South Africa must open up grain market
DURBAN – South African maize farmers are going to suffer as long as there are only limited markets for the country’s grain and maize prices lie below the costs of production, an industry official said yesterday.
South Africa, the continent’s largest producer of maize, this year expects to harvest the largest crop since the record 14,42 million tonnes crop reaped in the 1981-82 season, which is seen affecting maize prices in Africa’s biggest economy.
Jane McPherson, manager of farmer development of industry group Grain SA, said low prices and higher input costs would hurt farmers’ ability to service debts and re-invest.
“We need to be able to expand our market for grains,” she told an Agribusiness Investment Summit in Durban.
“The farmers cannot afford to borrow because the price of producing is too high,” she said.
The Solidarity union last week warned of a maize crisis, which could lead to farmers losing their farms if production of maize is not reduced drastically.
South Africa expects to produce 13,094 million tonnes of maize from the 2009-10 crop, the government’s Crop Estimates Committee (CEC) said last week. South Africans consume between eight and nine million tonnes of the staple each year.
“We need to look at protection from dumping, we need to look at biofuels, so we can expand our markets,” McPherson said.
South African farmers want the government to allow the use of maize in biofuels production in order to ease energy costs and help make cultivation profitable.
The government unveiled blending ratios for biofuels years ago but said maize, South Africa’s staple food, could not be used in the production of biofuels in order to ensure food security and keep a lid on high prices.
South Africa has secured foreign markets to sell surplus maize of about four million tonnes in this season to safeguard maize prices, but McPherson said this would not suffice, and there were also infrastructure constraints to exports.
“We can’t export it [surplus maize] because our railways cannot handle it,” she said.
Analysts have said lack of appropriate infrastructure, limited cross-border railways and high logistics costs are some of the main challenges hampering investment in the sector and partnerships between the private and public sector are needed to open up transport corridors across Africa. – Nampa-Reuters