The reports of a potential La Niña event during the coming summer months presents mixed fortunes for Southern and East Africa’s agriculture. For parts of East Africa, the La Niña weather event typically correlates with below-average rainfall in the months between December and February, while Southern Africa experiences wetter conditions over the same period. What makes this concerning for East Africa is that this is a period just before the start of the summer grains planting, which occurs in February of each year. Therefore, a La Niña event would raise the risk of yet another poor agricultural harvest for countries in this region.
In the 2019/20 season, major grain-producing and consuming countries in East Africa, especially Kenya and Ethiopia, had mixed fortunes. The United States Department of Agriculture (USDA) estimated Kenya’s 2019/20 maize production at 3.4 million tonnes, down by 11% y/y on the back of unfavourable weather conditions at the start of the season. With Kenya’s annual maize consumption at about 4.8 million tonnes, it implies that the country could require imports of about 1.4 million tonnes within the 2020/21 marketing year, which is still underway. This was a second consecutive season of large maize imports, as the previous season’s imports amounted to 900 000 tonnes. The prospects of a La Niña event means that Kenya could remain a net importer of maize for a third consecutive year.
By comparison, however, Ethiopia might have a fairly good maize season in 2019/20, despite the constant threat of locust invasions. The country’s 2019/20 maize production is estimated at a record of 8.6 million tonnes, up by just 1% y/y, according to data from the USDA. This will be sufficient to cover domestic annual consumption needs. Other countries in the region such as Tanzania and Uganda are projected to have roughly balanced supplies for the year. The challenge, however, could be in the upcoming 2020/21 production season.
With Southern Africa experiencing inverse weather conditions to East Africa, as previously noted, forecasts appear somewhat positive. The Australian Bureau of Meteorology’s increased the probability of La Niña to 70% — roughly three times the normal likelihood – which could lead to increased moisture and potentially higher yields in the 2020/21 production season (see Exhibit 1).
Already in the 2019/20 production season, South Africa and Zambia had bumper harvests in major crops and various horticultural produce. These countries collectively have surpluses of over two million tonnes of maize, which are sufficient to offset maize shortfalls across both Southern and East African countries in the 2020/21 marketing year, primarily for Kenya and Zimbabwe.
Aside from the climatic conditions, there are two additional risk factors for East and Southern Africa’s agricultural sector. First, desert locust swarms still pose a serious threat in Ethiopia, Kenya, Somalia, South Sudan and Sudan, and could stall the agricultural recovery if not effectively controlled. At the end of August 2020, aerial control operations using biopesticides were underway across East Africa. The progress of these control operations over the coming months will be critical determinants of the success of the next season which begins in February 2021. The weather will also have an impact on the locust spread.
Second, the COVID-19 pandemic remains a major risk for agriculture in several countries, specifically the impact of containment measures amongst smallholder farmers and informal markets, which thrive on the movement of people. With an exception of South Africa, the official numbers of the COVID-19 infections remain relatively low in some African countries. It is unclear whether the infections will remain under control in the coming months or if there is going to be a second wave, as we have witnessed in various countries.
In the event of a renewed surge in infections, especially during the planting period, which is from October in Southern Africa and from February in East Africa, there could be disruptions to field activities. Disruptions could emanate from government regulations and containment measures, such as lockdowns and other strict social distancing measures.
With highly mechanized farm sectors are likely to be less affected by containment measures, South Africa appears to be the only country in Southern and Eastern Africa with significant parts of the agricultural economy with a level of mechanization that might not be disrupted by social distancing regulations. This implies that agricultural sectors across the region are at a higher risk. The same is true for informal agriculture and food markets, which are occupy a dominant share in various African countries.
Ultimately, climate and pandemic risks could weigh on agricultural output and farm profitability in the 2020/21 season, and in turn the livelihoods of those who are directly and indirectly dependent on the sector. That said, the climate and the prognosis of the pandemic in the coming months remain highly uncertain. Therefore, these risks warrant close monitoring in the weeks and months ahead.
