'Irresponsible' SA maize export may drain local silos

Gina Schoeman, an economist at Absa Group Ltd, said that millers, chicken producers and cattle breeders are facing a surge in costs and food inflation may quicken to as much as 15 percent from 11.1 percent in November. Five maize-meal brands sold for an average of R31.77 per 5kg bag yesterday at a Shoprite shop in Sandton, Johannesburg. About 39 percent of South African households live on less than US$52 a month, according to government data.

"It is clear now that exports were done irresponsibly," Chris Schutte, chief executive officer of Pretoria-based Astral Foods Ltd., the nation's second-biggest chicken producer, told Business Week. The price increases "will hit that section of the market that can afford it the least [...] Does it make sense for a country where maize is the basic foodstuff to export it at 1,400 rand a ton and buy it back at 2,800 rand a ton?" Schutte asked. South Africa grapples with the gap between rich and poor. It is the most unequal of 67 countries assessed by the World Bank and one-fourth of South Africans are jobless.

In November 2011, maize inventories plunged 40 percent from a year earlier, South African Grain Information Service (Sagis) said. "There will be very little maize left in silos come April 30," said Christo Booyens, assistant general manager for Senwes Ltd., SA's biggest grain-storage company. "Ideally you want about six weeks' stocks to ensure smooth supplies to millers." According to Jannie de Villiers, CEO at Grain SA, the country will need to import 700,000 tons of maize between January and July. White maize makes up half of producers' feed expenses, which in turn comprise 30 percent of input costs, said Dave Ford, chairman of the Red Meat Industry Forum, adding - "[t]he next six months will be tough."

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