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Maize shortage, price spikes ‘preventable’
Grain SA CEO says SA will run out of maize as early as next month after the country’s maize surplus was exported
ANNALEIGH VALLIE Published: 2011/11/10 06:34:09 AM CONSUMERS will pay higher prices for food this Christmas because of a shortage of maize — which the Department of Agriculture, Forestry and Fisheries could have prevented.
The surge in prices will be caused by a shortage of grain feed for animals after SA’s maize surplus was exported.
Grain is an important input in most food production.
SA will run out of maize as early as next month even though it posted a surplus last year, Grain SA CEO Jannie de Villiers said yesterday. The government had yet to respond to requests for information that could have helped local businesses foresee the shortage, he said.
Mexico, South Korea and Taiwan had imported about 1,2-million tons of South African maize since May, Mr de Villiers said.
This was more than the surplus in SA’s silos and ate into supplies available to local food producers.
“They (other countries) have also bought an unknown quantity that is in our silos and is still to be exported. This unknown quantity is now causing panic among local buyers,” Mr de Villiers said. “If we knew how much was left and how much had been sold we would not be sitting with a shortage.”
The maize was exported at R1400 a ton but local prices are at R2900 ton and expected to rise above R3000 a ton within days.
Agriculture, Forestry and Fisheries Minister Tina Joemat- Pettersson yesterday acknowledged there would be pressure on the availability of maize and this would put pressure on the price of food and feed prices.
She acknowledged that the problem was due to “successful exports of maize by the private sector in recent months”, driven by her department in order to reduce the surplus and increase prices for producers.
Ms Joemat-Pettersson said the government was “aware of the tension arising between grain producers and buyers of the grain”. She was also aware this affected the affordability of food.
What SA was experiencing was a result of “market dynamics”.
An export pool had been proposed as a potential intervention, which the industry had shot down, she said. Industry stakeholders had also rejected recommendations by the National Agricultural Marketing Council to access information on import and export intentions. The issue was being revisited.
“Such information will contribute to all stakeholders having a better understanding of market dynamics over the coming months, and hence position themselves tactically without government interference in the market,” Ms Joemat-Pettersson said.
Dr John Purchase, CEO of the Agriculture Business Chamber, said yesterday that the South African Grain Information Service’s data was historically based.
“Only once the transactions are concluded do they need to be reported,” he said.
“Government is not entirely to blame as there is no current mechanism to force exporters to indicate how much grain would be leaving the country before the entire transaction is carried out.
“The industry is wary of such information, however, as we do need some uncertainty in the market. It’s hard to know where we draw the line.
“This principle is not clear in SA — where the market’s job ends and where certainty takes precedence. We need a mechanism to address the problem.”
Compounding the problem, data released by the US agriculture department yesterday showed the unusually hot, dry weather in July and freezing temperatures in September had reduced maize yields, which will soon drive international maize prices even higher.
valliea@bdfm.co.za