Drought may lead to 10% jump in maize meal price

The price of maize meal, a staple food on which many South Africans depend, may increase by up to 12% because of the effect of crop losses due to drought.

On Tuesday, the crop estimates committee released its latest summer grain crop estimates for SA.

It showed the white maize harvest (mostly used to produce maize meal for human consumption) was expected to be 25% down on last year and the yellow maize harvest (mostly used for animal feed) could decline by about 20%.

“This places the total maize production estimate at 13.2-million tonnes, down 20% from last year. This is the lowest maize harvest in five years,” said Wandile Sihlobo, chief economist at the Agricultural Business Chamber of SA.

He said the expected harvest of about 13-million tonnes would be sufficient to meet annual domestic maize consumption of about 12-million tonnes. But the expected production figure remained tentative while the drought and heatwaves in some of SA’s main maize-growing regions dragged on.

Provinces that have been badly affected include Gauteng and parts of the Free State and the North West.

“We worry that there could be a further downward revision of the crop forecasts in the coming months as farmers and analysts continue to assess the extent of the heatwave damage,” said Sihlobo.

Ferdi Meyer, director of the Bureau for Food and Agricultural Policy, said SA had roughly 2.3million tonnes of maize carryover stock from last year, which, if added to the expected 13-million tonnes of production expected in 2024, gave SA access to about 15-million tonnes of maize.

This meant the country should be able to export some maize to neighbouring countries that relied on supply from SA. It was likely that SA would also export some maize to Zambia.

However, according to Meyer, the 20% decline in white maize production in SA and expectations of maize shortages in other Southern African producing countries such as Zambia and Zimbabwe have already seen prices in the region react.

In the past three weeks, futures prices for white maize jumped 20%, and the white maize price is now about 25% up from last year.

White maize, which trades at a premium to yellow maize because of its importance as a staple food, is now trading at about R5,200/tonne. Yellow maize is trading at about R4,200/tonne.

“Given the increase in maize prices, we expect maize meal prices to increase by between 10% and 12% within the next two months,” Meyer said.

This will result in even harder times for SA consumers. Food price inflation in SA has consistently outpaced the headline consumer inflation rate for the past two years.

Apart from the direct impact higher maize prices have on the price of maize meal, higher maize prices also drive up the cost of animal feed, which results in price increases for meat, eggs and other animal proteins.