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Syngenta’s ‘AgriSafe™’ risk protection plan pay out

News Snippets
16.07.2014

Syngenta maize hedging pay out 


Syngenta’s ‘AgriSafe™’ risk protection plan pay out R 37 million to participating growers
 
South African maize growers have joined their international counterparts by becoming part of a unique input cost protection plan which takes some of the uncertainty caused by fluctuating value of currencies, inflation and volatile commodity prices out of their day to day operations. For more than 400 participating growers, this has meant sharing a pay out of R 37 million with which to ease their cash flows.
 
The payments originate from the Syngenta AgriSafe product, the unique ‘hedging’ mechanism launched by the company as part of its A-Z™ integrated yield and risk protection model for maize growers.

 
Launched in South Africa in 2012, the benefits of the programme are now being realised by the maize growers who are joining counterparts from Canada, Germany, Russia and Poland who are also benefitting from the operational certainty of AgriSafe.
 
Explains Linda van der Merwe of Syngenta: “The AgriSafe concept is simple: when a grower invests in Syngenta’s A-Z spray programme to protect his crop and optimise his yield, the company offers free hedging for a tonnage based on the value of the transaction.
 
“Syngenta secures the cover on the SAFEX futures white maize market at first grade price levels at no cost to the grower, and without the grower being obliged to deliver the crop. Should the fixing date price be lower than the futures price, Syngenta pays out the difference to the grower. If the market closes higher, the grower enjoys the unlimited benefit of the higher commodity price.
 
“For growers contracted into the Syngenta A-Z programme, this simply means that they are effectively able to manage their risk as weather conditions or crop failure do not come into play, as the grain is not physically traded.”
For participating growers, the number of tons to be hedged is calculated on the value of their crop protection purchases made during the maize growing season, and defined in their agreements. Syngenta then undertook the hedging on behalf of the growers at no cost to farmer.
 
“On 15 July 2014, after the spot price for September white maize was confirmed on the SAFEX futures market, pay outs to our growers were calculated.” “At Syngenta, our growers’ profitability remains our number one focus.  Their income depends on yield and the ruling, volatile commodity price. The combination of Syngenta’s A-Z programme and AgriSafe address both these elements to put our clients in a position of optimising their yields,” Van der Merwe said.