The BFAP sector model is used to generate an annual baseline for the South African agricultural sector, presented in August every year. The BFAP baseline presents a 10-year outlook of agricultural production, consumption, prices and trade in South Africa, based on a specific set of assumptions regarding economic, technological, environmental, political, institutional, and social factors. One of the most important assumptions is that average weather conditions will prevail in Southern Africa and around the world: therefore, yields grow constantly over the baseline as technology improves. Assumptions with respect to the outlook of macroeconomic conditions are based on a combination of projections developed by the IMF and the World Bank. Baseline projections for world commodity markets are generated by FAPRI at the University of Missouri.
An example from the 2013 outlook for the South African maize soybean industry is provided below:
Markets are extremely volatile and the probability that future prices will not match baseline projections is high. Given this uncertainty, baseline projections should be interpreted as one possible scenario that could unfold, where temporary factors (e.g. weather issues) play out over the short run and permanent factors (e.g. biofuels policies) cause structural shifts in agricultural commodity markets over the long run.
The baseline, therefore, serves as a benchmark against which alternative exogenous shocks can be measured and understood. In addition, the baseline serves as an early-warning system to inform role-players in the agricultural industry about the potential effect of long-term structural changes on agricultural commodity markets, such as the impact of the sharp increase in input costs or the improvement in technology on supply response. The annual BFAP baseline should be regarded as only one of the tools in the decision-making process of the agricultural sector, and other sources of information, experience, and planning and decision-making techniques have to be taken into consideration. Within the BFAP industry analysis framework, the baseline presents a basic outlook to which specific scenarios can be compared in order to simulate the impact of strategic decisions.