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JEREMY MAGGS: South Africa’s summer grains crop is under strain as the El Niño weather pattern intensifies. So what long-term impact is this going to have on the sector? We turn our attention now to Wandile Sihlobo, who’s the chief economist of the Agricultural Business Chamber of South Africa (Agbiz). Wandile, a very warm welcome to you. So what is that impact going to be, do you think?
WANDILE SIHLOBO: What we are worried about, Jeremy, at this point is the impact of El Niño. We’ve been on this weather cycle since the start of the season from around about October. But unlike in other periods, it started off seemingly different and with favourable rainfall across the region to an extent that farmers planted their typical area across the region.
It was only at the beginning of February when reality hit home, and it was clear that we are in El Niño.
It is dry and crops are struggling across the region, Zimbabwe, Zambia, as well as the BNLS countries (Botswana, Namibia, Lesotho and Eswatini) and here at home. These are some of the aspects that are top of mind at the moment.
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JEREMY MAGGS: We knew that it was coming. Surely the maize industry would’ve factored that risk into its planning.
WANDILE SIHLOBO: We knew, Jeremy, that it was coming, but what the weather forecast signalled at the time was that it may only start to be dry from around about end of February. But the reality ended up being that a month earlier than that, the dryness hit home and, of course, farmers themselves, they really also don’t have much leeway in here because the majority of the grain production in Southern Africa is rain fed. So you really hope that it does rain and this time around the forecast told us that, look, we may be able to get good rains for much of the season. The reality was that it is only now where we are caught up with this and the financial losses for many of the regions, they seemed like they would be fairly large. So that’s the difficulty at the moment.
JEREMY MAGGS: Is there a quantifiable impact on maize production right now?
WANDILE SIHLOBO: We are dealing with a moving target right now, but what I can say is in South Africa, the survey that was done at the end of February showed that the harvest may be down about 13% year-on-year, with the overall grain production of about 17.4 million tonnes.
Now, looking at that in perspective, it signalled that South Africa was still going to be fairly fine in maize supplies and the soybean. But the reality is that that survey was completed somewhere around about mid-January and since then and its publication, we haven’t received any rainfall, which means that the crop condition has probably deteriorated worse.
We will have another update at the end of this month, which I think will give us a better picture in South Africa.
In Zimbabwe, for example, there is a quantifiable figure because the government tells us there that they need to import around about a million tonnes of maize in order to meet their domestic needs. We know that in Zimbabwe, they usually need about two million tonnes or so to meet their annual consumption. So that means half of their annual maize needs is imported.
In Zambia, we know that a million hectares of maize has also been disrupted, which is also about half of the area that they usually plant. So those are the numbers we’re sitting with in as far as the scale at this moment. But I think what is important here, Jeremy, is to emphasise that Zambia, South Africa and Zimbabwe are some of the region’s largest maize producers. So if you have constrained supplies there, then the entire region has a problem at hand.
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JEREMY MAGGS: Is it too soon to start worrying about food security?
WANDILE SIHLOBO: I do think that for countries in the region, particularly Zimbabwe, we should be worried about food security because we already know from numbers that are coming from there that they’re saying roughly 2.7 million Zimbabweans are at risk of hunger. In Zambia, we are hearing concerns of similar like that and as well as within the BNLS countries and Madagascar. These are some of the things that we should be worried about.
But what we don’t know as yet is the scale of this challenge, about how large it will be. But if you are in South Africa, I still think that you are sitting in reasonably better conditions than many people in the region because where the major threat in South Africa is in is not on the entire agriculture per se, but rather on white maize supplies because we know that all of our vegetables and our fruit are produced under irrigation. The dam levels are healthy, the guys are able to produce on that.
In the east of South Africa, yellow maize, soybeans, yes, they’re not in the best shape that farmers would like, but still the crop in some regions we would be able to harvest something. But I think within the region, given that they also plant different varieties of crops than what we plant in South Africa, they’re probably more hard hit than us.
JEREMY MAGGS: Is it too soon as well to start talking about a restriction on exports?
WANDILE SIHLOBO: I think, Jeremy, there are a couple of things that the policymakers need to consider now, the regional governments, when they’re looking at this, I would say about four perhaps policy considerations. The first one would be to your point, I would advise against the restrictions on exports or putting a price cap on maize prices because in the near term, all of that looks ideal in saying we are protecting the consumer, we’re not going to export what we have, we’re going to cap the price of a commodity or maize.
But the challenge with that is that it constrains the farmers’ incomes and their preparedness for planting for the next season. We almost have to lean on what South Africans usually say, which they say the cure for higher prices is higher prices because any upside on a price will actually incentivise for the next season or when the rain finally comes that the farmers can plant more.
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The other issue to consider is that the region is dependent on imports when it comes to fertilisers, agrochemicals, and seeds. So if you cap the price or you restrict the exports, which then by way dampens profitability of the farmers, that again means that you are putting them in bad shape.
What perhaps maybe should be considered, as my second point, will be that the governments that have fiscal space, maybe they should do something on supporting the households and also talk with outside organisations, as my third point, like the World Food Programme (WFP) to say, can they assist them in importing some of the maize from the world market.
I think that may apply mainly to the likes of Zimbabwe and some of the BNLS countries that may not have fiscal space so that the World Food Programme can assist them on that. It will also be useful to engage white maize producers like Mexico so that when they start with their planting at the end of April, they can know that there’s going to be this demand in Southern Africa, and they have to cater for that because white maze is not as widely available in the world as yellow maize.
JEREMY MAGGS: Wandile Sihlobo, thank you very much indeed.
