How unity, technology, and added value contribute to the profitability of farms

While farm success was previously determined by weather and yield, in 2026, rising production resource costs are becoming a priority. Daniel Rossouw, Head of Agricultural Sales at Nedbank, analyzes the economic factors shaping South Africa's agricultural sector and offers producers strategic ways to protect their profits.

Successful farming operations rely on a careful balance of energy, labor, and raw material expenses, which is critical for business survival. Rossouw, with nearly 35 years of experience in agricultural finance, notes that the 2025–2026 period represents one of the most challenging economic landscapes for this sector.

Agricultural enterprises face not a single isolated factor, but cumulative cost pressure across several key areas. Rossouw explains that in 2026, the greatest pressure comes from combined resource prices, including energy, labor, logistics, and finance, rather than any single type of expense. He emphasizes that the severity of these issues varies greatly depending on the specific commodity.

Among the main resources, fertilizers stand out as a significant source of pressure, especially for grains, oilseeds, sugar, and horticulture. In standard grain systems, fertilizers account for 20% to 35% of resource costs, and significantly more in high-intensity operations. According to the latest estimates, fertilizer prices have risen by up to 50% compared to the same period last year.

Since South Africa imports over 80% of its fertilizer needs, local prices are closely linked to global trends in crude oil prices and exchange rate fluctuations.

Fuel presents similar difficulties. Diesel accounts for up to 15% of resource costs in grain production, and because about 70% of diesel fuel in the country is imported, farm expenses are directly dependent on global oil markets.

In addition to energy and fertilizers, other necessary operating costs are steadily increasing:

• Electricity and utilities: Although power outages have ended for an extended period, electricity tariffs continue to rise. This heavily impacts irrigated agriculture and high-value crops. While more farmers are investing in solar and alternative energy sources, such solutions require significant initial capital investment.
• Labor dynamics: This is particularly important in labor-intensive, high value-added sectors such as horticulture, viticulture, and sugarcane. Labor costs include not only rising base wages. Increases in the minimum wage, persistent shortage of skilled personnel, and variable productivity make these sectors especially vulnerable to margin compression.
• Crop protection: Active chemical ingredients are strongly tied to international commodity prices and the US dollar. Unlike optional farm expenses, reducing chemical use directly increases production risks, leaving little room for cost adjustments.

To cope with this pressure, Rossouw insists that producers must expand their financial monitoring beyond traditional metrics such as current commodity prices and local rainfall. Over the next twelve months, farm profitability will be determined by the dynamic interaction of macroeconomic forces.

He points to several critically important variables requiring close attention:

• Interest rates and inflation: Although potential rate easing offers hope for relief, persistent inflationary spikes could delay further rate cuts, sustaining high financing costs.
• Exchange rate stability: The Rand has recently shown strong resilience, but currency markets remain inherently volatile and require constant risk management.
• Geopolitical turmoil: Fuel, oil, and fertilizer markets remain highly sensitive to international conflicts and global supply disruptions.
• Climate change: Early signs and warnings of the El Niño cycle indicate increased production risks in the 2026 and 2027 seasons.
• Municipal and infrastructure overheads: Rising municipal tariffs, water costs, and localized power restrictions continue to limit expansion in high-growth and export-oriented regions.

Essentially, managing modern agricultural risks requires looking at the big picture and preparing for economic instability even before purchasing resources or sowing seeds. As market conditions change, it is crucial to collaborate with a financial partner who understands these macroeconomic shifts to maintain liquidity and structural stability.

To learn how Nedbank can become a partner to your agricultural business and support your strategic planning for the 2026–2027 seasons, contact business@nedbank.co.za or reach out directly to your regional Nedbank business manager.

Rapeseed grown by local farmers and processed by Southern Oil (SOILL) plays an important role in strengthening grain systems, reducing carbon emissions, and producing nutritious feed. Through the B-well brand, this versatile, heart-healthy ingredient transforms local agricultural resources into everyday food products.

The future of food lies not only in inventing new products but also in more efficiently utilizing crops already grown and processed in South Africa, allowing greater value to be extracted from local agricultural resources. This is precisely what the story of rapeseed demonstrates.

Although rapeseed is often associated only with the name on a bottle of oil, it is part of a much broader value chain based on local production. B-well rapeseed oil is made from 100% South African, non-GMO rapeseed seed, which is grown by local farmers and processed in the city of Stellenbosch by Southern Oil (SOILL). This product connects farmers, processors, food manufacturers, retailers, and consumers, spreading from farms in the Western Cape to kitchens across the country.

For grain farmers, rapeseed serves a significant function in the overall farming system. Instead of continuous planting of grain crops, farmers rotate the cultivation of rapeseed with crops such as wheat and barley. As a cover crop, rapeseed helps control certain weeds and plant diseases, while also improving the yield of subsequent wheat harvests, contributing to a more diverse and sustainable cultivation system. The application of conservation agriculture methods improves soil health and nutrient cycling, and crop rotation supports more efficient fertilizer use.

