Home » Business » Regional Maize Prices to Increase

International Grains Council quoted a maize price of US$238 per tonne last year.

THE poor maize outlook in the southern African region and the demand for the staple grain is expected to push maize prices up, but this is unlikely to affect world prices which are on a decline.

International Grains Council quoted a maize price of US$238 per tonne last year.

But prices slumped and the World Bank quoted maize prices at US$178,67 per tonne in November 2014 and US$174, 23 at the end of March 2015.

But the poor outlook in southern Africa is already having an impact on cereal markets, with South Africa recording significant price increases in February, although the rise eased in March following improved rains. Maize prices have increased by 30 percent since the beginning of the year.

These price increases are expected to mostly affect those countries that rely more on maize imports such as Namibia where relatively high price increases were already recorded in February.

However, for Zimbabwe it is cheaper to import maize at US$174,23 per tonne instead of the US$390 per tonne maize producer price quoted by government which is twice the world price.

Setting the price so high contributed to the Grain Marketing Board’s (GMB) inability to pay and actually discouraged growers, who knew that millers would be trying to import more cheaply.

According to economist John Robertson, part of the reason why Zimbabwe’s economy is struggling is that it has been using scarce money to import food that it should have grown for itself.

This year it will cost the country about US$250 million, but the growing shortages could force the price even higher.

“Over the 17 years since the land reform programme was announced, at an average of about US$150 a tonne and an average of about one million tonnes needed every year, Zimbabwe has spent more than US$2,5 billion on maize imports alone. If those imports had not been necessary, Zimbabwe could have settled its debts to the IMF, the World Bank and the Africa Development Bank,” Robertson said.

Agricultural economist Peter Gambara said that the price increases in 10 Southern African Development Community (SADC) countries may be insignificant to the world prices.

“In a normal set up, one would expect product prices to go up if there is a shortage. In South Africa, for example, the producer price firmed by 29 percent from R1970 in November 2014 to R2550 now due to the drought. However, all the SADC countries are small when considered on a world scale. The World Bank ranks South Africa as the 11th largest world producer at 11,3 million tonnes, followed by Malawi, at number 23 with a production of 3,9 million tonnes, Zambia is ranked 24th with a production of 3,3 million tonnes and Mozambique at number 30 with a production of 1,9 million tonnes.

“The dynamics of supply and demand in the SADC countries does not affect the world price, so the world prices are unlikely to move significantly from the international price of US$174,23 per tonne,” Gambara said.

Local grain prices for a 20 litre container of maize at local markets has increased to US$7,25 in markets like Nyanga and US$6,88 at Mbare Musika, although in areas like Rusape maize is being sold for US$ 4,75.

Government stocks through the GMB are very low however, plans for imports by both government and private traders will likely cover most of the cereal production gap.

The Ministry of Agriculture Mechanisation and Irrigation Development announced last week that the country would import 700 000 tonnes of maize to avert hunger after annual crop yields shrunk by nearly half due to poor rains.

Agriculture Minister Joseph Made said the country had 150 000 tonnes of maize in stock and was looking to import to make up for the shortfall.

Source : Financial Gazette