Food security remains a topical issue in many African countries, where maize is, by and large, the staple food. Kenya remains a net importer of maize, following a harsh drought in the 2016/17 production season. The thin resources available in Malawi, Zambia and Zimbabwe remain stretched as drought and fall armyworms threaten the 2017/18 maize production season. South Africa also started the 2017/18 production season on a bad footing, as I highlighted in this column the difficulties brought by extreme dryness in the western sections of the Free State and North West provinces at the beginning of the year - Wandile Sihlobo, Agbiz economist
*The article first appeared on Business Day on 15 February 2018
Food security remains a topical issue in many African countries, where maize is, by and large, the staple food. Kenya remains a net importer of maize, following a harsh drought in the 2016/17 production season. The thin resources available in Malawi, Zambia and Zimbabwe remain stretched as drought and fall armyworms threaten the 2017/18 maize production season. South Africa also started the 2017/18 production season on a bad footing, as I highlighted in this column the difficulties brought by extreme dryness in the western sections of the Free State and North West provinces at the beginning of the year.
Fortunately, the summer crop conditions in South Africa have since improved, albeit, marginally, thanks to the recent rainfall. In the week ending on 6 February 2018, World Weather Inc. released its assessment on South Africa’s soil moisture. The data showed that recent rainfall in the summer crop producing regions helped to slightly improve soil moisture, which bodes well for summer grains and oilseeds.
Moreover, the South African Weather Service, in its recent Seasonal Climate Watch, indicated that the summer crop growing areas of the country could experience a weak La Niña between February and April 2018. This means there are prospects of above-average rainfall from now into early autumn. This could support crops in areas that managed to plant on time, from the current stages of development up to pollination. This essentially increases a possibility of fairly good yields in grains and oilseeds.
While South Africa’s summer grain and oilseed production is expected to decline this season, some international observers are fairly positive about the country’s crop performance this season. For major grains such as maize, the United States Department of Agriculture (USDA) recently reiterated its view of South Africa’s 2017/18 production. The agency left its maize production estimate unchanged from January 2018, at 12.5 million tonnes (down from 17.5 million tonnes in 2016/17 production season). This includes both commercial and non-commercial maize production. The Agricultural Business Chamber sees South Africa’s 2017/18 commercial maize production at 11.2 million tonnes. Overall, the official estimates from the National Crop Estimates Committee will be released on February 27.
Also worth noting is that a harvest of between 11.2 and 12.5 million tonnes of maize is well above the annual consumption of 10.5 million tonnes. Furthermore, there will also be a large carryover stock of roughly 4.2 million tonnes of maize from the 2017/18 marketing year. This will boost the supplies in the 2018/19 marketing year which starts on 1 May 2018. These developments suggest that the South African maize market could be well supplied in the 2018/19 marketing year.
From a consumer’s food security point of view, this is a welcome development as it implies that maize prices could possibly remain affordable for some time. On 13 February, the white maize spot price was about 36% lower than the corresponding period in 2017, trading at about R1814 a tonne. The key risk that could potentially overturn this bearish maize price trend is the developments in the regional African countries. From 2017 to early 2018, South Africa experienced weak demand for white maize in its traditional markets in the continent because of large domestic supplies in many countries. Given that supplies are now slightly depleted as many countries near the end of their marketing seasons, if the new season crops fail or decline significantly, then African markets will invariably look to South Africa for additional supplies. On the downside, such scenario would potentially change the maize price dynamics and have notable effects on the food inflation path. However, on the upside, elevated maize prices will be a positive for maize farmers, many of which are still recovering from several seasons of drought.
Above all, there is no immediate concern, but over the coming months, the weather developments will be the key factor to watch locally and in regional African countries as weather will have notable implications on the staple food prices and the agricultural sector in the near to medium term.
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