After harvesting, the rapeseed seeds are sorted, stored, and transported for processing. At the Southern Oil (SOILL) facility, the seeds are cleaned and crushed to separate the oil from the other material. Approximately 42%–44% of the seeds is extracted as oil. The remainder is processed into rapeseed meal—a protein-rich ingredient used as animal feed, including for dairy and poultry. Thus, one seed contributes to both food production and livestock farming.

These two products together form a closed local value chain. The oil goes into consumer products, while the protein-rich meal returns to agriculture through animal feed. The efficient use of both streams helps minimize waste and maintain the flow of value between local farming and food production. This is the meaning of sustainable sourcing in the story of B-well rapeseed.

This is not just a statement that the seed is local; it reflects a combination of interconnected practices and outcomes: the seeds are grown by recognized South African farmers; rapeseed is included in crop rotation systems that support the overall grain production system; the local supply chain ensures a shorter and traceable path from farm to processor; processing takes place in South Africa, reducing the need for international transport; and both main products from the seed are utilized productively, helping to minimize waste and maximize the crop's value.

It should also be emphasized the environmental benefit of local production. A shorter and traceable route contributes to reduced transportation-related emissions compared to oils imported into South Africa from abroad. Furthermore, local sourcing provides a clear logistical advantage by shortening the path from agricultural production to processing and market. Since the rapeseed seeds are grown and processed locally, the agricultural and industrial value remains in South Africa.

Morné Bothes, Commercial Director of SOILL, notes: 'Rapeseed shows what is possible when local agriculture and processing work as a single system: one crop can strengthen crop rotation, provide a local food ingredient, and return valuable protein to the agricultural value chain.'

The extracted oil is ultimately refined and used in cooking oils, mayonnaise, sauces, and dressings. Rapeseed oil is naturally cholesterol-free, very rich in plant omega-3s, and has an omega-6 to omega-3 ratio of approximately 2:1. The B-well brand, created by Southern Oil, brings this rapeseed story to South African kitchens. Through products like B-well rapeseed oil and rapeseed-based mayonnaise, the brand offers consumers practical ways to incorporate rapeseed into their usual daily meals.

B-well rapeseed oil is approved by the South African Heart and Stroke Foundation and has received the Cansa Smart Choice seal. The Cansa seal is awarded to products that meet its scientifically based nutritional criteria in a specific food category. These independent recognitions confirm the product's nutritional quality and help consumers identify it as a conscious choice for everyday cooking oil.

Rapeseed oil also has a neutral taste, allowing the flavor of the food to remain the main focus. Its versatility makes it suitable for frying, baking, roasting, marinating, and salad dressings. The South African Food Future conference brings together people who grow, produce, move, sell, regulate, and buy food. Rapeseed is part of this discussion because its journey connects every part of this system. From local seed in the Western Cape to food and animal feed, rapeseed demonstrates how South African agriculture and local processing can create more value from one crop—supporting farmers, feeding people, and returning protein to agriculture.

To truly transform the value chain in South Africa's poultry industry, the sector must move beyond simple micro-projects. Ishmael Sunga, CEO of Sacau, strongly advocates for empowering young entrepreneurs to lead medium-sized enterprises.

The South African poultry sector is at a strategic crossroads. It can continue to grow on the fringes, attracting more small and marginal producers into an already crowded space of survival, while the most profitable parts of the chain remain in the hands of a few large integrated companies. Or it can make a more decisive choice: intentionally create this missing middle tier.

This missing middle tier represents a new generation of professionalized, medium-sized businesses led by young men and women. These enterprises are capable of turning local demand into ownership, production into decent jobs, and poultry farming into a serious engine of inclusive industrialization.

The poultry value chain does not just need more producers; it needs a stronger class of businesses between small-scale operations and large integrated corporations. This is what the 'missing middle tier' is: the underdeveloped space where commercially disciplined, medium-sized enterprises should operate, grow, supply formal markets, and create decent jobs.

If this space remains empty, the sector will maintain a structural division between informal subsistence activities and large firms that dominate feed production, processing, distribution, and market access. Many promising operators in the poultry value chain are too advanced to support micro-enterprises but are not yet strong enough to win major commercial contracts, gain access to affordable financing, consistently meet formal standards, or negotiate effectively with large buyers. Without targeted support, they remain trapped below scale, and the industry continues to reproduce exception.

Poultry farming is one of the most practical areas for creating this missing middle tier because demand is high, production cycles are relatively short, and opportunities exist across the entire value chain. Medium-sized enterprises led by young women and men can operate in broiler and egg production, feed distribution, incubators, chick supply, veterinary services, housing construction, slaughtering, cold storage, transportation, packaging, aggregation, branding, and market distribution. Thus, the opportunity is not limited to farming; it extends to every link that supports the poultry economy.

Creating this level is not charity; it is an economic necessity. Medium-sized poultry enterprises can create more jobs than fragmented micro-projects, remain more tied to local conditions than large corporations, and respond more flexibly to regional, suburban, rural, and institutional markets. They can transform youth from program participants into employers, asset owners, service providers, aggregators, and suppliers to formal markets.

Equally important, they can act as an attraction factor for small and marginal operators by creating structured demand, aggregation channels, service networks, and market discipline.