Exhibit 1: La Niña prospects
Source: Australian Bureau of Meteorology
Note: My good friend, Dr Tinashe Kapuya, contributed to this Morning Note. Dr Kapuya is an agricultural economist and currently leads Value Chain analytics division at the Bureau for Food and Agricultural Policy (BFAP).
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This essay first appeared on Business Day, August 13, 2020
Tempus fugit (time flies) is an apt phrase to describe developments in the global agricultural market. It feels like just the other day when I wrote an update note on global grain conditions following the release of the monthly world agricultural supply and demand estimates report from the US department of agriculture. On August 12, the department released its update for August, which made minor yet mixed adjustments from the previous month’s estimates.
In a positive development for these uncertain times, the 2020/2021 global maize production estimate was lifted 1% to 1.17-billion tonnes from the July estimate, which is also 5% higher than 2019/2020 production. The upward revisions were mainly on the US and Ukraine’s maize production estimates. In the case of Ukraine there is a consensus in the market that the heatwave that raised concerns in the past few months might have caused lower-than-expected damage, hence the level of optimism about the harvest.
However, there are doubts about the size of the US maize harvest as traders believe the unfavourable weather conditions of the past few weeks might have caused damage to the crop. This is something we will keep an eye on, and the US department of agriculture numbers for October should account for such potential damage. Be that as it may, my sense looking at all the recent data releases — from the US and the International Grains Council (IGC) — is that the world will have abundant maize supplies in the 2020/2021 season.
This, of course, is a northern hemisphere story. The southern hemisphere’s maize plantings will only start around October, but the medium-term weather forecasts point to a potentially good season, which is also supportive of the optimistic view coming out of the US.
Moreover, the US has lifted its estimate for 2020/2021 global soybean production by 2% from July’s estimate to 370-million tonnes — a 10% annual uptick.
This is supported by prospects of a large crop in the US and South America. Brazil has made large shipments to China in recent months, which should incentivise farmers to increase plantings in the 2020/2021 season to serve ever-growing Chinese demand. This projection is supported by solid growth in feed demand as China recovers from African swine fever and expands its poultry industry.
On the negative side, in terms of wheat, the US department of agriculture has trimmed its estimate for 2020/2021 global production by 0.4% from July to 766-million tonnes. The downward revision was mainly to the EU’s estimate, which is unsurprising as that region has experienced dryness in the past couple of weeks. Nevertheless, this is 0.3% higher than the previous season’s record global wheat production. This also underscores the aforementioned optimism around global grain supplies.
This is comforting news for countries, such as SA, that are dependent on imports. SA imports roughly half its annual wheat consumption. Increased production means global prices could soften or remain flat, which is beneficial to local consumers. Most importantly, this also means the key wheat-producing countries won’t need to restrict exports during the pandemic, as they attempted to do at the start of the year.
The 2020/2021 global rice production estimate was also cut by 1% from July’s estimate to 500-million tonnes, primarily on the back of expected lower yields in parts of the US, Thailand and Vietnam. The current estimate, however, is still something to celebrate; it is up 1% from the 2019/2020 season and promises to boost rice stock levels.
Similar to wheat, South Africans take a keen interest in the global rice production conditions as the country is a net importer to augment domestic consumption. The IGC currently estimates SA’s 2020 rice imports to be 1.10-million tonnes, up 10% year on year. Hence a forecast year of relatively large global rice supplies bodes well for importers such as SA.
It also signals that there won’t be a need for protectionist policies by major producers, even in the case of the rice trade — earlier in the year, Vietnam and Cambodia were among the countries that were jittery and attempted to place protectionist trade policies on rice, which were later reversed.
In a nutshell, the US department of agriculture revisions in August 2020 were mixed with downward revisions in some crops and upward in others. But the big picture is that all expected harvests will be larger than the 2019/2020 season, which means the world will be awash with grains. This should keep global food price inflation in check in the medium term.
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The global grains environment has changed somewhat from the optimistic picture of a few weeks ago. The increased dryness in parts of Europe and the US is weighing on global crop production, specifically maize and wheat, and this has raised the prospects for downward revision of yields estimates. The United States Department of Agriculture (USDA) was the first of major institutions at the start of this month to lower its estimates for US maize and wheat production. This was followed by the EU’s production estimates, primarily on the back of concerns about yield prospects.
