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During my brief time working with the team at Bloomberg, the one thing I picked up from the news editor was his obsession with maize futures prices. Some may wonder why but it is an important barometer used to measure possible future food price increases as maize is the basic ingredient in much of what we eat.
When the price of bread goes up, it’s felt across the country. And a bigger concern is that one of the root causes of the Arab Spring had to do with massively increased food prices.
A concerned Fanie Brink, an independent agriculture economist, who travels on a road to Parys, says the current maize crop is non-existent where it normally has two metre high plants at this time of the year.
He says the current drought could end up worse than what was experienced in 1991/92 and an IMF/World Bank intervention is needed. – Stuart Lowman
By Fanie Brink*
“The present drought in the summer rainfall region of South Africa can easily be worse than the previous severe drought during the 1991/92 production season.
Only 3.3 million tons of maize were produced during that season on 4.2 million hectares that were planted with an average yield of 0.78 tons per hectare,” according to Fanie Brink, an independent agricultural economist.
About 4 million tons of maize had to be imported and yellow maize had to be blended with white maize for human consumption which was not very acceptable by the majority of the consumers in the country.
“I have driven from Bothaville to Pretoria last week Thursday and I haven’t seen one single maize plant along the road to Parys where normally the plants are almost two meters high this time during the season.”
A barren maize field on a road to Parys.
The production of maize under irrigation normally contributes an average of 2 million tons every season but because of the very low rainfall and the poor levels of most of the dams in the region, it is possible that a much smaller harvest can be expected.
That could bring the best estimate for the total production of maize this season down to between 3 and 4 million tons.
This is an absolute disaster for the agricultural industry and for economic growth compared to the 14,2 million and the 9,3 million tons of maize that were produced over the past two seasons respectively.
“The two biggest challenges that we are now being faced with and to which we don’t have obvious solutions are, firstly, how do we manage the problem to support the commercial maize farmers in the country to plant maize again next season, and secondly, how do we manage to import a possible shortage of at least 5 to 6 million tons next year.”
Read also: Double whammy: Drought, Rand to hurt consumers
These imports will be needed to provide maize for human and animal consumption in the country and to supply our neighbouring countries, amounting to about 9 million tons per The north western Free State and the North West Province are the largest maize-producing areas in the country and have contributed an average of 59,3% of the total production over the past two seasons.
These areas are also experiencing one of the worst droughts in many decades and the time for plantings will practically expire at the end of the month.
These areas also delivered on average 73,3% of the total white maize produced over the past two seasons. The current drought could create a shortage of white maize for human consumption next year. White maize is usually only available in limited quantities on the international market to import.
The main reason is that the major maize-producing countries in the world, such as the United States and Argentina, only produce yellow maize for animal feed and no white maize for human consumption. White maize is produced in Mexico but the possibility of imports from this source is very limited.
Read also: SA turns to Mexico for maize as drought bites output
The country has apparently only the necessary infrastructure and transport capacity to import about 2 million tons of maize and therefore it may probably be necessary to also make use of air transport in addition to rail and road transport to move the maize to the big millers in Randfontein and elsewhere in the rural areas from the Durban harbour.
“The government and the organised agriculture should approach the World Food Program of the United Nations as soon as possible to bring the extent of the drought and the fact that the current and future food supply in the entire Southern Africa is seriously threatened to their attention in order to immediately consider emergency steps that should be taken in terms of food aid to this region.
The World Bank and the International Monetary Fund should also be approached for any possible financial emergency support that can assist the farmers to reschedule their debt obligations. This problem should be addressed very urgently to support the future sustainability of food production in the country on which the entire food chain depends.
The first official estimate of the total area planted this season will only be released at the end of February and the first crop estimate at the end of March next year by the Crop Estimates Committee of the National Department of Agriculture, Forestry and Fisheries.
• Fanie Brink is an independent agricultural economist with a master’s degree in agricultural economics and has over 40 years' experience in the agricultural industry in South Africa.
He was from 1988 to 2006, a Senior Economist and Deputy General Manager, Research & Development at Grain SA and is still very involved in agriculture as an agricultural economist, adviser and mentor.
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