Prediction-busting maize outlook comes as balm to inflation-weary consumers

As the summer planting season is fast drawing to a close, a preliminary forecast suggests that 2021’s harvest will be more than sufficient to satisfy domestic demand, despite the heavy rainfall across parts of SA’s main maize-growing regions that has been classified as a national disaster.

This year’s expected commercial maize plantings of 2.6-million hectares represented a cumulative decrease of 5.3% in area planted compared with the previous year, but it was still slightly more than the five-year average of 2.5-million hectares, a forecast by the crop estimates committee of the department of agriculture, forestry & fisheries shows.

“Now that we have the plantings data, the discussion is likely to shift to yields,” said Wandile Sihlobo, chief economist at the Agricultural Business Chamber of SA.

Last year SA produced 16.2-million tonnes of maize, representing an average yield of about 5.89 tonnes per hectare (t/ha). 

It was SA’s second-largest maize harvest yet, slightly trailing the record of 16.8-million tonnes harvested in 2017.

Sihlobo said that in the past 10 years maize yields averaged just more than 5t/ha. The 2014/2015 production season produced one of the lowest yields of 3.75t/ha for maize as this was a drought year. It was unclear what the yields will be in the 2021/2022 production season, but he said that various industry surveys suggest that several areas such as the western regions of the Free State, the North West, and parts of the KwaZulu-Natal and the Eastern Cape, which received heavy flooding, could realise lower yields than the previous season. 

Too early

SA farmers will have to achieve an average national yield of 4.5t/ha to produce sufficient maize supplies for domestic consumption, Sihlobo said. “Such a yield estimate is possible given that the floods that caused the damage were not a nationwide challenge but [restricted to] certain regions of some provinces,” he said.

Dirk Strydom, head of marketing at Grain SA, would not comment on the organisation’s expectations regarding maize yields for the 2021/2022 season, saying that it is too early to provide an accurate estimate. “We know that many farmers suffered crop damage due to the rain and in some cases there have been 100% losses. The true effect of the damage will become clear [in] about March,” he said.

The crop estimates committee will publish its first yield estimate for the 2021/2022 summer grain season at end-February.

Out of about 11-million tonnes of maize needed to meet local demand, about 5-million tonnes is for human consumption that is mostly supplied by white maize. The balance is for animal feed, mostly supplied by yellow maize, said Sifiso Ntombela, chief economist of the National Agricultural Marketing Council.

“It is early in the season and a lot can still change, but for now it looks as if a crop of in the region of 12-million-14-million tonnes is possible,” Ntombela said.

Positive balance

Export volumes for the year will depend on how the harvest is spread between white and yellow maize, he said. In 2020 SA exported about 2.6-million tonnes of maize valued at R9.2bn, but on average the country exports about 2.3-million tonnes.

According to Ntombela growing demand for animal feed could lead to a decline in export volume, however early indications suggested that SA would be able to maintain a positive trade balance for maize.

This would help keep price increases for maize meal in check. Maize is an important food staple for many South Africans and its affordability is supported by the country’s self-sufficiency in production.

According to Hester Vermeulen, manager of consumer analysis at the Bureau for Food and Agricultural Policy (BFAP), in most provinces maize meal accounted for 5%-9% of total household food expenditure. In Limpopo, households spend about 16% of their food budget on maize meal. Per capita annual maize consumption has increased from 50kg in 2016 to about 55kg, said Vermeulen.

Stats SA’s consumer price index (CPI) for December 2021 showed that inflation on food and nonalcoholic beverages came in at 5.5%. This followed a steady increase from 5.4% in January 2021 to a peak of 6.9% in August 2021. The main contributors to food inflation were oils and fats (20.8%), meat (8.6%) and dairy and eggs (5.3%). The bread and cereals category showed a far more conservative increase of 1.2%.

However, Sihlobo said that the International Grains Council and the US department of agriculture forecast 2021/2022 global maize production to amount to 1.2-billion tonnes, up 7% year-on-year, which bodes well for a sideways to slight downward price trend across the coming months. 

Based on the significant share of breads and cereals in the CPI expenditure basket, this could play a role in inflation across the coming months.

During the last week of January, the SA maize price was about R3,765/t. At the time the import parity price for maize from the US was R6,085/t and for maize from Argentina it was R5,663/t.

erasmusd@businesslive.co.za