To zoom into the details, the downward revision of US maize production resulted in a 2% decline in the 2020/21 global maize production from June estimates to 1.16 billion tonnes. Nevertheless, this is still 4% higher than the previous season, supported by expected large production in South America, Europe and parts of Asia.
The crop is currently at its growing stages in the northern hemisphere which means the weather is an important factor to monitor in the coming weeks and months since it will continue to influence crop conditions. In the southern hemisphere, however, the 2020/21 maize season’s planting will only begin around October.
The long-term weather forecasts, specifically for South Africa, generally look favourable which supports the view for a possible, good crop even in southern hemisphere countries that are yet to plant the 2020/21 crop. Here at home, the focus is currently on the 2019/20 maize crop which is still at harvest stages. For example, in the week of 17 July 2020, about 52% of the expected commercial harvest of 15.5 million tonnes had already been delivered to commercial silos across South Africa.
In terms of wheat, the USDA forecasts the 2020/21 global wheat harvest at 769 million tonnes, which is marginally lower than the previous month’s estimate because of the aforementioned weather challenges in parts of EU and the US. This, however, is still 1% higher than the previous season.
SA stands to benefit
Wheat-importing countries like South Africa stand to benefit from large global supplies. South Africa imports roughly 50% of its annual wheat consumption. In the 2019/20 marketing year, which ends on 30 September, imports are estimated at 1.8 million tonnes. About 85% of this has already landed in the South African shores. The import volume requirements for the 2020/21 marketing year which starts on the first of October 2020, will be clearer once we have a reliable estimate of the size of the harvest of the crop which is currently underway. It is this marketing year that consumers will benefit from both cost and availability perspective from the expected decent global wheat harvest.
Other major grains that are worth monitoring, but were not affected by the recent downward revisions on the back of weather concerns, are rice and soybeans. In the case of rice, the USDA has maintained its production forecast at a record 502 million tonnes, up 1% y/y on the back of an expected large crop in Asia. Under this production estimate, global rice stocks could also lift by 2% y/y to 185 million tonnes. This would add bearish pressure on prices and, in turn, be beneficial to import countries like South Africa, which is set to import 1.1 million tonnes in 2020 (up 10% y/y).
The 2020/21 global soybean production was also left roughly unchanged from last month at 363 million tonnes, which is up 8% y/y. This is on the back of an expected recovery in production in the US, Argentina, Brazil and Paraguay, amongst others.
Influence on prices
Positively for consumers, the influence of these large global grains supplies is starting to reflect on prices which have somewhat softened over the past couple of weeks compared to last year. This is evident on the FAO global grains index which averaged 86.6 points in June, down by 2% y/y.
In a nutshell, the dryness in parts of Europe and the US is increasingly becoming a concern and has led to a downward revision of crop prospects. But this was fortunately compensated by expected large harvests in other regions, hence on balance, the expected harvest is still higher than the 2019/20 production season with prices somewhat softening as a result of this expected harvest. With that said, the weather conditions for the coming months in Europe, the US and other major grains producing regions are crucial as that will influence the size of the crop the world end up with in 2020/21 production season.
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In the second week of July 2020, the Economic Transformation Committee of the African National Congress (ANC) and Business for South Africa (B4SA), released their respective strategy documents for the post-COVID-19 inclusive economy recovery for South Africa. Both the ANC and B4SA prioritized the agriculture sector, for its transformative potential and aligned their strategies with chapter six of the National Development Plan (NDP), which reflects the commitment of both the government and private sector to the larger development agenda of South Africa.
Both plans highlight that poor infrastructure – both in the former homeland regions and in general logistics to move the produce to the ports and processing plants – is a constraint that needs urgent action; that improving agricultural finance is critical to unlocking the sector’s growth, particularly through the Land Bank; and that strengthening agriculture value chains is critical for fostering inclusive growth.
However, these ideas on how to strengthen the agriculture sector are not new. They first entered the policy arena in 2012. But in the subsequent eight years, little was done on the implementation front. Covid-19 presents an opportunity to change the narrative by focusing on why implementation has lagged and how it can become more effective.
