Maize in short supply and dear

2012-01-23 00:00

SOUTH Africa is in danger of running out of maize by April.

And as the price for the country’s staple escalates and exports continue, so basic food prices including those of eggs, chicken and milk, could rise.

“Maize is one commodity that has a huge knock-on effect,” said Frank Winder, managing-director for Advanced Nutrients South Africa. “It is used in so many foodstuffs and is also used as feed for livestock, affecting the price of common food products such as chicken and eggs.”

He said the country was likely to run out of maize by the end of April.

While Winder warned that consumers “should expect that they will have to make adjustment and spend a large percentage on food”, Grain SA’s Neels Ferreira ruled out any risk to food security.

“While the situation is tight, we will not run out of maize in the immediate future and hence there is no risk to food security,” Ferreira said.

The maize price has shown an increase of over 60 % since March last year and forecasts predict a shortfall of between 200 000 and 500 000 tons this year.

Winder said the majority of maize is being exported to honour futures contracts made last year, reportedly at R1 400 a ton. Local consumers are paying roughly R2 600 a ton, around double the price of one year ago. The price, said Winder, is expected to cross the R3 000 thresholds within days.

The Democratic Alliance has meanwhile called the plan to export maize short-sighted.

Agriculture, Forestry and Fisheries shadow minister Lourie Bosman said dramatic price increases would be devastating for the poor.

“The government must take the lead in implementing a fair mechanism that requires grain exporters to indicate how much grain will leave the country before the transaction is carried out,” said Bosman.

“We must not undermine the livelihoods of farmers and farm workers, but we cannot allow people to go hungry either.”

The futures contracts were made a year ago, when many farmers were sitting with a surplus of a million tons that had depressed maize prices and was threatening to bring many farmers into financial ruin.

Farmers lobbied the government to assist in exporting the surplus. This was achieved.

Agriculture Minister Tina Joemat-Pettersson noted in April last year that the government had drained a surplus that could have damaged the industry.

But it seems this plan has worked too well, as the country is now reportedly facing shortages.

Already, yellow maize is being imported into the Western Cape.

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