SOUTH AFRICA – SA may need to import as much as 5-million tonnes of maize this year, roughly half of its requirements, because of the worst drought in three decades, SA’s largest producer group said on Wednesday.

The drought in the continent’s biggest maize producer has been exacerbated by an El Niño weather pattern and follows dry spells last year that reduced the crop by a third to 9.94-million tonnes, the lowest since 2007.

“We can now, with a lot of confidence, say we are in a disaster in the maize belt,” Grain SA CEO Jannie de Villiers said.

“We will be lucky if we produce 5-million tonnes this year and then we will need to import 5-million tonnes. This is the sort of scenario that we are looking at.” That would raise practical problems about who could supply the required commodity and whether SA would be able to handle such a large volume of imports.

The South African Reserve Bank, which has been raising interest rates, has expressed concern about the effect of the drought and food price pressures on inflation in SA.

Industry estimates at this stage remain fairly rough and previous predictions were for import needs ranging from 700,000 tonnes to 4-million tonnes. But the predictions have increased the longer the drought has gone on.

The hardest-hit areas are in the northern Free State — the western part of the maize belt and a key growing area. Mr De Villiers said many farmers had not planted there yet, missing the last real opportunity.

“The insurance companies will not pay out if the crop has not been planted and germinated by the first of January,” he said. Maize in SA is generally planted in about November.

The situation in eastern part of the maize belt in Mpumalanga, which has had some rain, is not as bad, but Mr De Villiers said yields there would likely fall below average.

“How are we going to import 5-million tonnes? Because our port facilities cannot do that,” Mr De Villiers said.

Such facilities would include grain elevators to move imports and storage sites, which risk being overwhelmed. Transnet’s CEO said in December that the groundwork was being prepared to import as much as 4-million tonnes of maize.

Mr De Villiers said the other problem was sourcing white maize, the staple crop that provides much of the caloric intake for SA’s lower-income households.

Outside of Africa, the only other significant producers of the white variety are Mexico and the US. Yellow maize in SA is mostly used for animal feed.

According to the South African Grain Information Service, in the 2014-15 marketing season SA imported just 65,000 tonnes of yellow maize.

So far this season, which runs to the end of April, the country has imported 670,000 tonnes of yellow maize and 68,000 tonnes of white maize, the latter from Mexico and Zambia.

South African white maize prices doubled last year and the March white maize contract hit a record close of R4,901 a tonne on Tuesday, on drought worries.

It briefly hit a historic high of R4,952 a tonne on Wednesday on Mr De Villiers’s comments before falling 0.5% at R4,875 a tonne – Reuters

January 8, 2016;