The South African Drought and Food Prices

<img src="drought money.jpg" alt="Drought money" width="300" height="178">

How will the SA Drought affect Food Prices?

News24 quoted Finance Minister Nhlanhla Nene as saying: “If [the drought is] long, indeed it will have serious impact on the food prices. It will have an impact on economic growth because agriculture is one of our focus areas. It would also have an impact on employment; it would have an impact on our revenues.” He also added “We are bracing ourselves for the worst”.

The drought in South Africa is threatening the agricultural sector and will also impact the production of maize, a staple food in South Africa. Rising food prices will put an even bigger burden on cash-strapped and debt-ridden consumers who are struggling to make ends meet.

Five provinces – KwaZulu Natal, Mpumalanga, North West, Limpopo and the Free State – have been declared drought disaster areas. The Minister of Agriculture, Forestry and Fisheries, Senzeni Zokwana, said: “South Africa has declining but sufficient stock levels of white maize until the end of April; yellow maize stocks will be very tight. According to the crop estimate committee, the maize production estimate declined from 14.2 million [tons] in 2013 to 9.8 million tons in 2014, 31% less.”

On 13 November 2015 News24 stated “If rain doesn’t fall in the next few weeks, the crop and livestock prospects for many commodities will be decidedly bleak, with direct and material impact on the earnings of farmers and the companies that support them, and on food price inflation.” The main commodities which are being affected are maize, wheat, sugar cane, and citrus. However, “all commodities and livestock in drought-stricken areas are affected.”

Santam agriculture manager for specialised crop insurance, Johan van den Berg, has stated that the only places where there are no problems are the Eastern and Southern Cape. The next few weeks are crucial for the maize industry as the planting takes place from mid-October to late-December.