Provinces’ scorched landscapes a prelude to higher food prices

LIKE many Eastern Cape natives living in Gauteng‚ at this time of the year we travel across the country to visit our families back home, and also just to get some rest from our daily work.

Some do this trip by flying to East London or Mthatha airports‚ and others by driving for eight hours.

I typically fall into the latter group‚ so I can enjoy the beautiful province-to-province landscapes.

On Monday, I left Gauteng excited about seeing the landscapes, but they led me to again realise the seriousness of the current drought plaguing the country.

I have been a vocal advocate about this drought. The last time I visited the farms was at the start of November, and I have since been writing desktop research notes from data and insights from our regional operators and other sources.

Monday’s trip gave me some additional insights about the current situation on the ground.

Our landscapes mimicked images of the Karoo. Many fields had been planted but crops had not yet emerged: some plants‚ mostly in irrigable areas‚ were struggling with heat-stress.

In the past‚ when driving along the N1 and N6 at this time of the year, you would be passing through captivating maize‚ sunflower and soybean fields.

My route covered large parts of Gauteng‚ the Free State and the Eastern Cape. Together‚ these provinces produce roughly 45% to 49% of South Africa’s maize output, and also have large commercial and smallholder livestock farmers, who are currently facing high feed costs and water shortages.

This bleak picture shows that South African farmers are in a very difficult situation, and that consumers are bound to see further increases in food prices in 2016.

Estimates‚ taken from Grain SA‚ suggest that South Africa might again be a net maize importer in the 2016-17 marketing year.

The imports might treble the 201516 import estimate of 770 000 tons, and that might pose some difficulties on the infrastructure side (shipping ports) as the country will also need to import about two million tons of wheat this season and possibly large volumes of soybean.

This concerns me. On my first day of work this year – January 5 – white maize prices were at R2 120 a ton and on my last day of work for the year – December 18 – prices had increased by 94% to R4 115 a ton.

Further increases in prices occurred around the beginning of December, as drought fears intensified and the rand continued to weaken.

This means that these increases have not yet filtered through to maize products on the retail shelves due to the lag effect. In 2016‚ one can expect substantial increases in maize meal prices and‚ ultimately‚ in prices of other grain-related food. Even more concerning is that the South African Development Community (SADC) countries are facing the same challenge.

It’s worth noting that in a normal year‚ about 69% of the SADC’s maize imports (excluding South Africa) come from South Africa.

In 2016-17‚ their maize import needs might increase, and that would place further pressure on the South African ports‚ as an entry for the regional markets.

As devastating as this drought situation is‚ somehow it offers us an opportunity to engage with agricultural technology developers‚ support services and innovators and reflect seriously on the level and type of investments in agriculture. Furthermore‚ we need to find possible financial interventions to support our local farmers‚ as they have suffered huge losses in 2015-16 and some are again likely to suffer further losses in the 2016-17 year.

South Africa experienced droughts in the early 1930s‚ the early 1980s and as recently as 1992 and‚ undoubtedly‚ this drought will not be the last. Given the current increasing frequency and severity of droughts‚ adding to the global warming threat‚ the next drought spell may well be sooner than imagined‚ hence threatening our food security status even further.

Sihlobo is an economist at Grain SA; he writes in his own capacity