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Grain producers are experiencing increasing financial pressure due to high input costs and low grain prices. This emerged strongly during Grain SA‘s annual congress at Nampo Park. It was also a key focus on the second day of the congress, which is traditionally marked by working group discussions on maize, winter grains, sunflower and sorghum, as well as soybeans and groundnuts.
In the maize working group, it became evident that producers’ numbers are no longer adding up; in some cases, maize production simply is not profitable anymore. The discussions therefore focused on improving input efficiency, managing costs more effectively, and stimulating market demand to absorb the surplus production. Some producers questioned whether reducing the number of hectares planted to maize might be a better approach. The challenge, however, is to maintain sufficient production for market security without causing overproduction, which is at the root of the current problem. This oversupply, combined with low international prices, is placing significant pressure on the industry.
Economic overview
The maize working group session was led by the chairperson, Will Grobler (Sannieshof), together with Dr Dirk Strydom, managing director of Nampo, and Mlibo Qotoyi, operational manager within Grain SA’s Farmer Development Programme (PGP).
Dr Strydom indicated in his market overview that there are carryover stocks of both white and yellow maize in South Africa, with a large production season ahead according to figures submitted to the National Crop Estimates Committee (CEC). Due to limited export markets for white maize, surplus white maize is often sold in the yellow maize market for animal feed purposes, increasing yellow maize exports. When viewed in combination, this amounts to nearly 4 million tons of maize that must be exported – more than the normal 3 to 3.2 million tons per season – placing considerable pressure on the market.
According to him, the current situation suggests that South Africa will likely start the next season with large carryover stocks. The country has moved from import parity to export parity prices, but prices still need to adjust further to stimulate exports. Exports are progressing slower than expected, which increases pressure. The core challenge is to accelerate exports and unlock new markets so that the market can recover over time.
Balancing prices
Dr Strydom said discussions showed that producers, under cost pressure, produce more to remain profitable, but this creates carryover stocks and keeps prices low. With low international prices and high local supply, many are currently producing at a loss.
Grain producer Janes Barnard from Hoopstad submitted a motion on the first day of the congress regarding the cost squeeze. He argued that the era of planting 100% “from corner post to corner post” is over. “In 20 years, farming techniques, technology, and new cultivars have improved so much that producers are farming themselves into bankruptcy through total overproduction of both maize and soybeans. If we continue planting blindly as we did in the past, we must prepare to trade only at export level. But where will we export to if the world is already oversupplied with grain?” he asked.
According to Dr Strydom, the working group stressed that markets must be expanded, especially for white maize, where about one million tons of additional demand is needed. He said fewer plantings could help restore balance, but it remains a difficult decision because prices must compensate for reduced plantings. “The reality is that producers will always try to produce as much as possible. This raises the question of whether more attention should not be given to stimulating demand.”
Ultimately, each producer will have to decide what makes economic sense, with market forces determining whether hectares increase or decrease. In this regard, producers used the opportunity to request the minister of agriculture, John Steenhuisen to consider ethanol plants that could increase local demand, help bring prices back into balance, and restore profitability.
Biofuels
Steenhuisen said that growing domestic demand for maize, especially for biofuels, is an important topic. The question is whether South Africa is doing enough to unlock additional domestic demand streams that could stabilise prices and reduce dependence on volatile export markets. He noted that the biofuel framework has been under discussion for a long time, but progress has been uneven. If structured correctly – fiscally responsible and market-aligned – biofuels could contribute to energy diversification, rural industrialisation, and support for maize producers. A 2022 World Wildlife Fund (WWF) report indicates that South Africa could produce 3,2 billion litres of sustainable aviation fuel annually under strict sustainability requirements.
Such a framework must be economically viable and should not create unintended distortions in the food system. Expanding domestic demand strengthens the resilience of the grain value chain, whether through agro-processing, animal feed, industrial use, or biofuels.
Japan shows interest
Steenhuisen added that Japan is showing increasing interest in South African yellow maize because of its consistently high quality. Japanese delegations visited South Africa last year, holding discussions and visiting farms and silos to observe production systems first‑hand. Another visit is planned for this year as part of efforts to further strengthen the relationship. Access to markets such as Japan is crucial, as it demonstrates that South African maize meets some of the world’s strictest food‑safety standards.
Moisture basis
Dr Strydom said moisture basis was also discussed. The key question remains at what moisture percentage maize is delivered, and at what percentage producers should be compensated. This essentially relates to weight components at the point of delivery.
There are also important logistical aspects involved, such as where and at what moisture levels producers are able to deliver. These issues played a central role in the working session.
Given that grading regulations are currently set at 14%, the question arises whether the compensation basis should also be set at 14%. – Christal-Lize Muller, Plaas Media
