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RISING maize prices may spell doom for consumers, but are an excellent opportunity for SA farmers, the Agriculture Business Chamber (Agbiz) has said.
“For farmers, rising maize prices could be a good thing … it’s creating opportunity for them,” said Dr John Purchase, chief executive of Agbiz.
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 government has a safety net in place for those consumers that are at 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 interfering in maize prices.
Last week, analysts began warning food prices were likely to rise between 12 percent 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 that 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 South African company Pannar Seed, because it is believed this could drive up seed prices, and thus food prices, substantially.
Although the merger has been approved, Purchase said the merger was not well understood, and needed careful analysis to work out exactly how much it would increase seed prices if at all.
He said the potential pros of the merger included increased opportunities for technology advances.