Production dynamics
Farmers feed the nation with domestic and even imported produce. Farmers always remind people that they are the ones who cultivate the food that people eat. They are right because people buy their produce – farmers are indeed bread winners. The strategic importance of domestic farmers stems from the possibility that foreign laws and practices may prevent exports of certain products for some reasons. Therefore, local production becomes a guarantee of food supplies during such times. Foreign policies during times of emergencies put priorities to their population. This was seen during the outbreak of COVID-19. The vibrancy and resilience of South Africa’s domestic production cushioned the impact. In this opinion piece I am picking up on grain farmers. Grain farmers have seen it all, benefited from higher prices during years of bumper crops and lately suffered from higher inputs prices when grain prices are moderating.
South Africa produces enough maize for domestic consumption and export significant volume. The country has produced an astounding volume of maize during the past three or four years. Luckily for the maize farmers in South Africa, the favourable volumes of produce happened amid higher maize prices caused by a period of drought in some of the world’s leading producers of maize. Lower volumes (reduced world stock levels) coming from the drought affected countries had an impact on prices. It is important to note that almost all the maize that go through silos in South Africa is produced by commercial farmers with small volumes coming from smallholder farmers. With that said, there is a maize market that is vibrant with maize that do not go through the commercial silos. This maize in the Eastern Cape for example gets sold through different sizes of packaging. The areas producing maize that does not go through commercial silos seem to be growing and the market in the rural towns of these rural provinces are now starting to show that something is happening on the market side.
Maize market observations
The demand for maize in the rural towns of the Eastern Cape seem to be high and the domestic supply seem to be also increasing in the recent past. By the domestic supply I am referring to maize that originates with within the boundaries of some of the local municipalities. In the early 1990s to about 2017 almost all maize sold in the stores of town like Idutywa, Gcuwa, Ngqamakhwe, Gatayane and Xhora originated from Elliot, Ugie and Maclear predominantly. That has changed, a reasonable amount of maize now comes from these areas and the price movements and incentives are reflective of areas with reasonable supplies of affordable maize. The challenge, however, is that farmers are not clearly following the reasoning why buyers of maize are the ones who come up with prices some of whom want to pay much lower prices than even SAFEX prices.
I have not done a scientific study to ascertain my views on the matters I will be raising but they are my observations. The demand for maize especially yellow maize has primarily been driven by the necessity for wool producers to raise lambs that will give them wool of good quality.
- The wool from lambs is more valuable at wool auctions, as the buyers pay more for it – this fact can be cross referenced through Cape Wools market reports. The feeding is done on ewes and lambs as well as rams. Furthermore, maize is fed to poultry and piggery be the residents of the rural areas surrounding these towns.
- Maize market in these towns require different volumes ranging from 5kg to 50kg bags. Interestingly, the wholesalers in these towns as well as the supermarkets are the biggest buyers for re-sales. Their location and distribution position them to access more maize buyers than a village farmer would under normal circumstances.
- The village farmers have some of the basic challenges such as weighing scales that render them vulnerable. Buyers during times of low supply will go and pick bagged maize and not go there with weighing scales. As maize is offloaded at the buyer’s premises, they then weigh every bag, and subsequently penalize the farmers for any deviations. The only option left to the farmer is to sell, even if the farmer is not happy.
- There is a matter than needs a closer look, that of buyers who will buy maize in town that originates from their villages. To understand the reason behind this inherently irrational decision, research needs to be conducted. The cost of buying maize in town is high when you take into consideration the cost of hauling it back, which is why I refer to it as irrational and surely based on something that is not obvious.
- During 2021–2023, there has been a discernible increase in the quantity of bagged maize from certain areas. Buyers are now not even going to pick maize from villages and if they need maize, they only give an indication that the farmer can deliver.
- Early harvesters receive advantageous prices, which subsequently decline throughout harvesting period and immediately after the harvesting season in accordance with SAFEX price movements. It is important to emphasize that, given current input costs, village farmers would lose money if they sold maize for less than R3200 per ton.
- The current difficulties facing the livestock sector will affect the grain industry.. As a result of bird flu the bird population is expected to come down reducing the number of birds fed with maize as one of the ingredients. Although a short-term decline in demand is projected, as bird populations decrease, demand may even climb again as stock levels are rebounding.
Input prices and storage arguments
During the previous season, communal farmers came to realise the impact of the conflict between Russia and Ukraine, as the price a 50 kg bag of mixed fertilizer increased from approximately R550 in 2021 to nearly R980 in 2022. Because the prices of pesticides continued to rise, the cost of production went up by about thirty percent. The cost of tractor services to plough/plant and spray a hectare went up.. Farmers communal farmers in many areas of the country struggle (must sell when prices are low or stand to have quality loses) because they do not have access commercial silos. This suggests that on-farm storage becomes essential when taking price changes into account, since farmers would otherwise have to sell their grain when prices are low. Then, training on the use of fumigation chemicals and maize storage methods must be paired with the supply of storage assistance. Maize storage is very technical since moisture content tests are required to guarantee that the corn has the appropriate moisture content while it is being stored. To ensure that the quantities of maize harvested are reported, storage can prove to be an essential part of the market infrastructure and should be registered.
Conclusion
Farmers put in a lot of labour, are sometimes misunderstood, and receive modest rewards compared to the amount of work they put in. Fascinatingly, it appears that farming is addicting because farmers opt to persevere through the challenges rather than give up. In addition to dealing with challenging market conditions and obstacles, communal grain farmers are beginning to actively participate in rural town maize marketplaces. The consequences of global politics even affect communal farmers (input prices). The price of maize is teaching communal farmers valuable lessons that are difficult to learn in the short run. To support these farmers, storage facilities must be made available to them so that they have time to make decisions.
