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Natural resources and energy
Special
41
November 2016
Tiger Brands, Pioneer Foods and Premier Foods mill approximately
60% of the nation’s white maize crop. Their brands, which include
Ace, White Star and Iwisa super maize meal – all genetically modified
– constitute over 73% of the maize meal market.
So, national food security does not automatically translate to food
security for households. However, increases in maize prices do
translate into more pressure on food security for poor households.
For the past ten years, the Pietermaritzburg Agency for Commu-
nity Social Action (PACSA) has tracked the cost of a basic food
basket for low income families in Pietermaritzburg, KwaZulu-Natal.
In August 2016, for a family of seven, a nutritionally complete
food basket would cost R4 325,24 per month. But few people can
afford this, and therefore in reality, most people can only afford a
nutritionally incomplete ‘PACSA Food Basket’ which cost R1 942,42
in August 2016.
It means that low-income households are underspending on
nutritious, albeit still very basic food, by 55% – with serious implica-
tions for their health and wellbeing. This food basket had increased
with R318,67 (19,6%) from R1 623,75 in August 2015 to R1 942,42 in
August 2016.
PACSA stresses that ‘Maize meal is a core driver of food inflation
in the PACSA food basket, contributing around 12%. Along with
the overall increase in cost of the PACSA Food Basket, maize meal
(25 kg) is also at its highest levels year-on-year, with a 25 kg bag
costing R233,82 – this is 39,6% (R66,35) more than it was a year ago
(R167,46)’.
The price of maize meal is important because low-income house-
holds secure the starches (the bulk foods) before nutritionally rich
foods such as protein, calcium and vegetables. Any significant in-
crease in maize meal means less money is available to buy foods
essential for dietary diversity and therefore negatively impacts on
the health status of families. But such an increase in the price of
maize is exactly what agricultural researchers are expecting.
The Mpumalanga Highveld is one of South Africa’s most impor-
tant maize producing areas, so the scale of the threat to agricul-
ture from mining is a crucial food security question. According to
the Centre for Environmental Rights’
Zero Hour
report, ‘By 2014,
61,3% of the surface area of Mpumalanga fell under prospecting and
mining right applications’ and ‘if mining continues at its current
rate, around 12% of the country’s total high potential arable land
will be transformed’.
In its pilot research project in the fertile Delmas, Ogies and Leandra
districts in 2012, the Bureau for Food and Agriculture (BFAP) calcu-
lated that in their pilot area, current coal mining activities lead to a
loss of 284 844 tons of maize per year, with a further 162 736 tons
from areas being prospected for coal mining.
BFAP calculated that the removal of this volume of maize could
lead to a 14% rise in maize prices. ‘The impact on households would
be devastating,’ says PACSA food security researcher Ms Julie
Smith. If the potential loss of maize growing land is extended to
the whole of Mpumalanga, it is possible that around 240 000 ha of
high potential land will be lost to maize farming in Mpumalanga, im-
plying a loss of 1,2 million tons of maize to the South African mar-
ket. This is enough to permanently change South Africa into a maize
importing country.
‘The maize grown on Mpumalanga’s high potential agricultural
soils protects the country’s food security in years of drought. In a
wet year, Mpumalanga produces around 22% of the harvest. In dry
years, its contribution rises to 54% because it is more resilient in
the face of drought. Therefore, Mpumalanga’s maize production
plays a stabilising role in South Africa’s maize price,’ explains Belfast
veterinary Mr Koos Pretorius.
And because of climate change, drought years in the central and
western parts of the country where most maize is produced, are
set to increase. Pretorius explains that three factors determine the
price of maize: The global maize price set at the Chicago Board of
Trade, the local supply (the harvest), and the exchange rate.
When South Africa produces a surplus harvest, the South African
price of maize is the Chicago price minus the cost (transport) of
exporting the maize into the world market. It therefore remains
cheaper than the international price.
However, if there is a shortfall in the production of South African
maize – as there is in 2016 because of the drought – the price is the
Chicago price plus the cost of importing. When the rand weakens,
the cost of imports goes up further.
In 2012, this difference was huge – around R1 100/ton between
the export parity price of ±R2 200/ton and the import parity price
of ±R3 200/ton to R3 400/ton. ‘Farm gate’ prices are responsible
for about half the increase in the price of the most popular ‘super
maize meal’.
The other costs include transport, storage, milling and the vol-
ume lost by refining the raw maize. A steadily weakening currency
steadily inflates to the import parity price.
This year’s drought has led to predictions of a food crisis with
‘dire consequences for the poor’, agricultural economist Mr Nick
Vink warned in January 2016. He predicted a total maize crop of
4 700 000 tons, ‘less than half of the industry’s average of some
11 500 000 tons per year for 2011 to 2015 and of the average con-
sumption of 9 600 000 tons per year over the same period’, with
limited carry-over stocks from the previous year.
How coal mining
threatens food security
Grain SA/Sasol photo competition