Farmers urged to take advantage of rising maize prices due to US drought

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THERESA TAYLOR

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RISING maize prices may spell doom for consumers but offers an excellent opportunity to SA farmers, says the Agriculture Business Chamber (Agbiz).

“For farmers, it (rising maize prices) could be a good thing… it’s creating opportunity for them,” said Agbiz CEO Dr John Purchase.

He said rising global prices due to a drought in the US meant prepared farmers could take advantage and increase production to fill a global shortage when their season begins in October.

“We do understand that the consumer is going to be under pressure, but we also understand that the government has a safety net in place for those consumers who are in the lower end of the LSM strata,” said Purchase.

He listed social grants as a possible solution for low LSM consumers and said Agbiz would oppose government interference in maize prices.

Last week, analysts began warning that food prices were likely to rise between 12 and 15 percent in the next few months due to an increased maize price.

Economist Mike Schussler told Sapa that the SA maize price was 44.4 percent higher in the first seven months of this year compared to the first seven months of last year.

Purchase said huge droughts in the US, a weak rand-dollar exchange rate, and a tight local and international supply-and-demand market had caused maize prices to rocket.

Schussler said input costs such as electricity, fuel and seeds would still cause high food prices in SA, even when the US drought was over.

“The poorest of the South African consumers will be the hardest hit because they spend 40 percent of their income on food,” said Schussler.

Debate has also raged around the proposed merger between American seed company Pioneer Hi-Bred and SA company Pannar Seed because it is believed this could drive up seed prices, and thus food prices, substantially.

The merger has been approved by the Competition Commission but has been taken to the Supreme Court of Appeal, which would make a decision as to whether it would listen to the matter.

Purchase said the potential pros of the merger included increased opportunities for technology advances.


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