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Food price pinch ahead as maize crops struggle

| Economic factors

Consumers should brace for a price increase on the most basic food as poor rains drag down this year’s yield on the country’s maize crop.

Consumers will pay more for maize meal in the next few months as a drought continues to starve maize producers of rain for their crops.

Jannie de Villiers, CEO of Grain SA, says it may be too late for the rain to improve anything for the current maize season, which ends this month, but there is still time to get things going for the next season.

“Lots of rain can damage the current crop if it is getting too wet. However, we need more rain to restore the moisture in the soil, otherwise we won’t be able to plant next season,” De Villiers told City Press.

De Villiers said the areas that had been hit hardest by the drought were North West and the northwestern part of the Free State.

“The farmers planted almost the same number of hectares of maize as last year, [this season farmers planted 2 652 000 hectares and last year planted 2 688 000ha]. We expected the same crop as last year [14 250 000 tons of maize], but because of the drought, the Crop Estimates Committee expects only 9 666 000 tons; a decrease of 32%. In South Africa, the local demand is about 10 million tons,” said De Villiers.

One hectare is about one-fifth of the size of the pitch at Ellis Park Stadium.

Consumers to feel the pinch

He says there is enough white maize for human consumption this year. However, the prices have gone up considerably.

In November 2014, at planting, the price of white maize was R1 970 a ton and the price is now about R2 550 a ton, an increase of 29%.

This increase will trickle down to consumers, according to De Villiers, and maize will become more expensive later in the year.

Production of yellow maize has also been under pressure, and between March 28 and April 3, South Africa imported 21 137 tons from Argentina. This is the first time during the maize season that South Africa has imported yellow maize.

In South Africa, maize is mainly used for animal feed, as well as for cereals and snack products.

One of the consequences of a drought for farmers is that they receive less money than they bargained for and this can affect their cash flow to begin planting for the next season’s harvest, which could also lead to more supply problems.

“We are in discussions with government to assist farmers to be able to plant next year again. If they can’t pay their debts this season, they will not be able to secure a loan for next season,” said De Villiers.

These discussions could lead to subsidies to assist struggling farmers.

Crop insurance

According to agricultural services company Unigrain, the week from March 28 to April 3 was also a poor showing for maize exports, for both white and yellow maize, and it was the lowest weekly total thus far in 2015.

“We will have to import substantial quantities of yellow maize for feed purposes. Feed prices will increase and it will go through to poultry [meat and eggs], all dairy products and red meat,” said De Villiers.

This is not the first time that the maize sector has had to import yellow maize.

Last year, between March 15 and April 18, South Africa had to import 79 673 tons of yellow maize from Ukraine. Although the necessity to import the product mainly had to do with a maize shortage in neighbouring Zimbabwe, weather was also a factor.

So far in the 2014/15 maize season, which started on April 26 last year, South Africa has exported 1 394 953 tons of yellow maize, most of which was sent to the east.

Almost half of the yellow maize exported – 679 185 tons – went to Taiwan, 198 197 tons ended up in Japan and 214 474 tons was exported to South Korea.

Yellow maize is also exported to Saudi Arabia, Portugal, Italy, Cameroon and neighbouring states Botswana, Lesotho, Mozambique and Namibia.

According to Unigrain, the Argentine shipping line-up showed that another 30 000 tons of yellow maize was en route to Cape Town.

De Villiers said the sector was also working on improving the crop insurance system in the country.

“The insurance companies are risk averse and do not provide insurance to all farmers. It is mostly because of the international insurance underwriters that do not have an appetite for South African agriculture.”

SA considers maize hybrids

A research programme using drought-tolerant maize hybrids has been initiated in an effort to mitigate the effects of climate change.

The drought-tolerant maize hybrids will be marketed under the trade name DroughtTEGO.

This innovative technology was developed by Water Efficient Maize for Africa (Wema) – an international public-private partnership comprising the African Agricultural Technology Foundation, which is based in Kenya; the International Maize and Wheat Improvement Centre; national agricultural research systems in Kenya, Mozambique, Tanzania and Uganda; and agrochemical and agricultural biotechnology company Monsanto.

Wema is funded by the Bill & Melinda Gates Foundation, the Howard G Buffett Foundation and USAID. The project was started in December, when 10 000 seed packs of drought-tolerant maize hybrids were distributed to smallholder farmers across the country.

The results of this project are still pending.

“Yes, we need to do more research on this. It was a very good year to test it to see if it works. South Africa needs many solutions to mitigate the droughts to remain food secure,” said Jannie de Villiers, CEO of Grain SA. 

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