Tshepiso Mokhema and Andre Janse van Vuuren
SOUTH Africa is importing maize for the first time in 11 months as the worst drought since 1992 destroyed crops in the continent’s biggest producer, the largest local grain farmers’ organisation said.
The nation will need to import 934 000 tons of yellow maize, worth about $137 million (R1.6 billion) at current international prices, from countries such as Argentina and Ukraine in the year to March 2016, Grain SA chief executive Jannie de Villiers said last week.
Three shipments of 30 000 tons each from the Latin American nation were en route to Cape Town to provide feedstock for dairy cows in the Western Cape, he said.
The drought has damaged crops in the Free State and the North West, which comprised 64 percent of output in 2014. The local price of white variety, a staple food, has risen 27 percent this year and that of the yellow type, used mainly as animal feed, by 13 percent as the Crop Estimates Committee predicts the smallest harvest since 2007.
Late rains at the end of February were not enough to salvage crops as most had already pollinated, De Villiers said.
“We’re not talking a big recovery,” he said. “The worrying factor is that not all the cobs have been filled. This drought could hit us next year as farmers won’t start working their land unless there is sufficient moisture in the ground.”
The committee expects growers to harvest 9.67 million tons of both white and yellow maize in 2015, 32 percent less than a year earlier.
It would release the second prediction for the season on March 25 and might leave the forecast unchanged, according to the median of five analysts’ estimates in a Bloomberg survey. Recent rains might lift the harvest to 10 million tons, De Villiers said.
“It’s not a super crisis except if they start estimating the white crop down,” he said.
“There are parts of the North West where they are not going to harvest anything, zilch, but that was the situation at the first crop estimate so from zero you can’t go lower.”
The limited availability of white maize globally made importing this variety unlikely, which might raise prices in the event of shortages, he said.
Grain SA expected a surplus of at least 100 000 tons of this type, which would be enough to meet the needs of the country and neighbouring Botswana, Lesotho, Namibia and Swaziland, which it traditionally supplied, he said.
Other crops
Mexico is the world’s biggest producer of white maize and South Africa is the largest grower on the continent. Almost all maize traded on the international market is yellow.
Harvests of crops including sunflower and sorghum have also been damaged. White maize for July delivery was little changed at R2 736 a ton while the yellow variety fell 0.3 percent to R2 439 a ton last week.
The increase in prices was likely to push up inflation, De Villiers said. In addition to the price of the maize-meal staple rising, poultry and meat costs might also jump as maize feed used to feed the birds and livestock.
The nation’s inflation rate fell to a four-year low of 3.9 percent in February, Statistics SA said on Wednesday. While price growth has stayed inside the central bank’s 3 percent to 6 percent target range for six months, the drought may add to pressure on the cost of food, which climbed 6.4 percent from a year ago.
With the effect of dry weather on the grain, “we could easily go to double digits” in food inflation from about May as more expensive maize got absorbed into the supply chain, De Villiers said.
Food comprised 14 percent of South Africa’s inflation basket, according to Stats SA.
Maize and products related to the grain, such as chicken and beef, contributed 74 percent of that, De Villiers said.
The country has exported 1.4 million tons of yellow maize since the start of the marketing season in May, with China, South Korea and Japan as the biggest buyers, according to the nation’s Grain Information Service. It has sold 475 201 tons of the white variety, with Botswana buying 30 percent of the total.
The marketing year had been changed to the end of March, said Wandile Sihlobo, an economist at Grain SA.
The organisation projected 517 000 tons of yellow maize demand from Botswana, Lesotho, Namibia and Swaziland in the year to March 2016, he said.
This excluded possible demand from other neighbours such as Zimbabwe, a nation that had also been affected by drought, Sihlobo said.
Most of the maize imported by these countries comes through South African ports and forms part of the 934 000-ton import estimate. – Bloomberg