SA, neighbours brace for El Niño’s wrath
Maize production under fire
Renée BonorchisExcessive heat and scant rains across South Africa in February have changed the outlook from positive to concerning for maize supplies at home and for neighbouring countries, according to Wandile Sihlobo, chief economist for the Agricultural Business Chamber of South Africa.
From the summer months at the end of 2023 and into January this year, the calamitous forecasts that the El Niño weather system would result in drought-like conditions across large portions of South Africa’s important crop-growing regions proved to be untrue.
That was a relief for the outlook on food prices and inflation. But in a period of just four to five weeks, that’s shifted.
“The 2023/24 summer crop season started on favourable footing. We received widespread rains, which was unusual in an El Niño season, which would typically start with drier weather conditions,” Sihlobo said.
“Those good early-season rains led us to believe the country would have a decent harvest in the 2023/24 production season. But this view has now changed. We worry about possible poor harvests.”
Decline of 13%
South Africa’s early production forecasts show the challenge.
The Crop Estimates Committee places South Africa’s 2023/24 white and yellow maize harvest at 7.0 million tonnes, down 17% from a year earlier, and 7.3 million tonnes, a drop of 8%, respectively.
This puts the overall maize production estimate at 14.3 million tonnes, which is a decline of 13% year-on-year.
The challenge for maize is the possible poor yield because of dryness in some regions, as the area plantings are higher than in the 2022/23 season, Sihlobo said.
Added to the worry is the fact that while South Africa had a barrage of drenching rains at the start of the summer crop season, other countries in southern Africa didn’t.
Zambia, the second-largest maize producer in the area after South Africa, declared a drought disaster and there are similar concerns in Botswana, Lesotho and Zimbabwe.
“Southern Africa’s maize supplies will likely be tight in the 2023/24 season,” said Sihlobo.
He added: “There will be increased pressure on South Africa to supply maize to the neighbouring countries. The issue will be white maize for human consumption in most countries.”
Inflation
Investec chief economist Annabel Bishop said the United Nations has reported that the warming El Niño weather phenomenon that peaked in December was one of the five strongest recorded to date, predicting that it would produce above-normal temperatures from now until May.
The recent extreme heat in South Africa over February, and continuing so far into March, has had some negative effect on crops, and this could see an interruption to the expected moderation in food price inflation in the first half of 2024, Bishop said. This would also negatively affect agricultural prices in the second half of the year, she said.
In the second half of this year, annual consumer inflation was expected to fall toward 4.0% year-on-year, and then dip below, coming out nearer to 3.5% by October, due also to the effects of a high base of a year ago.
But, she added: “With weather conditions, due both to the El Niño phenomenon and climate change, having a damaging effect on some crops last month and into this, looking forward food price inflation may see less of a moderation ...”
While Investec expects to see consumer inflation remain on the downward trend it begun in 2022, this doesn’t mean the inflation reading will fall every month this year, but instead, a downward trend implies that overall the momentum is lower, said Bishop.
Tight surplus
Although a maize harvest of 14.3 million tonnes is lower than the previous season, it would still meet South Africa’s annual maize consumption of roughly 12 million tonnes if it materialises and the country would remain a net exporter of maize, albeit at a much lower volume than the previous years, according to Sihlobo.
“But if the region struggles with drought, South Africa’s possible small surplus may be too tight to meet regional needs,” he said.
Further, there’s still deep uncertainty about the maize harvest size in South Africa. It’s only when the March production forecasts from the Crop Estimate Committee are released that there will be a clearer picture.
– Fin24