FAO Says Maize Prices Reach Record Levels in Several Markets? [analysis]

Tighter maize supplies and g export demand has sustained upward pressure on maize prices this year, pushing them to record levels in several markets.

In its latest ‘Crop Prospects and Food Situation’ report for March 2014, the Food and Agriculture Organisation of the United Nations (FAO) indicated that in southern Africa, tighter maize supplies and high food prices have affected access to food, mainly for vulnerable groups.

“Following several years of surplus production, lower domestic maize harvests in 2013 resulted in tighter supplies, and caused an 11% increase in the sub region’s aggregate import requirement for the 201314 marketing year (generally MayApril), estimated at about 1,37 million tonnes,” the report stated.

SA BIGGEST

South Africa is supplying nearly all maize requirements in the sub region, mainly to Zimbabwe, Botswana, Lesotho, Namibia and Swaziland, following the reduced exportable surplus in Zambia, which is the sub region’s second largest supplier.

Maize planting estimates in South Africa, which accounts for more than half of the sub-region’s output – show a moderate contraction in the 201314 cropping season, but remain above the previous five year average, while a small increase for the minor sorghum crop is estimated.

However, preliminary estimates indicate a recovery in maize production in 2014.

The FAO is, however, optimistic about southern Africa that has overall satisfactory 2014 crop conditions, but raised concerns that early dry spells are worrisome in some parts.?The harvesting of the 2014 cereal crop is expected to commence in March, with the bulk of the harvest to be completed between April and June.

NEAR NORMAL

Cumulative precipitation levels since the start of the rainy season in October 2013 have been near-normal in the main crop producing zones.

However, water deficits were recorded in some parts of South Africa, Botswana, Namibia and Angola, as well as areas in northern Mozambique, Malawia and Zambia, which delayed planting activities and impeded early crop growth, limiting potential crop yields.

Rains, however, improved as the season progressed towards the end of 2013 and into the beginning of 2014, and current conditions point to generally satisfactory crop development.

The FAO noted that although estimates are not yet available for most countries, a larger aggregate cereal crop is foreseen in 2014, compared to the below-average production of the previous year.

On Tuesday, Mihe Gaomab II, Chief Executive Officer of the Namibian Competition Commission said prices of basic foods are increasing worldwide. Food prices are expected to rise three to four percent in 2014 and will continue rising till year 2018 representing a 12% to 15% increase over a four year period. He said there are global factors at play that can have repercussions on food prices. The El Nintildeo drought impact of 2012 to 2013 withered crops in the fields.

“As a result, prices for agricultural goods and agro- processing products will tend to rise and since it usually takes several months for these commodities prices to translate to the food we buy, most of the drought’s price effect will occur in 2014 as it is happening currently in Namibia,” Gaomab said.

HIGHER PRICES

Higher prices of agricultural inputs will directly affect the cost of meat and any other animal-based product. Also hardest hit will be cereals, baked goods and other grain-based food. Gaomab said current exchange rate depreciation from around eight plus to the US Dollar in 2012 to around 10 plus in 2014 will also cause the price of imported food to increase in line with the depreciation impact of the exchange rate.

“There is therefore cold comfort that Namibians will have to dig deeper into their pockets to meet the rising prices of foodstuffs. According to data and inflation reports by Namibia Statistics Agency, food price inflation is on an increasing trend and this trend, based on forecasted data worldwide, will continue till 2018,” he said.

Source : The Namibian