of patents. It’s an emerging risk, no doubt about it.”Until now, many blockchain startups have downplayed the importance of patents and pinned theirhopes on wider adoption through open source. Hyperledger, a venture led by companies includingIBM, Accenture and Intel, makes its code free for others to use and enhance. Chain, which letscompanies use the blockchain to issue and transfer assets, released its code in late October. Even R3-- a consortium of some of the largest banks -- made its Corda blockchain available last month.As such projects have multiplied, some blockchain supporters have suggested open-source makespatents irrelevant. It doesn’t, according to Vitalik Buterin, co-creator of the popular Ethereumblockchain.Companies could find themselves being sued by one-time collaborators. Large firms could wieldpatents to muscle into promising businesses developed by today’s startups. Patents could also beused to shut down rivals.“Blockchain software companies may end up being amalgamated into existing software giants, atwhich point blockchain patents will just become part of the existing patent war,” Buterin said. “As isthe case with all software patents, in my opinion their availability will only slow down and harminnovation.”

Not long ago, BitX, a well-known cryptocurrency exchange in Africa and Southeast Asia, released itscode for switching between fiat currencies and bitcoin. Soon after, the startup noticed Bank ofAmerica filed a patent for a similar technology, said Marcus Swanepoel, BitX’s chief executive officer.That put BitX in a bind. If the patent is granted, the bank could theoretically go after BitX or some ofits users, or try to charge royalties. BitX’s lawyers concluded the patent would be hard to enforce andthe company ultimately decided against going to court.“The success of those protocols depends on broad-market adoption,” Swanepoel said.In another worrisome sign, Goldman recently quit R3, people familiar with the consortium said lastmonth, and others may soon follow.To forestall potential disputes, some firms like Blockstream have made patent pledges, promising itsown patents will be available to others for free.Others are working to set up a patent pool, where members can cross-license each other’s patents.Cooley’s Murck points to Open Invention Network as a model. Launched in 2005, OIN was set up tocross-license and buy up Linux-related patents. OIN is now considering buying up blockchain-relatedpatents as well, according to CEO Keith Bergelt.“We are creating a patent non-aggression environment,” he said.Nevertheless, good intentions may mean very little when push comes to shove.“I would take people at face value, that they’d take patents without intending to assert them,” ReedSmith’s Kaufman said. But, “if you are part of a public company and companies infringe your patents,you may have an obligation. There have been many, many patent cases based on patents that wereinitially considered defense patents.”

Olga Kharif, Bloomberg, 21 December 2016

What happened to the financial blockchain revolution

Once upon a time, there was a lot of optimism that the blockchain -- the technology underlyingBitcoin -- would help the finance industry deal with a big headache: post-trade processing, the oftenlong and arduous task of making sure money and securities change hands and everybody knows whoowes what to whom.The problem might yet get solved, but it probably won’t come as a revolution.The industry’s main effort to bend the technology to its will -- the R3 consortium -- recently saw thedeparture of several banks, including founding members Goldman Sachs and Banco Santander, andreportedly reduced its fundraising target. Charley Cooper, managing director of R3, explained thatinitial expectations were unreasonably high, blaming the "hype cycle" on tech firms and their dreamsof disruption.Now, R3 has unveiled its new platform: Corda, a decentralized database that does not use ablockchain, as its technical white paper specifically points out. In a blog post, R3 architectureconsultant Ian Grigg argues that Corda will become a formidable opponent to the two most popularblockchain technologies, Bitcoin and Ethereum, because it is the only solution that "asked the userswhat they want."Okay, so the problem this whole time was that Bitcoin’s anonymous creator neglected to ask financialinstitutions what they wanted? Bitcoin was created as an alternative to banks, not a solution forthem. By contrast, plenty of blockchain-inspired ventures -- such as Digital Asset Holdings, BlockchainInsurance Industry Initiative, and Japan Exchange Group -- have focused precisely on figuring outwhat financial customers want.It turns out that using blockchain terminology is a good way to get customers interested. Corda, forexample, offers oracles and notaries and smart contracts -- features that in existing systems haveboring names such as data feeds, central counterparties and automated reconciliation tools.

Post-trade processing is a multi-billion dollar industry, and it would be silly to think that financialtechnology providers somehow overlooked this opportunity for years. There are plenty of enterprisesoftware vendors angling to serve this market, and financial institutions aren’t suffering from a lackof technology so much as an excess of complexity.Consider the market for syndicated loans, often cited as low-hanging fruit for blockchain disruptiondue to the lack of a central clearing authority and settlement times that can often exceed 20 days.Despite the fact that automated settlement technology is already available, the largest participantshave yet to integrate their systems with the new platforms.Regulation is one complicating factor. Reforms since the financial crisis have forced banks to rushinfrastructure changes, leading to fragmentation of market practice and potential fragility. As arecent ISDA whitepaper puts it:The sheer pace of regulatory implementation and a limited capacity, both human and financial, totake stock, re-engineer and implement changes have caused many market participants to buildtactical solutions to their immediate problems. This is not sustainable and, in addition to being costly,there is a nervousness that the resulting ecosystem is not sufficiently robust to support the industryin times of stress.What a mess. In theory, distributed ledger technology could streamline the entire transactionprocess, from pre-trade to execution to regulatory reporting. But how do you accomplish such arollout without bulldozing everything to the ground? It’s really hard to retire legacy infrastructurewithout disrupting the delicately balanced systems that have been evolving for decades.It’s tempting to imagine that technology alone can revolutionize the banking industry. After all,decentralized blockchains like Bitcoin and Ethereum seem to replicate global financial infrastructurewith ease. Yet such self-governing structures work in part because they don’t have to be shoehornedinto existing bureaucracies. Hence, all the blockchain hype might ultimately do little more thanpressure financial institutions into meaningful collaboration. Change will probably be slow andcautious, but in this industry that’s considered a good thing.

Elaine Ou, Bloomberg, 8 December 2016

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