The expected relief in food prices, in particular maize, as reported by the president of the Botswana Millers Association Nkosi Mwaba is probably the best news ordinary folks especially those in the rural villages will get following the tumultuous events that unfolded due to the drought that gripped the region in the past two years.
Maize forms part of the integral staple diet in the average person’s life and because of that has a significant bearing on their standard of living.
This is particularly true when looking at it from the measure that is used to track changes in the overall price level as a way of determining the cost of living, which is referred to as the consumer price index (CPI).
The CPI is made up of various items which include food, transport and clothing which are accorded different weights in the basket based on the impact they exert on a consumer’s spending pattern.
In its analysis the local economic think thank E-consult says that when looking at the different weights in the basket the share of food spending is higher in rural villages than it is in cities and towns whereas the share of transport is higher in cities and towns than it is in rural villages.
In other words, a large part of income in villages is spent on food more than anything else.
“Expenditures are higher for bread and cereals, in particular maize meal,” it says. “This partly reflects the fact that rural areas are poorer than urban areas; elsewhere in this Review, we note that relative food expenditures decline with income, while relative transport expenditures rise with income,” it explains.
Given the expectation that maize prices will decline it may as a result lift a certain part of the burden on folks at the rural villages as spending less on maize products will stretch the income and thus be able to spend it on other equally important things.
According to Mwaba, the outlook for 2017 is much more positive with the continuing rains making it possible for a surplus maize crop as projected by South Africa.
This is in contrast to the unfortunate circumstance that plagued the region in 2015 when the worst drought was experienced since 1992.
Botswana, said Mwaba, was forced to divert its usual import route from South Africa to as far away as Mexico and United States so as to make up for the maize shortfall.
The extent of Botswana’s reliance on South Africa in meeting its grain needs is quite significant. Mwaba cites that Botswana millers import up to 95 percent of its grain from South Africa.
“Although there was no shortage of maize, the imported grain came at a price. The cost of importation as well as the weakening Rand at the time saw SAFEX prices soar up to R5 000 per ton. This resulted in local maize prices going up over 30 percent during the course of 2016,” said Mwaba.
However, he said that the maize price was expected to drop to P2 400 per ton when the new season crop becomes available which is expected between May and July.
He said to that regard that change is already seen as observed by relief on maize pricing but however the more evident change will be seen when the new crop is in the market.
“In the event of a surplus, we may see excess white maize being shifted to animal feed. Botswana will receive its full supply of maize from South Africa in this scenario. Botswana consumes just over 100 000 tons of maize per annum,” said Mwaba.
The only threat to the season’s harvest, Mwaba said, is the infestation of what is suspected to be the fall army worm which is reported to be rampant in Zimbabwe, Zambia and Malawi and has reportedly made its way into South Africa as reported in the Limpopo, Free State and North West areas.
He observed that it was difficult to determine the extent of the anticipated damage at this stage but if it did cause harm this could affect the SA maize exports as well as the pricing.
The good rains could possibly reverse the negative growth which was observed in the Agricultural sector which E-consult cites contracted by 1.3 percent in the third quarter of 2016. A positive change in the sector is by extension a positive impact to the ordinary folks’ lives.