SA will have Sufficient Maize Supplies in 2018/19 Marketing Year

I have recently discussed South Africa’s maize production dynamics, but I thought it would be good to provide an update following the recent data releases this week.

One of those data releases was the United States Department of Agriculture’s monthly update. The Department left its estimate for South Africa’s 2017/2018 maize production unchanged from the last month at 13.5 million tons.

The forecast is above the average production of about 12.5 million tonnes seen the past couple of years, however, it is lower than the previous season’s record harvest of 17.6 million tons due to a decline in area planted and expectations of average yields in some areas.

Also worth noting is that this estimate is in line with the national Crop Estimates Committee’s estimate for overall production (commercial and non-commercial). The non-commercial production, which is subsistence farming, accounts for a 6% share in the estimated harvest of 13.5 million tons.

The key message from these numbers is that South Africa’s maize market will be well supplied in the 2018/2019 marketing year (which started on 01 May 2018 and will end on 30 April 2019). With a carryover, the total maize supplies could reach 16.3 million tons, well above the local demand of 10.8 million tons. (To restate, the supplies figure includes an opening stock and the 2017/18 expected production).

This essentially means that South Africa’s 2018/2019 marketing year maize exports could, at least, amount to 2.4 million tons, down by 4% from the volume exported in 2017/2018. Most importantly, this suggests that the SAFEX maize prices could remain at relatively lower levels for some time, all else being equal.

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Maize Harvest Activity Gaining Momentum in South Africa

Maize harvest activity is gaining momentum across South Africa, thanks to favourable weather conditions. The progress is reflected in the volumes of maize delivered to commercial silos which amounted to 511 875 tons in the week ending 08 June 2016, well above the previous week’s (ending 1 June 2018) deliveries of 94 240 tons.

About 67% of this was yellow maize, with 33% being white maize. The fact that a large share of maize delivered to commercial silos is yellow shows that harvest activity is gaining ground mainly in the early planted areas in the eastern parts of the country, that predominantly produce yellow maize.

The total maize deliveries for the first six weeks of the 2018/2019 marketing year are estimated at 1.4 million tons.

More maize will be delivered in the coming weeks as the expected cool and drier weather conditions during the next two weeks could provide conditions conducive for the harvest activity, particularly in the early planted areas in the eastern and central parts of the South African maize-belt.

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Increasing the labour Intensity of South Africa’s Economy

On the 13th of June, I participated in a Roundtable discussion at the Centre for Development and Enterprise in Johannesburg under the theme “Increasing the labour intensity of South Africa’s economy”.

We had a number of great speakers covering a wide range of issues within the South African labour market environment. In the morning session (which I participated in), Professors Haroon Bhorat and Nicoli Nattrass of the University of Cape Town and Andrew Donaldson made a contribution under the question “Has policy made South Africa less labour intensive than it could have been?”

Meanwhile, Professors Jeremy Seekings and Anthony Black of the University of Cape Town, Gilad Isaacs of Wits Business School and I explored sectoral issues. The question we had to answer came down to: Why are sectors that use the most unskilled labour doing so badly in creating employment?

In an attempt to answer the question, I reflected on the South African agricultural labour market in the context of changing farm structures. Here are some of the key points I made in the closing remarks:

Can the National Development Plan’s agricultural employment targets (create close to a million jobs by 2030) be met?

  • Yes (to some extent). International experience shows that the agricultural sector can play an important role in absorbing labour and increasing labour participation.
  •  This is especially the case when taking into account the fact there is vast untapped potential land in Kwa-Zulu Natal, the Eastern Cape and Limpopo provinces.
  • The key subsector to focus on is horticulture (it is labour-intensive), and there is also a growing demand for horticultural products in the global market.
  • Overall — upskilling the current agricultural labour force to align with changing technological environment, increasing investment, research and development, and financial support (to developing farmers) are key to improving employment in the sector.

I have skipped a lot of important detail which is included in the presentation. You can access my full presentation here.

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Frost in Some North West Maize Fields

Although I am generally positive about South Africa’s 2017/2018 maize harvest, leaning on the National Crop Estimates Committee’s production estimate of 12.9 million tons, the reports of frost in parts of the North West province could lower the maize crop quality. So far, there have been reports of frost in areas around Lichtenburg, Delareyville and Sannieshof.

Harvest activity has commenced in the North West province and other provinces. One will have to closely monitor the yields and crop quality reports in the coming weeks in order to get a sense of the extent of the damage.

Overall, maize harvest activity should progress smoothly across South Africa during the next two weeks as the weather forecasts show a possibility of cool and drier weather conditions.

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Zimbabwe not a Bread Basket but it was Self-Sufficient

It is inaccurate to say that Zimbabwe was once the bread basket for Africa. Yet Zimbabwe’s President Emmerson Mnangagwa told the state-owned Herald newspaper in May that the country is “on track to regain its bread-basket status owing to the highly successful Command Agriculture Programme”.

While Mnangagwa was not clear on whether Zimbabwe was once a bread basket of Southern Africa or the entire continent, his predecessor, Robert Mugabe, often claimed continental success.

Fellow agricultural economist Sifiso Ntombela and I found in an Africa Check essay in 2017, aimed at assessing whether Zimbabwe was ever a bread basket for Africa that it was not. What we did find, however, was that Zimbabwe had been a self-sufficient food producer until its land reform programme was instituted.

