Agricultural analysts have remained optimistic that South Africa is not in a crisis, in spite of the damage to crops that occurred in February and March during the heatwave and the El Niño-induced dryness.
The Agricultural Business Chamber (Agbiz) chief economist Wandile Sihlobo on Friday said the recent drought presented upside risks to food price inflation, but not the overall basket.
“The challenge is primarily the white maize, especially considering the potentially more robust regional demand later in the year,” Sihlobo said.
“The favourable supplies of other grains in the world market, mainly yellow maize (also rice and wheat), and the moderating prices mean South Africa could be slightly cushioned in these commodities.”
According to the April 2024 Household Affordability Index, the average cost of the Household Food Basket rose by R58.38 to R5 336.31 from the previous month’s value of R5 277.93.
Nedbank Commercial Banking’s head of agriculture John Hudson said that when focusing on maize, there was a divergence in price between white and yellow maize, and the price differential would filter through into higher prices for food products related to white maize.
“On balance though the downward trend in food prices, which is currently evident, will help cushion any increases that may come through from white maize,” he said.
Hudson also said that it has been a very tricky season so far for the agricultural industry, following a good start as the full impact of El Niño was felt in mid-summer.
“Even so, the latest crop forecast, while down on last year’s excellent crop, is still well above South Africa’s domestic requirements.
“While this year’s crop is expected to be some 20% down on the 2023 crop, we must keep in mind that 2023 was an exceptional season from a yield perspective.
“It would also appear that the drop in the South African maize crop, which is down 18% on 2023, is not nearly as dramatic as the steep fall in yield in countries such as Zimbabwe and Zambia which are estimated to be down 50%.”
Meanwhile, the Absa AgriBusiness said also domestic supply was still projected to meet domestic demand, despite the challenging El Niño conditions.
Absa AgriBusiness economist Nkhensani Mashimbyi said the Crop Estimates Committee revised the forecast for white maize approximately 2% higher compared to their previous estimate in the third production forecast for summer crops.
Mashimbyi said the upward revision was a surprise, given the prevailing downbeat white production sentiments on the back of the dry and hot weather.
“Although most of the third production estimates for summer crops showed a more positive outlook compared to previous estimates, overall summer crop production is still anticipated to decrease significantly compared to last year. This is expected to provide price support over the next few months for producers,” she said.
“However, the anticipated deterioration of the white maize harvests, both in South Africa and neighbouring countries, has heightened regional demand. As South Africa is a regional exporter, this is expected to provide support for white maize prices. Consequently, prices are expected to be higher year-on-year in the second and third quarters, which are typically periods of higher maize deliveries.”
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