The lack of implementation of agricultural government policy and infrastructure-related constraints are down to three broad reasons. First, weak coordination and misalignment of functions and priorities between different government departments and different spheres of government. Second, a misallocation of the budget by the national and provincial governments. And finally, poor coordination between the government and private sector, which has led to a misalignment of transformation programs, incentives and in some cases, vision.
To solve these challenges, the task largely lies on the government through its various Sector Master Plans to continue working with the private sector and civil society to address the aforementioned challenges. Agricultural growth and job creation will be stimulated through the development of under-utilised land, especially in former homeland areas and underperforming land reform farms (about 400K jobs); the expansion of export-led high growth areas (250K jobs); and investment in agro-processing with integrated up-and downstream linkages (350K jobs).
Additionally, the ANC’s strategy has highlighted the importance of collaboration, by noting that the state should mobilise development partners, including the World Bank, the African Development Bank, the private sector and impact funders to contribute towards developing a thriving rural economy centred on agriculture. This has become more important than ever. The 2015 Development Committee paper ‘Billions to Trillions: Transforming Development Finance,’ highlighted that the Sustainable Development Goals marked a shift from needing billions of dollars in official development assistance, to needing trillions. While the largest supply of development resources remained domestic public spending, the greatest area for expansion was unlocking the transformative potential of the private sector.
There is evidence that partnerships between the private sector and government have, in some cases, piloted successful programmes to drive transformation. Some of these include projects of the Sernick Group, the Humansdorp Co-op and the Mohair Trust, amongst others.
Three common themes run throughout these programmes: first, public-private-partnership structured finance, to help meet development goals; second, supporting market linkages to help agriculture play its part in creating a more inclusive South Africa and third, upgrading skills and technology through farmer training and the adoption of technology in production practices.
The task ahead, particularly the agriculture and agro-processing Master Plans, should focus on upscaling and replicating these strategic partnerships in various value chains across the country. As we have previously argued, incentives for agro-processing could be in a form of tax incentives for various agricultural hubs which will be determined by the type of agricultural activity. For agricultural production, the selection of the value chains to prioritise should follow the NDP’s view of higher growth and labour-intensive value chains, such as horticulture. In regions where this is not possible, livestock and field crops remain key subsectors for agriculture expansion.
Points of deviation
The one important point of deviation between the ANC and B4SA is land reform, which is central to actualizing agricultural expansion. To create more policy certainty for the private sector, B4SA advocated for strengthened property rights and the extension of secure tenure or tradable leases in government land to attract investment, and by extension, stimulate long-term growth. Meanwhile, the ANC, in its efforts to reduce inequality and promote equitable land distribution, advocated that the state should release land to individuals but is not clear on whether on tradable leases or another form of tenure rights will be afforded to the holders and occupiers of these land parcels. The ANC also advocated to acquire land for redistribution, the programme to expropriate land in line with the existing legal and constitutional prescripts should be continued. To further accelerate land redistribution consideration should also be given to the taxation of unused land. A position which was not shared by B4SA.
Overall, the ANC and B4SA agricultural development plans have more areas of alignment than a diversion. However, focusing on implementation, rather than just ideas, is crucial to creating inclusive growth and delivering a million jobs envisaged in the NDP. Given the current fiscal constraints, development in the sector will be private-sector driven as acknowledged by both the ANC and B4SA, but the private sector involvement will require clear policy guidance on land reform and more assurance on property rights. The release of the land the ANC argued for, will need to be on long-term tradable leases so that investment could flow, particularly in areas with better infrastructure.
 ANC,” Reconstruction, Growth and Transformation: Building A New, Inclusive Economy”, June 9, 2020. Available: https://www.scribd.com/document/468680698/ETC-Document-FINAL-8-July-2020#from_embed
 B4SA, “A New Inclusive Economic Future for South Africa: Delivering an Accelerated Economic Recovery Strategy”, June 10, 2020. Available: https://www.businessforsa.org/wp-content/uploads/2020/07/B4SA-A-New-Inclusive-Economic-Future-for-South-Africa-Presentation-10-July-Final.pdf
 NDP, “An integrated and Inclusive Rural Economy”, August 15, 2020. Available: https://www.nationalplanningcommission.org.za/assets/Documents/NDP_Chapters/devplan_ch6_0.pdf
 These appeared in the NDP, chapter six in 2012.