Young women and men must be at the center of this strategy, as they represent the next generation of entrepreneurial leaders. They are more likely to adopt digital tools and artificial intelligence, keep accounts, use mobile payments, sell products online, organize through platforms or clusters, and experiment with new business models. Women entrepreneurs, already active in food trade and community supply networks, are particularly well-prepared to build strong customer relationships, manage distribution, and strengthen household and community food security.

This new generation can also contribute to the professionalization of the poultry value chain. Many young men and women possess higher capabilities necessary to navigate the complexities of modern value chain systems: digital literacy, systems thinking, adaptability, data interpretation, networking, innovation, and problem-solving in production, finance, logistics, and markets. With access to modern tools, technical knowledge, and global experience, they can raise standards, improve productivity, strengthen biosecurity, use evidence to make better business decisions, and build enterprises with regional and global ambitions.

If young entrepreneurs are left at the subsistence level, they will remain dependent on grants, vulnerable to market shocks, and unable to change the structure of the industry. But if they receive targeted support to become medium-scale operators, they can form a bridge between informal production, smallholder participation, and large agribusiness systems. This is where entrepreneurship development becomes transformative: it creates enterprises that can hire, invest, supply, comply, compete, and grow.

Professionalization must be seen as the foundation for developing the missing middle tier. Small and new poultry enterprises cannot compete, scale, or supply goods to formal markets if they remain in informal practices, weak record-keeping, inconsistent production standards, and limited compliance with food safety, animal health, and consumer requirements. Therefore, professionalization is not an optional soft option; it is the discipline that transforms promising operators into creditworthy, investable, and contract-ready enterprises.

This requires strong corporate governance, production planning, financial control, traceability, biosecurity protocols, quality assurance, contract management, customer service, and digital systems for accounting, payments, logistics, and market intelligence. It also requires recognized training programs, internships, mentorship, coaching, and certification pathways that reduce risks for young men and women and give them the authority to access financing, meet procurement standards, negotiate with buyers, and confidently transition into higher-value segments of the poultry value chain.

In practice, professionalization means creating enterprises that can produce to specification, price accurately, fulfill contracts, manage disease risks, maintain reliable records, adhere to delivery schedules, and continuously improve their performance. Without this foundation, financing becomes risky, markets remain inaccessible, and enterprise support breeds dependency rather than competitiveness.

To occupy the niche of the missing middle tier, young entrepreneurs need more than motivation and training. They need an enterprise development platform that combines political support, blended finance, shared infrastructure, technical assistance, professionalization systems, and guaranteed or structured market access. The following priorities should guide sector development programs, government policy, and private investment:

• Creation of medium-sized poultry enterprise clusters led by youth and women, linked to incubators, abattoirs, cold storage, feed depots, and logistics hubs. • Provision of staged financing that grows with the business, moving entrepreneurs from startup and expansion support to working capital, asset financing, and commercial credit.

• Conclusion of offtake agreements with retailers, government agencies, wholesalers, processors, and food service businesses so that enterprises can grow based on real demand.

• Establishment of robust management systems regarding production efficiency, animal health, financial control, compliance, labor management, quality assurance, and contract fulfillment.

• Opening up opportunities across the value chain so that young entrepreneurs can own businesses in services, logistics, processing, raw materials, and marketing, not just primary production.

• Policies and regulators: Recognize the development of medium-sized poultry enterprises as a priority for industrialization and employment; lower barriers to formalization; strengthen biosecurity and food safety systems; and align youth, agricultural, SME, and industrial policies.

• Sector development actors: Shift from short-term project support to integrated enterprise development platforms that combine incubation, coaching, certification, infrastructure access, market linkage, and results-based skills upgrading.

• Development institutions and commercial financiers: Create blended finance windows, credit guarantees, working capital facilities, and asset financing products linked to proven business performance, offtake agreements, and professionalization milestones.

• Industry players, retailers, and processors: Utilize supplier development programs, offtake contracts, technical assistance, and local procurement commitments to integrate medium-sized enterprises led by youth and women into formal value chains.

• Producers and educational institutions: Create pipelines of capable young entrepreneurs through mentorship, peer learning, internships, certification, business coaching, and practical experience in commercially viable poultry models.

The missing middle tier must be viewed as a conscious developmental milestone for the poultry industry. Government, industry, development institutions, retailers, producers, educational institutions, and development partners must work together to create a new generation of medium-sized enterprises led by young women and men. The absence of the missing middle tier should be a critical indicator of successful industry transformation: proof that the sector is no longer stuck between subsistence activities and concentrated large-scale ownership, but is building a broader, more inclusive, and competitive base of enterprises.

The choice is clear: either the missing middle tier remains empty, and the industry continues to reproduce exception, or it is intentionally filled with capable, ambitious, and well-supported medium-sized enterprises. These enterprises can meet commercial standards, create local jobs, expand ownership, strengthen food security, and give young women and men a real stake in the future of a data-driven, science-based, ICT-enabled, globally ambitious poultry economy. Thus, ensuring the sustainability of poultry in South Africa means ensuring the sustainability of enterprise ownership—and that starts with creating the missing middle tier.