Maize and meat prices may soar if rain damage is severe, but it's still early days

Business Insider SA

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  • Prices for maize and meat may spike due to the rain damage to grain crops this summer, but it is too early to tell how bad the impact will be.
  • Some farmers have suffered huge losses, with at least 22% saying that more than 60% of their white maize area has been negatively affected by the heavy rains.
  • Major grain-farming regions such as the Northern Cape and Free State have been most affected.
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Recent rain damage to maize fields in some parts of the country may have a knock-on effect on prices, but it is still too early to tell.

In a recent report by Grain SA, about 22% of grain farmers in South Africa said they expect more than 60% of their white maize area to be negatively affected by excessive rain.

The report draws from a survey conducted by Grain SA assessing the extent of the damage to maize and other grains caused by excessive rain this summer. The survey polled 434 farmers across the country, some of which have already suffered large-scale losses.

If a normal season prevails, farmers expect to harvest 32% white maize in below-average conditions and 31% in an average state. They expect that 20% will be in a very poor condition.

According to the report, the Northern Cape, and western and eastern Free State were the most affected grain-growing regions.

Yellow maize has also been affected, with 14% of the farmers saying that they expect more than 60% of the yellow maize area will be affected. However, 10% said less than 20% would be damaged.   

Although the summer crops are highly affected, it is difficult to conclude whether South Africa will face a potential shortage of maize and the impact on maize prices, said Dirk Strydom, Grain SA Marketing, Nampo and Research Coordination lead said.

"It is very early and therefore difficult to say what the impact on the crop is at this point. [We] would only be able to estimate by February, with the first official crop estimate," Strydom said.

The Crop Estimates Committee of the South African Grain Information Service is expected to release its latest crop estimates for the maize industry on 27 February.

Last year, South Africa's total maize production was projected to reach 16.2 million tons in 2021 from a previous 15.3 million tons in 2020. Of the country's total production, about 11.5 million tons of maize is consumed in South Africa annually.

"It depends a lot on what will happen with [the] weather going forward and if the crops that received damage are able to [recover]. However, one can conclude that the crop will be below expectations at the time of planning and planting," he said.

However, Shereen Tromp, senior consultant at Euromonitor International, said the recent flooding events that destroyed some crops might result in a supply scarcity, which will result in rising prices.

"The recent flooding in KwaZulu-Natal and Free State and the destruction of maize crops will result in rising prices of both meat and maize meal; as yellow maize is used as animal feed and white maize is used to make maize meal," Tromp said.

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