Johannesburg - South Africa faces its best maize harvest in three years this year, but high input costs may force farmers
to reduce plantings for next season.
Despite relatively high local maize prices compared to last year and growing demand for the crop within southern Africa and abroad, agriculture experts say soaring input costs may erode many of the gains made by South African maize farmers this year.
"When we look at grains in general, I think fertiliser has gone up by an average of about a hundred percent," Lourie Bosman, president of farmers' body AgriSA said.
"Fuel for farmers has more than doubled and if you talk of herbicides and pesticides we're looking at (an increase of) between 40% to 60%."
Prices of electricity and water have also soared and analysts say the ballooning cost of production may see farmers, in what is Africa's biggest producer of maize, planting less when the 2008/2009 planting season begins in November.
Hopes had been high that an expected spike in production this year would encourage farmers to plant more.
The government's crop estimates committee last month forecast this season's maize output at 11.6m tonnes, much higher than last season's 7.125m tonnes, and significantly more than the country's annual consumption of about 8m tonnes.
"With a situation like that and prices always likely to go up, you would normally expect farmers to be smiling, but that isn't the case," a Johannesburg grain trader said.
"The increase in costs definitely erodes the benefits from prices and higher output."
Knock-on effects
The farmers' woes may trickle down and affect the whole economy, particularly the government's ability to keep food affordable and the central bank's attempts to lower inflation.
The SA Reserve Bank has battled to keep inflation, which is hovering at 11.6%, within a target band of between 3% to 6% and its efforts this year have been made even more difficult by rising food prices triggered by a global supply crunch.
"Food price inflation accelerated from 16.9% in May to 18.2% in June, mainly as a result of significant increases in the prices of grain products... " the SARB said in its monetary policy statement last week.
The food price situation would worsen considerably should farmers decide to plant less of the staple maize crop in the coming season, analysts warned.
But with little assistance forthcoming from the government, which scrapped subsidies to farmers during the apartheid era, the options for local farmers may be very limited.
"What we're trying to get from (the government) at the moment is a safety net to subsidise insurance schemes for input costs, so that the farmers can cover their input costs if there is a disaster, for example," Bosman said.
"Without things like that, there is a very real possibility that we may see a reduction in the (crop) area next season."
- Reuters