Limited supplies, biofuel demand push maize prices up

17 Sep 2007

Increased global demand for biofuel has pushed up the already buoyant price of maize in South Africa, forcing aid agencies to procure food from elsewhere to feed an expected more than six million food-insecure people in southern Africa.

After a second consecutive poor maize harvest in South Africa, which usually meets food shortfalls in the region, prices have been high, according to the latest USAID-funded Famine Early Warning Systems Network (FEWS-NET). Demand-driven world prices, especially in the USA, where maize is increasingly used to produce ethanol, have also pushed up prices in South Africa, and is expected to keep them high for the rest of the year.

In dollar value, the price of white maize has shot up by 186% in the last two years: from US$89 per metric tonne (mt) in May 2005 to $254 per mt in August this year, according to Phumzile Mdladla, who heads FEWS-NET's Southern Africa office. "But demand for biofuel is not the only reason for the increase, it is a combination of factors: the drought last season, high fuel prices and an increase in demand."

The high prices of maize, the region's staple food, come at a time when the size of the food-insecure population in Southern Africa has almost doubled, from 3.1 million in 2006 to approximately 6.1 million in 2007.

Until March 2008, 401,200 people in Lesotho are expected to face food shortages, 407,000 in Swaziland, and up to 4.1 million in Zimbabwe, according to FEWS-NET. The number of food-insecure people in Mozambique is expected to rise to 660,000 during the lean season between December 2007 and January 2008.

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