Agricultural, commodity prices to remain high in 2012

Grain products had increased by as much as 13.4 percent, while maize went up by up to 60 percent since March last year. White maize is now fetching around R2 680 a ton and yellow maize just over R2 600 a ton.

Ernst Janovsky, agribusiness head at Absa Business Bank, told IOL that most issues plaguing the sector last year were likely to remain prevalent this year, as not much had been done to improve infrastructure and transport costs. "To some extent we will experience the same problems as last year," he said. In 2012, South Africa will go from being an exporter to an importer of grain, but Janovsky downplayed the significance of a grain shortage, maintaining there was still enough grain in the silos. The only downside would be that consumers would have to pay more as farmers held on to their stocks, waiting for the next price increase, he said.

Agriculture also faced challenges that had to be managed, such as market risk, which included price, storage and production risk, Janovsky said, adding that oil price increases and exchange rates were uncontrollable factors, as well. He cautioned that South African farmers faced over 60 percent of price exposure to the outside world. This scenario would oblige farmers to become players in the global market, which resulted in little control over pricing levels. Other factors which influenced prices, and over which farmers had no control, included international production trends, farming subsidies, and import and export tariffs, Janovsky said.

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