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December 06, 2011

Maize deficit a boon for South African farmers

by Nickolaus Bauer

South Africa's yellow maize deficit is not necessarily all that bad according to agricultural bodies, who believe it is a sign of a burgeoning industry.

In November it was reported South Africa would be experiencing a shortage of maize due to increased exports of up to 1.2-million tonnes to new markets such as Mexico, South Korea and Taiwan in the latter part of 2011.

This resulted in the country's maize surplus running dry and export demand cutting into supplies usually destined for the local market.

"By and large this is a good thing for South Africa as it shows we can export, import and grow in other markets. Hopefully it will lead to a point where farmers can stabilise the market so that the sector will grow and we can create more jobs. We will always prefer a surplus but if it is a small deficit that's also ok," Johannes Mller, Agri-SA president said.

Contrary to media reports, the deficit relates to only yellow maize which is primarily used for agricultural purposes such as the feeding of livestock, while white maize -- of which there is still a surplus -- is consumed by humans.

The maize was exported to these new markets at roughly R1400 per tonne, while local prices are pegged at around at R2900 per tonne.

"Everyone in South Africa had an opportunity to buy grain at decreased prices, but the consumers can't expect it to lie in the silos and wait for them. The agricultural sector began exporting so as to prepare for the next harvest and not waste any leftovers," Mller said.

According to AgriSA, the deficit will only be experienced for a few months, while supply and demand channels stabilise.

Mller's sentiments are echoed by the South African government, who were largely blamed for the deficit as they facilitated the setting up of exports to these new markets.

"Government can open the way for export but at the end of the day its normal market forces that dictate supply and demand and it's the agricultural companies who sold the excess. But it is a little blown out of proportion to be honest -- at the end of the day, it's good for business as farmers will end up producing more, selling more and hopefully employ more people," Deputy Minister for Agriculture Pieter Mulder said.

Mulder said that while government sympathises with consumers feeling the pinch due to rising grain prices, it is important to make sure imports rise.

"If we can get these export countries to be permanent, it will go a long way to ensure the demand for our supplies is met. We used have a lot of our exports taken by African countries like Zambia and Malawi but our neighbours are producing enough for themselves. If we are not careful our African neighbours will out-produce us and take away a share of these new markets as weather conditions and markets are sometimes more favourable," said Mulder.

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