On World Food Day, October 16, AfricaBio hosted a business breakfast where the theme of the day was “Wema: delivering the promise to African smallholder farmers”.
Water efficient maize for Africa (Wema) is a drought resistant maize variety which is bred to assist African smallholder farmers who are mainly dependent on rainfall to water their crops, thus making their farming practices riskier. Large parts of discussions were centred around the benefits that could be earned from the application of Wema in our society, and the impact thereafter on food availability.
The event came at an opportune time, when the southern African region has been heavily affected by drought, which has led to a 26 percent maize production decline between 2014 and 2015 to 21.1 million tons, according to the Food and Agricultural Organisation (FAO) estimates. This means that many families in the region who normally rely on agriculture for their livelihood will face a challenging time over the next months.
What adds to these challenges is the fact that 42 percent of southern Africa’s maize production is concentrated in one country, South Africa. More importantly, 69 percent of the region’s maize imports come from South Africa. This means that any negative impact on South African maize production also spreads throughout the region. This year, South Africa’s maize production is down by 30 percent year-on-year to 9.9 million tons.
The country will also be a net importer of maize for the first time in seven years. At GrainSA, we estimate this season’s maize imports at about 758 000 tons. We have, however, projected about 630 000 tons of maize exports to the region. But of course, this will come at a higher price due to strong demand. At the time of writing, the SA Futures Exchange white maize spot price was 62 percent higher than the same period a year ago at R3 020 a ton.
Higher food prices
This means that consumers in South Africa and throughout the region are facing high food prices and these are likely to remain at these levels until early 2016 if rainfall is sufficient in the 2015/16 rainy season. However, since the drought is expected to continue into the 2015/16 season, consumers are expected to continue facing challenges of high food prices in 2016.
This also comes at a time where regional economies and their major trading partners such as China and the EU are facing a downturn. As a result, South African industries such as mining that are taking a knock from low commodity prices are forced to downscale and retrench workers, leading to higher unemployment rates.
Countries that are on the edge, due to low grain supplies, include Botswana, Namibia, Lesotho, Swaziland and Zimbabwe. Collectively, these counties normally import between 30 percent and 83 percent of their annual maize consumption depending on the season.
This year, Zimbabwe will import more maize than last year when it had a bumper crop.
The only glimmer of hope for maize supplies in the region this season is Zambia, which has recently been exporting small volumes of white maize to South Africa and other regional markets. Zambia announced earlier this year that the country had about 800 000 tons of white maize for export markets, which would be of great assistance in the region.
However, in mid-October, it emerged from media reports that there were possibilities of a maize export ban, due to rising food prices as domestic maize prices responded to increasing regional demand and also to the depreciation of the kwacha to the US dollar. Such a ban would negatively affect regional food security.
It should be noted that there are large maize supplies on the world market. However, the logistical and cost challenges of landing maize imports more often than not inhibit its importation.
All of these price increases and their cost implications to consumers were brought about by drought. Thus, efforts such as Wema, which develop seed varieties that tolerate dry conditions and give better yields, raise the hopes for stakeholders along the value chain of maize in southern Africa. Research and development institutions should be given incentives to take up this challenge and contribute towards achieving food security for Southern Africa.
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Wandile Sihlobo is an economist at GrainSA. He writes in his personal capacity.
** The views expressed here do not necessarily reflect those of Independent Media.
BUSINESS REPORT