Due to the ongoing drought Namibia’s dry-land maize harvest was nearly completely wiped out, with a total production of 6 100 tonnes at a yield of 0.5 tonnes per hectare.
The harvest from irrigated fields was ±32 600 tonnes at a yield of 8 tonnes per hectare. The total harvest was, therefore, in the region of 38 700 tonnes. “The shortfall had to be imported mainly from South Africa and some small volumes from Zambia. Unfortunately the quality from Zambia was very poor, due to bad storage practices, as most of the maize with that origin was contaminated with live insects,” chief executive officer (CEO) of Namib Mills Ian Collard told Farmers Forum.
Collard says the harvest in South Africa was still in the region of 11 million tonnes of white and yellow maize, which was quite high, considering the drought.
This good harvest under adverse circumstances was due to the growing contribution of irrigated production and better farming practices. The local milling industry also procured their anticipated usage very early in the harvesting season to ensure availability.
“Currently the South African maize market is trading on import parity, specifically regarding yellow maize, as the local availability is constrained. The result for the consumer was that maize became more expensive due to the shortage,” he observes.
Shortfalls on yellow maize can be easily replenished, as most of the world’s production of (970 million tonnes) is yellow maize. The availability of white maize is, however, more problematic, as only 70 million tonnes are produced globally, including southern Africa. Availability can be ensured via pre-planting contracts with producers in the United States of America, but at a higher premium.
According to Collard, the greatest concern regarding maize relates to current weather conditions in the region, factoring in the predictions by weather forecasters, El Niño and the late rains in South Africa. It does not look very rosy currently, but luckily it started raining late last week in South Africa. But Namibia is still awaiting rain.
Although current maize prices provide an incentive for producers to plant, the history of the two droughts in close succession had put a lot of producers under financial strain, which can have a downward influence on hectares planted in South Africa and Namibia. The fact that a lot of producers cannot insure against drought anymore will also affect plantings negatively.
“Taking the above into account, along with the depleted stocks on specifically white maize, there can be upward pressure on white maize [prices] should the rain not be sufficient. Pre-planting contracts will then be done with producers in the USA. This will be at higher premiums and lower quality product. The increase will actually not be very dramatic, as the region is already trading on high import parity levels. This does not take into account any major exchange rate fluctuations.”
The expected wheat harvest in Namibia is lower than in prior years due to lower plantings. The wheat harvest in South Africa is somewhat smaller due to a late seasonal dry-spell in the Western Cape. Fortunately the world stocks and expected harvest are healthy. Shortfalls can thus be easily replenished from global sources.
Prices on wheat are quite low in US$ terms, but were negatively affected by the weakness of the Namibian Dollar (NAD).
Shipping costs are also currently very competitive due to the low oil prices and the world wheat harvest is quite healthy with relatively high stock levels.
The Black Sea countries and Russia are producing more and better quality wheat every year. This is lowering prices in US$ terms. Unfortunately this advantage is not available to local consumers due to the weakening exchange rate.
“Taking the possible weather risks into account on maize, along with the natural shortage of white maize, there can be upward pressure on maize prices. This can make staple food more expensive, or initiate a move to other staple foods like wheat flour, pasta, rice, etc, “ Collard says, adding that the availability of staple foods will not be a major problem, but affordability may become problematic should it not rain sufficiently and should the Namibia Dollar weaken even more against the US$.