The four grain commodity organisations, namely NAMPO, WPO, NOPO and SPO, formed a single service structure for grain producers on 10 June 1999. The new Grain Producers’ Organisation will focus on provid­ing need-directed specialist services to all grain farmers and will represent the total grain industry, with a gross annual turnover of approximately R11 billion.

Maize

Over the past four years, the market for agricultural products has changed dramatically from a strictly con­trolled environment with government intervention, to that of a minimum control market. This was mainly the re­sult of two initiatives, namely the liberalisation of the international market via the General Agreement on Tariffs and Trade (GATT) and the deregulation of the domestic market by the phasing out of marketing control boards in terms of the Marketing of Agricultural Products Act, Act No. 47 of 1996. The result was that price and production (volume) risks increased.

Total maize

In the past, producers received a relatively stable price for their maize, irrespective of geographic location. To­day, prices of maize differ from one area to another and from day to day and can fluctuate between import and export parity prices.

Maize is undoubtedly South Africa’s most important field crop, which is the staple food for the major part of the population. The average annual gross value of maize for the past five years amounts to R5 405 million. Maize is produced in most parts of South Africa. The major areas of production are, however, situated in the Free State, North West and Mpumalanga.

Maize is planted mainly between mid-October and mid-December. The rainfall pattern and other weather con­­­ditions of a particular season mainly determine the planting period as well as the length of the growing season.

Over the past five years, a swing towards the production of white maize has taken place. The present ratio of pro­­duction is 60% white and 40% yellow maize.

During the 1999/2000 season, the harvesting of maize was delayed as a result of the excessive rain having been experienced. The wet conditions also created quality problems. In most cases, the diplodia disease was re­­­­spon­sible for the quality problems. However, it appears that 70 to 80% of the total crop (white and yellow) is still going to be the best grade (grade 1).

Marketing

The maize marketing season in South Africa commences on 1 May and ends on 30 April the following year.

Since 1997, after the termination of the Maize Board, no statutory levies have been applicable and the marketing of maize is free from government intervention. All assets of the Maize Board were transferred to the Maize Trust and are to be used to the benefit of the whole maize industry.

Two direct consequences of South Africa’s exposure to the international market are the direct influence the ex­change rate has on domestic prices and the fluctuation of domestic maize prices between the import and ex­port parity prices.

World prices mainly determine a band within which domestic prices range, depending on domestic stock levels. Because of the erratic South African climate, there are substantial variations in production. The result is that local prices vary substantially from one season to the next.

During periods of shortages, the price is expected to increase towards import parity. During surpluses, as is the case this production season (1999/2000), the price is expected to move towards export parity.

Normally, the window of opportunity for exports of domestic maize lasts only until the end of October, when the US crop starts to be delivered and US exports start. However, this window may narrow in view of the anti­cipation of earlier than normal harvesting in the US.

Producers negotiate spot, contract or futures prices, based on market forces. Due to the quality problems having been experienced during the 1999/2000 production season, the Agricultural Markets Division (AMD) Mana­gement Committee of SAFEX recently decided to proceed with the introduction of constant month futures contracts on second grade white and yellow maize. This decision was taken in order to address calls from across the market to provide a mechanism for the pricing of second grade maize.

Trade balance

The maize industry is an important earner of foreign exchange for South Africa through the export of maize and maize products. The international maize market, especially the US market, has a dominant influence on local imports and exports.  

The graph below shows the imports of maize to and exports from South Africa during the past five seasons:

South Africa produced a substantial surplus of maize this season, which will be available for export. However, the voluntary maize export pool that was introduced by Grain SA (GSA) in May 2000 did not succeed in terms of the tonnage they expected to be earmarked for exports. It was hoped that, by committing about 1 million tons of maize to the pool, South Africa would equalise local supply and demand in a year when a bumper crop was evident. Not enough option contracts for maize to be delivered to the pool had been received by the cut-off date of 21 June 2000; therefore the pool managers decided not to exercise the options.

GSA subsequently decided to launch a second export programme, which would be co-ordinated by all the major SA grain co-operatives. The deadline for deliveries was the end of September and 1,8 million tons were targeted for this purpose. Transport problems were expected to be the main obstacle to get the maize out of the country. Quite a large number of buyers dishonoured their contracts this season as result of the relatively low prices and many role-players see this season as the watershed in the maize industry.

Maize tariff

The import tariff for maize is currently R67/ton. If the 21-day moving average F.O.B. price of maize in the US Gulf deviates more than US$7/ton from the reference price of US$99,95/ton, a new tariff will be triggered. The new tariff will then be calculated from the initial reference price of US$110/ton multiplied by a 21-day moving average R/$ exchange rate.

Organisations involved

• Farmers are represented by Grain South Africa (GSA), which promotes the interests of maize producers at all levels.

