COMMODITIES: Private traders scuttle SADC maize reserves procurement

Maize silos

Maize silos

Africa Bureau
HARARE, (CAJ News) FOOD reserve agencies in some Southern African countries might fail to procure their targeted volumes of the staple maize grain because of stiff competition from private traders this marketing season.

Three southern African countries comprising Malawi, Zambia and Zimbabwe face the predicament.

This is the aftermath of tight maize supplies following drought and, for Malawi and Zimbabwe, the devastating Cyclone Idai that ravaged the two countries earlier this year.

Zambia’s Food Reserve Agency (FRA) has expressed intentions to purchase only 300 000 metric tonnes of maize grain this marketing year, which is less than the typical 500 000 metric tonnes (mt).

According to Famine Early Warning Systems Network (FEWS NET), taking into consideration increased production costs, the agency increased its maize purchase price in July by nearly 50 percent from 75 Kwacha (K) per 50 kg bag (US$0,12 per kg) last year to K 110 per 50 kg bag.

“While this has been a positive development for producers, concerns remain about delays by the agency to honor payment obligations,” FEWS NET stated.

Current statistics indicate the agency had managed to purchase just over 51 000 mt, against a targeted total of 300 000 mt.

To the east of Zambia in Malawi, the state-owned Agricultural Development and Marketing Corporation (ADMARC), is facing increasing competition from private traders.

The agency began maize grain procurements in early July.

FEWS NET observed that deliveries had been low as the producer price of K150 ($0,20) per kg had been below market prices, which ranged between $0,22 and $0,34 from July.

Recent maize producer price revisions of K200 per kg might improve deliveries to ADMARC, FEWS NET stated.

Meanwhile, in the other country facing maize deficits, the government of Zimbabwe recently mandated the Grain Marketing Board (GMB) for maize marketing through implementation of statutory Instrument 145 of 2019.

“This however has not been fully enforced as some informal maize outflows to Zambia have been observed,” FEWS NET stated.

GMB is targeting purchase of close to 450 000 mt.

Just this week a total of 100 000 mt of grain had been procured after revision of the producer price ZWL 1,400 per mt ($0,16 per kg) to ZWL 2 100 per mt ($0,24 per kg).

Prices of maize, a staple grain in the Southern African region, are between 10 percent and 80 percent higher than the five-year average because of the reduced harvests.

South Africa and Zambia, the two key maize producing countries in the region the Southern African Development Community (SADC) region have seen maize harvest declines of 9 percent and 32 percent respectively compared to their respective five-year averages.

The slump in yields is attributed to droughts and the devastating sequence of cyclones that ravaged a number of countries in the region earlier this year.

While droughts are a common occurrence in the region, this year, Malawi, Mozambique and Zimbabwe suffered the double tragedy of cyclones as Idai struck with devastating consequences.

Mozambique suffered further devastation in the form of Cyclone Kenneth.

Vast tracts of farmland were destroyed when the disasters struck ahead of the harvesting season in March.

This is besides the death of hundreds of people and infrastructural damage worth of billions of dollars.

On a positive note, despite above-average opening stock levels of 4,7 million mt, Southern Africa is expected to register a minor maize surplus slightly above 100 000 mt in the 2019/20 marketing year.

South Africa’s Agricultural Business Chamber projects a potentially big maize harvest of 14 million mt- in the 2019/20 season.

The current season’s crop is 11,6 million tonnes.

The International Grains Council’s preliminary estimate for South Africa’s 2019/20 maize production is 12,8 mt.

– CAJ News

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