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Southern Africa chalked up a third successive year of record cereal harvests this year. Prices of maize, the region’s main food staple, in most main markets fell to their lowest levels for almost three years¹ – good news indeed for poor food consumers across the region, and an occasion, one would think, for special celebration in the aftermath of the ‘food price crisis’ of 2008/09 and the ensuing economic downturn. There are, however, several disturbing aspects of the current regional food situation which suggest a need for any optimism to be tempered with a degree of caution.

More than half of the region’s maize is produced by South Africa, which after its second biggest harvest ever now finds itself with a 4 million ton surplus and prices that have plummeted to their lowest level since 2005². With prices well below the cost of production, there are warnings that up to 30% of commercial maize farmers face bankruptcy³.  Some of the surplus will go, as it normally does, to maize-deficit neighbours in the region -- Botswana, Namibia, Lesotho, Swaziland and Zimbabwe -- but this is unlikely to account for much more than a quarter of it this year. With harvests in the world’s biggest maize producers, USA and China, also at an all-time high this year, more distant markets like Taiwan and South Korea will be accessed only at very disadvantageous prices. Matters are made worse by the strengthening of the Rand due to increased ‘safe-haven’ demand for gold.

South Africa’s beleaguered maize farmers are hoping that some relief will come from the government’s current talks with China for the sale of part of the surplus. That China is willing to buy South African maize at the moment is partly thanks to the inflated world wheat price that has followed an export ban by the drought-afflicted Russian Federation, and the scope for using maize as a substitute for wheat to meet its rapidly expanding demand for feed for cattle, poultry and aquaculture. If the negotiations allow South Africa to add value by processing the maize into feed products, and if this is more than a one-off deal, so much the better.

However, the terms being negotiated with China are bound to reflect South Africa's lack of an alternative and provide little respite for farmers.  In several respects this is a self-inflicted problem:

• In addition to favourable weather conditions and cheaper fertiliser in 2009/10, South Africa's unmanageable surplus owes much to its headlong rush into GM maize in the last few years. This means that most of its output can be exported only to a limited list of countries under conditions specified in the Cartagena Protocol on Biosafety. This year, for the first time, GMO export permits were issued for almost 300,000 tons of maize to Kenya, Mozambique and Swaziland in apparent contravention of those conditions, provoking a storm of accusations that South Africa is ‘dumping’ GM maize into countries which do not yet have biosafety regimes in place. As the African Centre for Biosafety has argued, the only real winners in this situation are corporate players in the global GM seed oligopoly⁴. 
• Again, there may well be a case for diverting existing maize surpluses into biofuel production despite its relatively low conversion efficiency compared with other crops like sugar cane. However, this is prevented by the government's ongoing ban on use of maize for this purpose, a hangover from the 'global food crisis' of 2007-08.
• Furthermore, anti-collusion legislation forbids producers from pooling their output for the purposes of negotiating directly with foreign buyers. Farmers’ organizations have appealed for special exemptions from this, but have been told that the necessary legislative procedures could take at least two years to put into effect⁵. 
• Finally, logistical bottlenecks resulting from a long-standing failure to maintain rail and harbour infrastructure appear to have lowered still further the price that producers can expect for their exported maize⁶.  

So although the government is eagerly trying to find markets abroad for the present maize surplus, one cannot help but conclude that the current problems reflect longer term failures in agricultural policy on a number of fronts. Unfortunately, it is not just commercial maize farmers in South Africa who are likely to pay the cost of these failures. The danger now is that those who do survive the current price collapse will switch precipitously into wheat next year⁷, exacerbating instability in regional maize markets and sending prices rocketing once again, all the more so once the present run of good seasons gives way to less favourable production conditions, as it surely will. 

This could have serious implications for food security right across southern Africa, not just in the aforementioned immediate neighbours. A main reason for this is the inherently unstable nature of domestic maize markets in the region. Output in most countries varies within 10 per cent either side of self-sufficiency in most years. Maize markets are also ‘thin’: only a small proportion of output (typically averaging around 15%) is marketed, the remainder being retained by farmers for their own subsistence. This means that even modest fluctuations in output, mostly reflecting variations in seasonal weather conditions, tend to result in large changes in market price⁸.  

