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After several weeks of back-and-forth communication, the South African Cereals and Oilseeds Trade Association (SACOTA), received confirmation from the Department of Agriculture that Brazilian maize imports are now permitted. This is an important step forward in ensuring food security in South Africa this season.
Due to a decrease in local yellow maize production and an increase in maize prices, it became evident several months ago that South Africa might need to import yellow maize. On the Johannesburg Stock Exchange December traded yellow maize futures contract, prices increased from approximately R3 800 in January to R4 700 in May of this year, an increase of 19%. Local prices have since decreased somewhat due to lower international prices and a firmer Rand.
Read more about maize harvest estimates here.
Transport costs
However, in comparison, imported maize remains approximately US$15 to 20 (or R275 to R300) per tonne cheaper than local maize. This is particularly true for the Western Cape, parts of the Eastern Cape and possibly the coastal areas of KwaZulu-Natal (KZN). The price in the Western Cape could be attributed to the high transportation cost from the inland areas to the broader Cape Town area. It costs approximately the same to transport one tonne of maize from South America to Cape Town than from the local inland production areas to Cape Town. The import price advantage for the Eastern Cape and KZN is less.
The first vessel of Argentinian maize arrived at the end of April 2024. According to the National Agricultural Marketing Council Supply & Demand estimates, 383 000 tonnes of maize could be imported this season. It will, however, depend a lot on future price trends (global vs local) and also on demand from Southern African Development Community countries. Until 2 August this year, 168 000 tonnes of maize have already been imported.
Having more than one international supplier is, however, critical. As it is, Argentina is experiencing a harbour export strike. Brazilian maize also is likely to price a few dollars cheaper in the coming weeks, which could help to curb rising local prices. Ensuring that South Africa can import basic food commodities from the most cost-effective exporting countries is critical for food security in times of shortages.
Learn more about the agro-processing of maize here.
A few hurdles
South Africa cannot just import maize from anywhere. Based on local Genetically Modified Organisms (GMO) regulations, the list of cultivars approved in the exporting country must be synchronised with the local lists maintained by the Department of Agriculture. This is despite the fact that the imported maize will be transported directly from the harbour to the feed processing plants and is prohibited from being used as seed.
Synchronising inter-country lists is a complex process as GMO cultivars these days mostly consist of stacked events. Furthermore, seed developers obtain approval for single or stacked events in the exporting country, but do not necessarily release these events commercially. SACOTA therefore needs to request the multi-national seed developers to obtain confirmation that these events were not commercially released in the exporting country. – Press release, SACOTA