In our view, a country should be able to meet its staple food consumption needs and simultaneously command a notable share in exports of the same food commodity to be considered a “bread basket”.

An examination of the production data from the UN’s Food and Agriculture Organisation of key staple foods — maize and wheat — shows that Zimbabwe’s production of these commodities never surpassed a 10% contribution to Africa’s production over the past 55 years. In the two decades prior to Mugabe’s leadership (1960–80), Zimbabwe provided an average share of 6% of Africa’s maize production — almost on par with Nigeria but lower than Kenya’s contribution of 7%. During that period, the country’s maize production outpaced consumption by an average 400,000 tonnes a year, making it a net exporter.

During the first half of Mugabe’s rule (1980-2000), the country’s maize production contributed a share of 5% to Africa’s output. While it was a net importer in most years, on average the country remained a net exporter of maize, with a declining maize trade balance. This decline, and the country’s trade balance, worsened following the introduction of Zimbabwe’s land reform programme in 2001.

The country’s share of maize production on the continent then dwindled to an average of 2%. During this period, its maize consumption outpaced production by an average of 550,000 tonnes per annum — turning it into a net importer. The trend is similar for wheat and other major grain commodities as a contribution to Africa’s food system.

Mnangagwa also boasted that “Zimbabwe kissed hunger goodbye when it embarked on Command Agriculture with the support of Sakunda Holdings”. While this might have been true for the 2016-17 production season, it might not hold in the current season.

The most recent data from the US department of agriculture suggest that Zimbabwe’s 2017-18 maize production could decline by 54% from the previous season to 1-million tonnes. This is due to expectations of lower yields in some areas following unfavourable weather conditions at the start of the season. Considering that Zimbabwe’s maize consumption is estimated at 1.8-million tonnes this season, the country could again be a net importer of maize to fulfil domestic needs.

With such statistics, it is hard to convince anyone that Zimbabwe has really “kissed hunger goodbye”.

While its government’s support programme might have contributed positively, the weather has not supported a good season.

Fortunately, South Africa could have more than 2-million tonnes of maize available for the export market, which should benefit Zimbabwe over the next months. It will once again not be a bread basket for Africa, but a net importer.

Written for and first published in the Business Day on 07 June 2018.

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A Brief History of South African Chicory Production

Having spent the past three days in Port Elizabeth, which is the nearest city to the heart of the South African chicory industry, Alexandria, I feel compelled to say a few words about its history and production.

Chicory was first introduced into South Africa for commercial use in the Alexandria area in the Eastern Cape province in 1895. Today the crop is largely spread in a number of areas within the province, such as Bathurst and Cacadu, as well as a couple of areas in KwaZulu Natal province.

While the crop currently covers many areas, the volume produced has dwindled in recent years. Between 2010 and 2017, chicory production declined from 28 300 tonnes to 6 566 tonnes due to a reduction in area planted – this is according to data obtained from the Department of Agriculture, Forestry and Fisheries.

In terms of usage, chicory is used as an ingredient for a variety of products including coffee mixtures, pure chicory drinks, chocolates, breakfast foods and pet foods. Of course, the most recognisable products are Ricoffy and Frisco. 

Oh, I should clarify, I didn’t visit the chicory fields. I spent the past couple of days in fascinating discussions about agriscience, innovation, agricultural policy, commodity markets and political economy at the Agricultural Business Chamber (Agbiz) 2018 Congress. But, I thought it would be good to mention this crop, and its significance in some of our daily products.  

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Key Things to be done for SA Agribusiness Competitiveness

Today has been interesting — away from excel spreadsheet at the office in Pretoria. I am in the great City of Port Elizabeth in the Eastern Cape, attending Agbiz 2018 Congress.

We had a number of great speakers, including Marcos Fava Neves of Sao Paolo University, Mpumelelo Mkhabela of the University of South Africa, Goolam Ballim of Standard Bank and Neal Gutterson of DowDuPont. Neves and Gutterson covered global developments on agriscience and innovation, while Mkhabela and Ballim focused on the domestic political economy.

Here are some of the points that I extracted from Mkhabela’s presentation on South Africa’s national competitiveness – in other words, key things that the country needs to do in order for its agriculture and agribusiness to be competitive:

  • Greater cooperation between government and agribusiness
  • Cooperation among partners domestically paves way for cooperation at external level – e.g. trade/investment agreements
  • Business must accept imperative to transformation as part of a national competitive strategy, not only because the law says so
  • The government must appreciate the importance of the business sector by using corporate taxes responsibly, not loot & stop casting doubt on the bona fides of South African business people because they are white
  • Private companies, farmers and State Owned Companies with unused land must give to black people who need it for productive purposes – and give them title on the land
  • On the point of land reform — move black people from the status of subjects (under traditional chiefs) to full citizenship where they can prosper
  • Our companies must be measured against the best in the world
  • Education, R&D – measure ourselves against the top in the world
  • Appreciate the national interest better. AfriForum who say bad things about the country abroad is undermining the government’s investment drive. Workers who campaign for banning of our SA agriculture exports when they are on strike undermine market share of local products.

My apologies if I summarized Mkhabela without full context, but this is a gist of what he said. For further engagement, he is on Twitter @MMkhabel

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