Possible impact of recent rainfall on maize production, food prices

19 Jan 2017

Good rains have fallen since October 2016 up until now and more are expected to fall during the course of the year as predicted by South African Weather Service. This has without a doubt brought back production of agricultural crops especially in grain areas around the country.

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Maize production in the current season (which ends in April) is estimated to reach more than 12 million tonnes compared to the 7.5 million tonnes production output of the previous season. If the rainfall continues and grain production improves as predicted, we are likely to see a drop in food prices probably in the third quarter of 2017. This will bring some relief to consumers.

Red meat

However, on the red meat side, things are highly likely to be different. The drought which is still continuing in some part the country has unfortunately almost destroyed the country’s livestock farming sector. Due to the drought scores, of cattle and sheep died and there was nothing farmers could do in some areas. Others were forced to slaughter to prevent their animals from dying on their own. In 2016, more than 15,000 cattle per week were being slaughtered, however, that did not bring much change for meat prices as they stayed relatively flat.

This year farmers will cut down significantly on the slaughtering for two reasons: one being that there isn’t much to slaughter, and two due to the fact that farmers are now focusing on rebuilding their herds which might take up to three years. What this means is that local meat supply will be significantly less than normal. Meat imports might be necessary to meet local demand. This, unfortunately, will push up red meat prices substantially in 2017 and even beyond until the local red meat supply improves.

Improvement for poultry industry expected despite challenges

Interestingly, despite all the current challenges it faces, the poultry industry is expected to make some improvement in 2017. This is on the back of the fact that maize prices are expected to drop as outputs improve in the 206/17 season. Maize is a critical factor for production in the poultry industry as it is used to feed chickens.

Essentially, what this means is that the costs of production in the poultry industry are likely to fall in 2017 driven by the prospect of lower maize prices. This will certainly improve productivity in the industry which will, in turn, lead to a drop in chicken meat prices as the supply increases. However, this will also depend, to a great extent, on how competitive the local producers are against other producers, especially those from the EU and the USA.