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Photo: Simphiwe Mbokazi

South Africa's competition watchdog has dismissed an application by the country's farmers' group for an exemption to allow farmers to reserve surplus maize for export, fearing it would push prices up.

South Africa, the continent's largest maize producer, harvested 12.815 million tonnes of the grain in the 2009/10 season, the biggest crop in three decades.

The country's annual maize consumption is 8-9 million tonnes, leaving it with a surplus of about 4 million.

Farmers have struggled to find export markets for the surplus maize, prompting farmers group Grain SA to apply for an exemption for a maize export pool to cushion a fall in prices.

The current legislation does not allow for the establishment of an export pool for the grain.

“The surplus should under normal market conditions translate into lower prices for consumers, including large industrial users of maize such as animal feed producers,” the commission said in a statement on Tuesday.

“We are concerned that the proposed scheme is likely to artificially keep prices in South Africa high, when they should be falling.”

The commission added that the scheme was unlikely to boost maize exports due to the unavailability of export markets.

The commission also said alternative options had not adequately been explored such as hedging, crop substitution and bio-diesel.

The agriculture minister has said South Africa must review its biofuels policy to include maize to allow farmers to use their surplus crop for energy production.

The government unveiled blending ratios for biofuels three years ago but said maize could not be used to make biofuels to ensure food security and keep a lid on high prices. - Reuters