SA expecting its worst corn crop in 8 years, stoking food cost fears in Botswana

South Africa’s worst corn harvest in eight years is raising concerns about food costs for neighboring countries that rely on the nation for grain.
Lesotho, Namibia and Botswana will be among the countries most affected, according to Jonathan Pound, an economist at the United Nations. South Africa, the continent’s largest producer of corn, will see its harvest fall by 32 percent after a heat wave and dry weather, a report showed today.
“If you’re on lower incomes in Namibia, Botswana and Lesotho obviously it’s not good news,” Steve Wiggins, research fellow and agricultural economist at the London-based Overseas Development Institute, said by phone. “Fortunately, the number of people involved are limited in those countries.”
Wholesale costs for South African white corn, used to make a staple food known as pap, have soared 20 percent in the past month as heat and lack of rain scorched crops across the country, according to data from the UN’s Food & Agriculture Organization. Persistent dryness in key growing areas may have “disastrous” consequences for the farming industry, Grain SA, a farmers’ group said Thursday.
Farmers may reap 9.67 million metric tons of corn this season, said Rona Beukes, a spokeswoman for the Crop Estimates Committee. That compares with a 10.5 million-ton median of five estimates in a Bloomberg News survey and with 2014’s crop of 14.3 million tons, the biggest in 33 years.
White corn for delivery in July has risen 21 percent this year to 2,595 rand a ton ($225.51) on the South African Futures Exchange in Johannesburg.
Lesotho, Malawi
Lesotho will suffer the most from rising food prices because of the country’s poverty and reliance on South Africa, which completely surrounds the nation, according to Pound. Dry weather in Namibia and floods in Malawi and Mozambique mean those nations may need to buy more corn, he said.
South Africa will be able to export about 500,000 tons of white corn during the season that starts in May, Pound estimated. That’s about half the average from the past five years, data from the South African Grain Information Services show.
Ample global supplies of grain can offset the decline in South Africa’s harvest, according to Stefan Vogel, head of agricultural commodities research at Rabobank International. Corn from Ukraine is relatively inexpensive and there’s a significant global stockpile building after a bumper U.S. harvest, he said.
Food Supplies
“It might be a bit premature to speculate on food security,” Vogel said in an interview from London. “They will need to find a way to secure their supplies. The world market has enough available, it’s just a matter of getting it there and pricing.”
Global corn production will be about 992 million tons, according to data released Thursday from the International Grains Council, which cited good harvests across the European Union and U.S.
Pound said he’s waiting for crop forecasts from other countries for a better gauge of the regional effect of South Africa’s harvest. Lesotho, Malawi, Zambia and Zimbabwe are among the world’s top consumers of corn per-capita, according to the FAO.
“The general picture is overall agriculture production in southern Africa is going to come down,” Pound said in an interview from Rome. “This is likely to put upward pressure on prices.” Bloomberg.