Investigating the probability of a specific markup on white maize on SAFEX

Abstract

Due to the volatility of grain trading of white maize on the SAFEX trading platform, a white maize farmer can clearly sell his maize at a loss. The aim of this study was to investigate if white maize can be produced and sold at a specific mark-up. To determine if this was possible a quantitative method of research was used. Data was obtained from SAFEX, Grain SA and SAGIS. This data included average daily selling prices of white maize on SAFEX for the past 12 years, as well as input cost as obtained from Grain SA per year for the past 12 years for the Hoopstad region. The transport differential for Tierfontein was also obtained for the past 12 years to ensure that accurate calculations could be done. The study concluded that the farmer could in fact sell at a specific mark-up, however, the farmer needs to have a thorough knowledge of his input costs as well as needs to adhere to a consistent observation of SAFEX prices. This will ensure that a farmer can attain a specific predetermined mark-up. It is recommended that further studies be done on the other grains to determine if the same is attainable.