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Success in agriculture is no longer guaranteed solely by yield. In a market environment characterized by severe cost compression, Desri Lesele from Nedbank shares important insights regarding margin management, avoiding credit traps, and utilizing digital procurement tools.

Behind every successful summer harvest lies a careful balance between resource expenditures, market risk, and strategic planning, which determine the farm's survival. Discussing the practical side of margin management with Food For Mzansi, Desri Lesele, Senior Value Proposition Manager for Agriculture Clients at Nedbank, explains why financial discipline has evolved from an administrative preference to a strict commercial requirement for modern producers.

Lesele notes that the agricultural sector operates under high market pressure. Two consecutive strong production seasons have led to an abundance of grain supplies and lower commodity prices, while resource costs remain significantly above historical levels. He emphasizes: 'What we are seeing is a cost-compression season where margin management is as crucial as production management.'

In traditional agriculture, total tonnage per hectare is often considered the main indicator of success. However, current market conditions prove that two farmers can achieve almost identical harvests but end up with vastly different financial outcomes depending on decisions made before planting. The strategy heavily relies on proactive margin management to protect farm profits without compromising actual field productivity.

Lesele stresses that assessing a financing application goes far beyond checking standard financial statements and historical production charts. Essentially, this approach aims to stress-test the budget, clearly analyze the break-even point, and conduct a comprehensive risk assessment. The strongest funding applications are rarely the most optimistic; rather, they are those that demonstrate a clear, calculated understanding of both operational capabilities and market risks.

A critical error in this process is confusing accounting profitability with actual cash flow. While profitability shows whether a business creates value on paper, cash flow determines if the farm can survive long enough to realize that value. An agricultural business might look very successful on the balance sheets, but if its funds are tied up when resources need to be purchased, the operation faces serious strain. A lack of working capital at critical stages of the production cycle creates immense pressure.

Therefore, Lesele urges farmers to ask not only, 'Will this crop be profitable?', but also: 'When will my largest cash outflow occur?', 'How much working capital will I need?', 'What happens if the harvest is delayed?', 'What happens if prices are lower than expected?', and 'What happens if the yield is below plan?' It is these questions that test the resilience of the business and ensure the structural soundness of the financing model.

Effectively managing these cash flows requires making sound procurement decisions even before the season begins. Using digital markets provides the necessary price transparency when sourcing resources before the season starts. These platforms allow farmers to compare prices, evaluate alternative suppliers, and strictly control production costs. This disciplined approach to procurement led to Nedbank's partnership with the online agricultural marketplace PrysWys. This collaboration gives grain producers deeper insight into resource costs, enabling them to purchase more efficiently.

'The goal is to give farmers greater visibility into resource pricing and help them make more informed purchasing decisions. But the broader lesson extends beyond any single platform. The real opportunity lies in using technology to improve decision-making quality.'

Lesele's final message to grain producers preparing for the upcoming summer season is to focus entirely on building a sustainable business, rather than just chasing one harvest. He offers the advice of an experienced producer who perfectly embodies this mindset: 'I stopped trying to predict every season and started focusing on building a business that could survive most seasons.'

Ultimately, agriculture rewards meticulous preparation, not certainty. Farmers who successfully navigate this cost compression are those who proactively manage risks and build a business capable of withstanding future seasons.

Authors of the 2026 Global Development Report, published by the World Bank Group, concluded that artificial intelligence can become a key factor in accelerating economic growth in developing countries. However, realizing this potential requires timely investments in energy supply, digital infrastructure, specialist training, and the development of state institutions.

According to the report, provided adequate government policies are implemented, AI will allow developing economies to achieve in a decade the level of development that would normally take about a century. Nevertheless, delays in addressing existing infrastructure problems and institutional constraints could lead to a deepening of the technological gap between nations.

The World Bank notes that the risk of job automation by generative AI in high-income countries is more than three times higher than in low- and middle-income countries. While 14.2% of jobs in developed economies are susceptible to potential automation, this figure stands at 4.5% in developing countries.

Despite this, the potential for productivity gains remains high. In developing countries, AI can boost the efficiency of 16.2% of jobs, which is only slightly lower than the rate in developed nations, where this figure is estimated at 18.7%. The study's authors believe that the main effect of technology adoption for most developing economies will be increased productivity, rather than mass layoffs.

Indimit Gill, Senior Vice President and Chief Economist of the World Bank Group, emphasized that countries do not necessarily need to create their own large language models or build large-scale data centers to benefit from AI. In his view, using small, accessible AI solutions adapted to local conditions can expand access for millions of people to medical, educational, judicial, and agricultural services.

The report highlights that AI is already assisting government bodies and businesses in data analysis, improving forecasting, and enhancing the quality of services provided. Technologies can be used to support doctors in disease diagnosis, assist farmers in decision-making, improve enterprise efficiency, enhance tax administration, social programs, healthcare and education systems, and respond to emergencies.

The study's authors point out that developing economies are experiencing the lowest average growth rates in the last three decades. They estimate that artificial intelligence can significantly accelerate economic development by the end of the 2020s, although this scenario is not guaranteed.

Among the main obstacles listed are electricity shortages, limited internet access, lack of computing power, data, skilled specialists, and effective government institutions. Without necessary reforms, AI could exacerbate global and domestic inequality, lead to further concentration of market power, and create additional threats to security, personal data protection, and public trust.

The World Bank proposes a phased approach to AI technology development. In the first phase, countries are advised to actively implement existing solutions, then adapt them to national specifics, and only after establishing the necessary infrastructure move on to developing their own advanced AI systems.

Gaurav Nayyar, director of the report's authoring group, specifically noted that the window of opportunity for making effective decisions is narrow. He stated that countries that invest now in energy, the internet, human capital development, and institutions will be able to use artificial intelligence for the benefit of their citizens and economy.

The research places particular emphasis on developing basic infrastructure. As an example, it cites Sub-Saharan African countries, where nearly a third of rural schools lack reliable electricity, and over two-thirds lack stable internet access. To address this issue, the World Bank, together with partners, is implementing the Mission 300 initiative, aiming to provide electricity to 300 million residents in the region by 2030.

The report authors also recommend expanding access to computing resources, increasing data volumes, including materials in local languages, supporting innovative companies, improving public procurement and project evaluation mechanisms, and strengthening public trust in artificial intelligence through responsible regulation and international cooperation. In their opinion, voluntary industry standards may play an important role in the initial stage, followed by the application of existing legislation if necessary to prevent negative consequences of AI use.

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