Grain SA, the biggest representative of commercial farmers in the sector, said prices for South Africa’s white maize might surge as much as 27 percent if the drought-stricken North West did not get more rain to enable farmers to plant.
The region produced about 30 percent of the white maize crop last season. The North West government declared a drought in September.
The province’s harvest of the grain probably fell 45 percent in the season this year to 1.16 million tons, or 21 percent of the national total, the official crop estimates committee said in its most recent prediction.
Prices have risen 18 percent this year, with the contract for delivery in March next year climbing to R2 490 a ton by the midday close on the SA Futures Exchange in Johannesburg on Friday from R2 447 on Thursday.
White maize’s import-parity price, or the cost local customers would pay for buying the commodity outside the country and shipping it in, is about R3 100 a ton, according to the SA Grain Information Service’s website.
“If we have a crop failure in North West this season, we could see white maize prices moving to import parity,” Grain SA chief executive Jannie de Villiers said. “With maize being the staple food and feeding into the poultry, dairy and meat industries, food inflation will surely become a problem.”
While farmers’ organisations had sought R400 million in drought aid for the North West, the government had provided just R43m, Johannes Moller, the president of commercial farming lobby Agri SA, told the Cape Town Press Club on Friday. – Bloomberg