• Directly affected groups in the marketing of maize and maize products are represented on the Technical Advisory Forum.

• The Board of Trustees of the Maize Trust, which ensures that the income derived from the assets of the Maize Trust, is utilised for the benefit of the whole industry.

• The South African Grain Information Service (SAGIS), a section 21 Company funded by, amongst others, the maize industry, administers the information function—that is registration, records and returns.

• Research is financed with income from the Maize Trust and performed by the Agricultural Research Council, CSIR and other research organisations.

Commercial white maize

Area planted and production

The major areas of commercial production of white maize are situated in the North West (840 000 ha), Free State (750 000 ha) and Mpumalanga (270 000 ha).

Commercial white maize plantings comprised 2 223 000 ha (62%) of the total of 3,230 million ha planted to maize for the 1999/2000 production season. The increase of 9,3% in plantings of white maize, from 1,830 million ha in 1998/99 to 2 million ha for the 1999/2000 production season, can mainly be ascribed to two fac­tors. Firstly, in many cases, producers planted white maize instead of sunflower seed, following an over-pro­duc­tion of sunflower seed last season (1998/99) which caused a substantial drop in sunflower seed prices. The second factor was favourable weather conditions that prevailed for maize production.

Grade problems were experienced with white maize mainly in Mpumalanga and the Free State Province, es­peci­ally with the fast growing cultivars and where minimum tillage practices were followed. However, (ac­cor­ding to the co-operatives) approximately 68% of the total white maize crop or approximately 4,0 million tons of white maize will still be grade 1.

The white maize crop for the 1999/2000 production season was expected to be 6,155 million tons, with an ex­pected yield of 3,07 t/ha.

Plantings, production and yield of white maize from 1995/96 to 1999/2000 are as follows:

The area planted to and production of white maize are depicted in the following graph:

Consumption

The local commercial consumption requirements for white maize for 1999/2000 are approximately 4,5 million tons, of which 75% is expected to be used for human consumption.

Commercial consumption of white maize from 1995/96 to 1999/2000 is as follows:

Prices

Domestic prices fixed on the South African Futures Exchange (SAFEX) for white maize as at 25 August 2000 are as follows:

Trade balance

Local stocks of white maize at the end of April 2001 are expected to be 1,5 million tons. Exports of 600 000 tons of white maize to SADC and other African countries have already been taken into consideration to arrive at this figure. Except for between 80 000 and 100 000 tons of white maize exported to Kenya and small quan­tities to the World Food Aid Program, exports from the 1999/2000 white maize crop are in general dis­appointing. This is attributed to the premium that local white maize enjoys to US white maize, the very high level of United States white maize stocks, low demand, and local infrastructural constraints. Should prices of SA white maize once again become competitive, exports to Kenya and Tanzania are likely, which will result in lower ending stocks.

Commercial yellow maize

Area planted and production

Commercial yellow maize plantings comprised 38% or 1,227 million ha of the total of 3,230 million ha planted to maize for the 1999/2000 production season. The area planted to commercial yellow maize increased by 14,2%, from 1,075 million ha in 1998/99 to 1,227 million ha for the 1999/2000 production season.

The Free State is the main production area for yellow maize (450 000 ha), followed by Mpumalanga (330 000 ha) and North West (310 000 ha).

The yellow maize crop is expected to be 3,986 million tons, with an expected yield of 3,25 t/ha.

Plantings, production and yield of yellow maize from 1995/96 to 1999/2000 are as follows:

Consumption

Yellow maize is sold mainly (85%) for animal consumption and for use in the manufacturing of animal feeds. How­ever, during times of white maize shortages, yellow maize is sometimes mixed with white maize for human consumption. As yellow maize is mainly used as animal feed, the ratio between the price of maize and that of the animal product will, to a large extent, determine the viability of especially the intensive live­stock industry.

Commercial consumption of yellow maize from 1995/96 to 1999/2000 is as follows:

Prices

Domestic prices fixed on SAFEX for yellow maize as at 22 August 2000 are as follows:

Trade balance

Local stocks of yellow maize at the end of April 2001 are expected to be 724 000 tons. Exports of 120 000 tons of yellow maize to SADC and other African countries have already been taken into consideration to arrive at this figure.

Developing agriculture

The area planted to maize by the developing sector for 1999/2000 is estimated at 637 743 ha, consisting of 478 582 ha white maize and 159 161 ha yellow maize. This represents a decrease of 3,8% compared to the 662 683 ha planted in 1998/99. The expected production by the developing sector is estimated at 443 329 tons, 305 034 tons white maize and 138 295 tons yellow maize, which is 2,5% less compared to a total of 454 615 tons produced in 1998/99. Maize grown by this sector is mainly for own use.

Sorghum

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