 This is generally a view carried in Chapter six of the NDP. Available here: https://www.nationalplanningcommission.org.za/assets/Documents/NDP_Chapters/devplan_ch6_0.pdf
 For more information, here is a full document: http://pubdocs.worldbank.org/en/622841485963735448/DC2015-0002-E-FinancingforDevelopment.pdf
 I have previously narrated The Co-op work in this article: https://www.news24.com/fin24/opinion/wandile-sihlobo-a-sleeping-giant-the-eastern-cape-20191005
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The high-frequency data on both domestic and global markets reinforced our view that grain prices could be under pressure this year and that, in turn, could lead to subdued food price inflation. In June 2020, the International Grains Council (IGC) lifted its estimate for 2020/21 global maize production from last monthly estimate to 1.2 billion tonnes, which is the largest harvest on record, and up 5% from the previous season. The downward swing in global maize prices saw a 21% y/y decline by 25 June 2020, with prices trading around US$162 per ton. Low global maize prices are likely going to remain the theme for the rest of the year.
The season is underway in the northern hemisphere, with the crop in most countries reportedly in good condition. Meanwhile, in the southern hemisphere, the 2020/21 production season will start around October 2020. The focus is still on the 2019/20 season, with the harvest process in full swing in all major southern hemisphere maize producing countries such as South Africa, Brazil and Argentina. What’s more, all these countries are forecast to obtain large harvests which will improve supplies, ahead of another expected good 2020/21 season starting in October, as previously noted. In the case of South Africa, the maize harvest is estimated at 15.5 million tonnes, which is the second-largest harvest on record and well above the annual domestic consumption of about 11 million tonnes. This not only means domestic maize prices could be under pressure in the coming months, but also that exports could also increase which is positive in boosting the agricultural trade balance.
In terms of wheat, the IGC lifted its 2020/21 production estimate further from 766 million tonnes last month to a new record of 768 million tonnes. This is underpinned by the anticipated largest harvest in Russia, Canada, Australia, Argentina, China and India, amongst others. While some European countries reported dryness last month, the weather conditions have now improved somewhat, specifically in the Black Sea region, which is conducive for the crop. As a consequence of the expected improvement in production, the 2020/21 global wheat stocks could increase by 6% y/y to 290 million tonnes. This means that global wheat production could be under pressure in the coming months. On 25 June 2020, the global wheat price was down 8% y/y, at US$212 per tonne (I’m using here the US Hard Red Winter wheat).
Wheat importing countries such as South Africa stand to benefit from such an optimistic outlook, more so, because South Africa’s 2020/21 season might lead to yet another small crop because of a potential reduction in area planted. Plantings are set to fall by 8% y/y to 495 000 hectares, mainly due to a decline in an area in the Free State. This means that South Africa will continue to have a large dependence on imports, about 50% of annual consumption.
In the case of rice, the 2020/21 global production was revised down marginally from 507 million tonnes last month to 505 million tonnes, which is still a record harvest. This is boosted by an expected large crop in India, Vietnam, Thailand, Indonesia and Bangladesh, amongst others. The anticipated large production could subsequently lead to a 2% y/y increase in global rice stocks to 180 million tonnes. Similar to the aforementioned commodities, rice prices could also ease in the coming month. Global rice prices harvest already come off higher levels observed in April where there were prospects of trade restrictions and a higher degree of uncertainty about the 2020/21 season harvest. South Africa, as a rice importing country, stands to benefit from this positive outlook. The IGC currently forecasts South Africa’s 2020 rice imports at 1.1 million tonnes, up by 10% y/y.
