Maize meal prices to rise

NAMIBIANS can expect to pay more for maize meal this year, the Namibian Agronomic Board said yesterday.

The board said yesterday that although Namibians will have access to maize meal on shelves, the switch to imports from other parts of the world and not the traditional import market South Africa will increase prices because of import parity price calculations, as well as the weakened South African rand against the US dollar.

“The real impact will be felt by consumers when they pay for their maize meal at the tills,” the board said.

The current drought has crippled most of the agricultural sector in southern Africa.

“The drought situation in South Africa and how it has impacted on production is extremely bad,” said Christof Brock, CEO of the Namibian Agronomic Board.

“We were given presentations that illustrate how badly the different production areas have been affected, and it is clear that South Africa will be importing about 1,1 million tonnes of maize to meet its own needs as well as those to whom they regularly export,” he noted.

Under normal production conditions, South Africa produces enough grain for its own needs as well as for export to neighbouring countries. Factored into the 1,1 million tonnes is what South Africa will need to meet its own consumer demand as well as the needs of countries to which it normally exports.

Namibian millers normally procure a reasonable amount of white maize from South Africa on an annual basis, while countries such as Zambia and Malawi which do not normally have to import white maize from South Africa now have no choice but to do so.

“Under the current circumstances, these sporadic importers will need to import much larger volumes than Namibian millers, and South African suppliers are faced with prioritising their supply to Namibian millers whose needs are smaller, yet whose annual patronage to South African suppliers is, consistent and loyal versus a supply of much higher volumes to countries who do not import as regularly,” he explained.

Under normal production conditions in Namibia, producers of white maize produce half of what is consumed in the country.

Of this amount, crops under irrigation and crops cultivated under rain-fed conditions contribute about 50/50 to the total maize harvest.

During a typically good year, Namibia produces an average of 65 000 tonnes. While production under irrigation is anticipated to yield slightly less because of the harsh climatic conditions, the total estimated harvest for the entire production period during the current drought is estimated at 45 000 tonnes.

This number has been recently adjusted from 37 000, and is in line with an anticipated slight increase in yield due to late rains that have led to a more optimistic outlook by rain-fed producers.

“Nevertheless, this pushes up the import requirements from 85 000 tonnes during a normal good year to 135 000 to meet current end-consumer needs,” he said.

Brock said the milling industry is confident that it will secure enough white maize from South Africa to fulfil its milling needs after the local harvest has been bought and partially milled.

“There is also a distinct possibility that some of the larger millers may import white maize directly from the world markets through the port of Walvis Bay. With these options open to the milling fraternity, there is a guarantee that there will be white maize on the shelves for end-consumers to purchase in Namibia,” he stated.

Brock said the recent fall of the rand against the US dollar adds to the increase in the cost of purchasing from world markets.

“Then there is the impact of the price formulae. Normally, South African pricing for its white maize is based on export parity; an industry-accepted pricing formula whereby producers sell their white maize at a set price per tonne to millers locally or regionally at a price that is on par with the cost of exporting their grain to foreign countries,” he said.

This cost would normally include shipping to overseas markets and transportation costs to the miller’s door.

However, under the present circumstances, South Africa, which usually exports, has had to become an importer of maize for its own consumption and for reselling to neighbouring countries, which means that they have to charge for their white maize on an import parity formulation.

The pricing calculation on the international market includes the anticipated shipping costs from the country of origin, having their grain landed at the Durban harbour and transported to the final country destination for storage, milling and packaging.

“The difference between these two calculations is substantial,” stressed Brock.

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