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May 04, 2008

South Africa will not stop grain exports to stabilise domestic prices

South Africa would not join China in curbing grain exports to cap domestic prices, as the move may discourage farmers from boosting output, Agriculture Minister Lulu Xingwana said.

“We don’t believe banning exports is going to help us in the long run,” Xingwana said in an interview in Tokyo.

SA is the world’s fifth-largest exporter of maize and Africa’s biggest producer.

Prices of maize, wheat and rice rose to records this year as countries including China, Russia, Kazakhstan, Egypt and India imposed export taxes or limited shipments to cool inflation and secure domestic supplies. SA may sell about 10% of its crop abroad this year.

The Congress of South African Trade Unions started nationwide protests last week against spiralling food and energy prices.

“The most effective way to curb food inflation is to boost production,” said Takaki Shigemoto, an analyst at commodity broker Okachi in Tokyo. “Export restrictions are not a solution to the problem.”

The price of white maize has tripled over the past three years. Restricting exports “will lower production once farmers know that they can only produce for the limited market internally and have lost markets outside”, Xingwana said.

SA would export more than 1-million tons of maize this year, mainly to southern Africa, the minister said. This was enough to meet demand in countries such as Lesotho, Botswana, Swaziland, Mozambique, Mauritius, Zimbabwe and Kenya.

“We will continue, if we have a surplus, to export to the countries where we were exporting before,” Xingwana said. “We believe in the long run the best way to stabilise food prices is to increase production,” she said.

Soaring food prices have spurred social unrest in countries such as Haiti and Egypt.

China imposed a 5% tax on maize and rice exports as well as a 20% levy on wheat from
January 1. Kazakhstan will ban wheat exports until at least September 1, it said this month. India banned rice exports in February.

Xingwana said SA would not use maize as a feedstock to produce biofuels because of food security needs. SA has set a target for biofuels to account for 2% of total fuel consumption by 2013 but has excluded maize from the plan.

Farmers group Grain SA says the policy should be scrapped because demand for maize for biofuels would bolster production of the crop.

“Corn will not be used for biofuels because we believe it is the staple food, not only for SA, but also for many countries in Africa,” Xingwana said.

Business Day

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