Soybean is another important crop for global food security, as a key input in animal feed. The IGC forecasts 2020/21 global soybeans production at a new peak of 364 million tonnes, which is up 8% y/y. This is supported by expected large harvests in the US, Argentina and Brazil, amongst others. This expected uptick in production could lead to a 3% y/y increase in stocks to 45 million tonnes. This means, the global soybeans prices could also be under pressure in the coming months, but this could be eased by a rapid push to rebuild the Chinese pig industry, which has been devastated by the African Swine Fever. We doubt that might be the case though. From a South African perspective, the country stands to benefit as it imports around half a million tonnes of soybean oilcake (meal). On average, 97% of soybean meal originated from Argentina over the past 10-years.
These positive global grain and oilseed prospects support our view that food price inflation could be subdued this year, hovering around 4% y/y (from an average of 3.1% y/y in 2019). The key upside risk within the food price inflation basket will mainly be meat, in part, because of base effects and a possible uptick in poultry prices following the recent increase in import tariffs. Overall, however, grains, and also fruit prices could offset the potential increases in inflation and keep the headline number at lower levels.
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This essay first appeared on Fin24, June 15, 2020
The South African agriculture sector has the potential to be amongst the sectors that will drive economic growth and job creation during the post-COVID-19 recovery phrase. The path to realise this growth does not need new policies.
The South African government should rather, recast its vision of agricultural development using chapter six of the National Development Plan (NDP) as a point of departure. The NDP proposed a three-tier approach for agriculture and agro-processing to reach its fullest potential of creating one million jobs by 2030, namely the development of underutilized land especially in former homeland areas and failed land reform farms (approximately 400 thousand jobs), the expansion of export-led high growth areas (approx. 250 thousand jobs) and the investment on agro-processing with integrated up-and downstream linkages (approx. 350 thousand jobs). But what will need to be done differently post the pandemic is the realization that the broad vision should be followed up with detailed operational plans to guide the officials and various stakeholders at the local level.
The Department of Agriculture, Land Reform and Rural Development is currently drafting the sector Master Plan, along with private sector players. Such a plan should prioritize high-value job-creating sub-sectors, and not only focus on areas where agriculture sector is established at the commercial level, rather in new areas that still have untapped potential. Such areas involve the former homeland regions of South Africa, government land and also underperforming land reform farms. The Master Plan should map these areas, along with potential agricultural activities which could be promoted. Another crucial step will be to understand why agricultural development has lagged over the past two decades in such regions while in the commercial agriculture areas the output has more than doubled since 1994.
There are several reasons which explain this disparity in fortunes, the major ones being lower levels of investment in agriculture and lack of infrastructure. With respect to investment, poor land governance, both in the former homelands and some underutilized land reform farms, have been the key impediments. With regard to the lack of infrastructure, the problem has been compounded by poor service delivery in various local municipalities, especially those in former homelands towns of South Africa.
Given these structural challenges, the Master Plan will have to lucidly articulate ways and means to increase investment, as well as the improvement or capacitation of local governance. In the case of investment, agriculture is a long-term economic activity with relatively modest returns. Given this reality, the South African government will have to clarify its long-term view on land reform policy, not only for areas that are already farming commercially but also for the former homelands, where investment and commercial agriculture is set to make the most impact.
A renewed drive on the prioritization of joint venture models between the private sector and the government is now critical in bringing about development. The private sector will not only bring a “know-how” to the state but also a capital investment. South Africa already has examples of such development programme from which to build on. These include, but not limited to, Sernick Group in the beef sector in the Free State and the Humansdorp Co-op in the Eastern Cape, which focuses on field crops and horticulture. Both companies have partnered with government and communities for the developed black farming businesses.
The Master Plans should reflect on such examples of successful programmes and further innovate and develop institutions which effectively drive and sustain development. Moreover, this post-COVID-19 agriculture development plan should also encompass the agro-processing side as that will add to job creation and development in various rural towns. On this particular point, private sector investment should also be encouraged. Therefore, the agriculture and agro-processing Mast Plan should also reflect on strategic incentives for firms to expand agro-processing in various towns which were not predominantly agricultural. This might be in the form of tax incentives for various agricultural hubs which will be determined by the type of agricultural activity. In areas where weather conditions permit, the government should encourage the expansion of horticulture production as this subsector has higher labour absorption multipliers than other subsectors of agriculture, in addition to also having a higher value.
