Johannesburg - South Africa’s massive maize import requirement, due to a devastating drought sweeping the country, might be smaller than expected, but still left the country with significant food security worries.
A key government body, the crop estimates committee (CEC), yesterday issued a forecast for the size of this year’s maize crop that defied expectations of a very small harvest.
The preliminary maize production forecast for 2016 domestic maize came out at 7.4 million tons, higher than market expectations of between 5.5 million tons and 6.1 million tons.
Grain SA, which represents 5 500 commercial grain farmers, had forecast the drought would cut the latest crop to as little as 4.8 million tons. However, the CEC’s maize estimate is 25 percent less than the 9.9 million tons of maize harvested in the previous season.
Agri SA economist Thabi Nkosi said the estimates had lowered the maize import forecast to about 4 million tons. There had been forecasts that the country would need to import as much as 6 million tons of maize in the year from May 1 to April 2017.
Nkosi warned though that the situation remained dire, given the way the drought had affected overall food production in South Africa. She said the drop in production would be felt more by the poorest of the poor who relied mainly on maize as their staple food.
“They would certainly have a huge impact on food inflation in South Africa and would probably push the price of the food basket from the current 4.8 percent to between 7 and 8 percent,” Nkosi said. “That would result in more people battling to access basic foods in the future and would impact on the stock feed, which would drive up meat prices further.”
The CEC forecast that farmers planted 1.99 million hectares for the 2016 season, down 25 percent from the 2.65 million hectares they seeded last year, because of the drought.
In an unprecedented move, the CEC moved its forecast for the first 2016 crop production forecast a month earlier than scheduled to help policymakers plan for possible shortages due to the drought.
Surprise
Grain SA economist Wandile Sihlobo said the estimate came as a surprise as most people had expected a smaller harvest.
Sihlobo said the forecast would improve the dire picture that had been painted for the local and regional food security perspective.
“The country might not have to import as much maize as initially expected,” Sihlobo said. “It is important (however) to highlight that although this is still a preliminary estimate, one will have to look at the next estimates to get a better sense of the current maize conditions.
“In the next few days, we will likely see the impact of this on the prices, likely to take a slight downward move from the current levels.”
The white maize spot price yesterday on the JSE fell by 2.34 percent to close at R5 016 a ton. On Tuesday, the price of white maize reached a record high of R5 376 a ton.
The yellow maize spot price fell 0.03 percent to R3 799 a ton. On January 20, the price of the yellow variety reached a record high of R4 060 a ton.
The drought has pushed farmers to record debt at an estimated R125 billion.
Agri SA chief executive Omri van Zyl earlier said the government needed to intervene and institute credit subsidies to avoid a crisis.
“The reality is we are sitting with a national emergency,” Van Zyl said.
“There will be a severe cash crunch for farmers when the new planting season starts in June and July. We will only know later this month, when the reports come in, on how extensive the subsidy requirement will be.”
An agricultural economist, who refused to be named, said the impact of the production would be felt in the months to come when farmers took stock of their losses.
The economist said if the rand was to decline from its current trading rate, it meant South Africa would have to spend more money to source maize from overseas markets.
BUSINESS REPORT