Poor crop yields mean maize imports likely
THE outlook for food production in South Africa suffered a setback when a government agency again downgraded its forecast for summer crops.
Commercial farmers are expected to harvest just over seven million tons of maize this year, according to a preliminary report by the Crop Estimates Committee released this week. The projected output is the lowest since 2007.
The report implies the country may need to import an additional three million tons to satisfy local consumption of 10 million tons.
Grain South Africa estimates that the country will need to import 3.8 million tons in the 2016-17 marketing season, which begins in May. This figure also caters for the needs of neighbouring countries such as Lesotho and Swaziland that rely heavily on South Africa for their grain supplies.
South Africa is still reeling from the effects of the drought, which analysts say will take several years to reverse.
The effects of the El Niño phenomenon have been felt by maize and livestock farmers, food manufacturers and the sugar industry, among others.
Consumers are feeling the squeeze because of higher food prices.
For example, the price of a 5kg pack of super maize meal has risen by 24.6% to R41.31 in February from a year ago, according to the latest Food Price Monitor, compiled by the National Agricultural Marketing Council. The price of frozen chicken portions has risen 39% year on year.
The scale of the challenge has galvanised organised agriculture, the government and other stakeholders into action in an attempt to contain the fallout.
Without adequate support, some farmers may not be able to meet their financial commitments, which would disqualify them from receiving further credit from lending institutions such as banks and co-ops to plant for next season. The planting should take place around October. This scenario will likely mean that fewer crops are planted, leading to a further spike in prices.
The problem areas at this stage are North West and the Free State, which have borne the brunt of the below-average rainfall and excess heat. Farmers have also planted late in the current season as they were waiting for rain. The two provinces, with Mpumalanga, produce the bulk of the country’s maize, which is a major input in food production.
“The majority of the issues are cost-related, which eventually impacts on food inflation and the consumer,” said De Wet Boshoff, executive director of the Animal Feed Manufacturers Association.
Maize and soya make up the largest inputs to animal feed. Adding to the problem is the weaker rand-dollar exchange rate that has pushed up the cost of imported feed.
The feed industry, which boasts an annual turnover of about R50-billion, buys raw materials to manufacture feed with dollars, making the purchase sensitive to the exchange rate.
“Maize supply in South Africa and Southern Africa, as everyone knows, is very tight. This means that maize prices will remain at import parity,” Boshoff said.
The Crop Estimates Committee forecast for white maize production is a drop to about three million tons this year from 4.7 million tons last year, while yellow maize is forecast to drop to 3.9 million from 5.2 million. Sunflower seed was the only crop that received an upward revision.
“The availability and affordability of white maize is at this stage a key concern for us,” said Omri van Zyl, executive director at Agri SA. Yellow maize is readily available on the international market.
The Land Bank this week called on farmers in droughtdeclared provinces to apply for loans raised by the bank from the Industrial Development Corporation to help ease the effects of the drought and return to viability in the long term.
The IDC advanced a concessional loan of R400-million to the Land Bank to lend to farmers. KwaZulu-Natal, Mpumalanga, North West, Limpopo and the Free State were declared disaster areas because of the effects of the drought.
IDC advanced a loan of R400million to the Land Bank to lend to farmers