All these ideas aren’t new. There is no need to re-invent the wheel. Rather, the focus should be on understanding why there have been low levels of policy implementation over the past two decades. Addressing the stumbling blocks to development (i.e. investment and infrastructure) and focusing on effective implementation are the key ingredients of a successful post-COVID19 agricultural sector.
Given that the private sector’s role might have been less pronounced in the past, the tight fiscal position that the South African government is currently in demands a need for external funding to drive development and agriculture. This means for the better part, agricultural development in a post-COVID19 will require deeper and greater participation of the private sector. However, effective private sector participation demands that government provides greater levels of policy certainty, especially land reform. The government will have to take an investment friendlier approach, which is still anchored in development. The private-public-partnership approach is one such model, and there are a number of case studies that can be used to draw lessons.
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This essay first appeared on Business Day, June 9, 2020
Some countries in the Southern and East Africa regions will again need large imports of maize in the 2020/2021 marketing year, which ends in April 2021. However, their saviours won’t be your typical major global producers such as Ukraine, the US or Brazil. Rather it is most likely to be SA and Zambia waiting in the wings.
In Southern Africa, the recent data released by Zimbabwe’s department of lands & agriculture placed its 2019/2020 maize harvest at 907,628 tonnes, up 17% from the previous season. Nevertheless, this is below Zimbabwe’s 10-year average maize production of 1.1-million tonnes and annual domestic consumption needs of between 1.9-million and 2-million tonnes. The 2019/2020 production season corresponds with the 2020/2021 marketing year, which means Zimbabwe will still need to import about 1-million tonnes of maize to fulfil domestic needs in the 2020/2021 marketing year.
Meanwhile, in East Africa, the International Grains Council forecasts Kenya’s 2019/2020 maize harvest at 3.4-million tonnes. This is roughly unchanged from the previous season, though there have been good rains over the past few weeks in the grain-producing regions of the country. With Kenya’s annual maize consumption at about 4.7-million tonnes, the aforementioned production estimate means the country could require imports of about 1.3-million tonnes in the 2020/2021 marketing year.
Unlike the other seasons, where African countries would look outside the continent for maize supplies in seasons of deficiency, SA and Zambia could emerge as key maize suppliers. Both countries are expecting their second-largest maize harvests on record for the 2019/2020 production season. In the case of SA, the expected harvest is 15.6-million tonnes, against domestic consumption of about 11-million tonnes. In the case of Zambia, the 2019/2020 maize harvest is estimated at 3.4-million tonnes against domestic maize consumption of 2.2-million tonnes.
This means SA could have at least 2.7-million tonnes of maize for export markets in the 2020/2021 season, which is 89% up year on year. Meanwhile, Zambia could have 1-million tonnes of maize exports, up from 100,000 tonnes the previous year. This would be the third year on record that Zambia would be able to export as much as 1-million tonnes of maize.
Other key maize producing and consuming countries in the Southern and East Africa regions, such as Malawi and Tanzania, will most likely have balanced supplies for their domestic markets and therefore limited room for exports. Hence our focus is on Kenya and Zimbabwe. Also, worth noting is that SA and Zambia are among the most prominent suppliers of maize to Zimbabwe and Kenya and featured among the top five maize suppliers to both countries in 2019, according to data from Trade Map.
Biosecurity policy is always an important consideration when it comes to African markets. To this end, SA has in the past experienced phytosanitary barriers because of its use of genetically modified maize seeds, which account for about 80% of its output. But this time around things will be different. Zimbabwe lifted its ban on genetically modified maize imports from January 31 as the country tried to improve local supplies after a poor harvest in the 2018/2019 season.
With the harvest of the 2019/2020 season also likely to be relatively low, this policy decision will help ease maize imports into Zimbabwe in the coming months. In the case of Kenya, however, there is still a ban on the importation of genetically modified maize. This might limit SA’s participation in Kenya, while Zambia, which produces non-genetically modified maize, might become a prominent player in the Kenyan market. SA’s importance is likely to be concentrated in the Zimbabwean market, but the bottom line is that SA and Zambia will be key sources of maize imports for the southern and East Africa regions within the 2020/2021 season.
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