This price instability can be moderated to a limited extent by drawing down or building up stocks, but beyond this only by timely imports or exports. In the event of an overall national shortfall, domestic prices will be capped at the price of imported maize, and since South Africa is the primary source of white maize imports for the rest of the region it is the cost of importing from South Africa that usually dominates. In the event of a region-wide drought as occurs periodically, availability and price of maize from South Africa become particularly important in curbing domestic price hikes, but only if South Africa has a surplus to export and is not itself experiencing a domestic price surge and a need to import from further afield. Furthermore, because marketed maize production in southern Africa is highly skewed towards a minority of better-off farmers, leaving about 60 percent as net buyers even in a good year, it is the bulk of the rural as well as urban population that is exposed to the adverse impacts of high maize prices on food security and livelihoods⁹. 

Even in this period of unprecedented regional plenty, hunger persists. Several countries have sizeable pockets of food insecurity, and all of them have groups of people who for one reason or another cannot produce or afford to buy enough for their needs. Many will end up needing emergency assistance. Numbers in need are likely to rise during the 'lean' season leading up to the harvest period next April. According to latest assessments¹⁰ these are likely to include more than a million in southern Malawi (despite a reported national maize surplus of 300,000 tons this year), half a million in Mozambique, and as many as 1.3 million in Zimbabwe. Maize price differentials between surplus and deficit areas within Malawi and Mozambique remain very high, making food unaffordable to poor people in deficit areas. Under a less favourable scenario with region-wide deficits and high prices, numbers needing assistance can be expected to rise dramatically, as they did in 2002-03.

All this highlights the vital role governments -- and regional governmental bodies such as SADC and COMESA -- have to play in reducing the damage that maize market instability can cause to producers and consumers alike, by taking steps ahead of time to make sure that markets work in the best interests of both. Such steps are many and varied and span different time-scales, but include:

• improvements in marketing infrastructure, 
• predictable and transparent interventions in maize markets which cap excessively high prices while supporting regional and domestic trade networks, 
• support for market-based risk management mechanisms for small farmers, 
• institutionalised social protection measures which prevent hunger and protect and promote livelihoods, and are attuned to the seasonal nature of hunger and vulnerability, and
• measures to promote sustainable productivity improvements in agriculture in the face of climate change.

Southern African governments have made some significant progress in this direction in recent years. Most now see the need to tackle chronic vulnerability to hunger through regular, institutionalised social protection programmes rather than depending on emergency food aid to deal with hunger that has already appeared. But much more remains to be done to get food policies right before producers have confidence in markets and poorer people can live in dignity and invest in a future for their families without the constant fear of hunger hanging over them.

Footnotes

1. FAO Global Early Warning & Food Information System, national food prices and data analysis tool, http://www.fao.org/giews/pricetool/, 1-Oct-10

2. ibid.

3. Business Day, 02-Sep-10, ‘Maize surplus’, http://www.businessday.co.za/Articles/Content.aspx?id=119854

4. Africa Centre for Biosafety, 2010, ‘The dirty politics of the global grain trade – GM maize farmers face ruin in SA’, ACB Briefing Paper No.21, www.biosafetyafrica.net 

5. Business Day, 10-Jun-10, ‘Grain SA’s plea to export surplus maize’, http://www.businessday.co.za/articles/Content.aspx?id=111400 

6. Africa Centre for Biosafety, op. cit., p.6

7. Business Day, 13-Aug-10, “Farmers ‘to plant less maize, more wheat’”, http://www.businessday.co.za/Articles/Content.aspx?id=117893 

8. Regional Hunger & Vulnerability Programme, 2010. ‘Food prices and markets in an era of global instability’, Frontiers of Social Protection Brief No. 4, p. 8, February, http://www.wahenga.net/node/1647 

9. ibid. p.8

10. FEWS NET, 2010, Southern Africa Food Security Outlook Update, September, http://www.fews.net/docs/Publications/SouthernAfrica_FSOU_2010_09_final....