The Zimbabwean government announced a ban on maize imports in mid-May 2021. The ban is set to apply from June 2021, with the government suspending import licenses for maize grain, maize meal, and all other maize products. The legislation has been placed to assist domestic farmers and millers, as the bumper crop forecast in 2021 is expected to cover national consumption needs in 2021/22 (April/May) MY. The ban is expected to negatively impact South African maize exports, as Zimbabwe is SA’s most dominant export market.
Bumper harvest expected
Zimbabwe is a net importer of grains and cereals and produced an average of 1.2 million tonnes of maize and purchased approximately 400K tonnes yearly during the 2016-2020 period. In 2021, the Southern African country is forecast to produce 2.7 million tonnes of maize, almost three times the yield in 2019 and 2020, when production was hampered by drought. The bumper harvest is set to boost the maize supply in the country and ease maize prices following the completion of the crop in June 2021. During a period of severe economic difficulties in Zimbabwe, the expected foreign currency savings from reducing maize imports are set to relieve pressure from the country’s limited foreign currency reserves. The nation spent USD 300 million importing maize in 2020 after successive droughts that left more than half the population poverty-stricken.
According to data from the United States Department of Agriculture (USDA), the expected yield of 2.7 million tonnes is the largest harvest since 1984. The country is also set to have a solid agricultural season. Planted areas for maize increased significantly in Zimbabwe, and this, along with a good rainfall season, has led to a large maize output. The country will have the most significant maize surplus in almost thirty years, as its yearly maize consumption is between 1.8 and 2.0 million tonnes.
Impact on South African exports
South Africa has profited from Zimbabwean maize demand in recent years. Due to the import ban from Zimbabwe, SA could have 2.8 million tonnes of maize surplus available for export markets. According to data from the South African Grain Information Services (SAGIS), an excess of 2.8 million tonnes would be the largest since the 1994/95 season, when the country exported 4.7 million tonnes of maize. According to Agbiz, these available maize export volumes are on the back of a large projected maize harvest, currently forecast at 16.7 million tonnes. This would be South Africa’s second-largest harvest on record. With the Zimbabwean market out of the picture, and various regional maize consuming countries in the Southern Africa region, such as Malawi, Zambia, Tanzania, and Mozambique, expecting bumper harvests, regional demand for maize will be lower than usual. The consistent markets that South Africa will likely have are the Asian markets, including Taiwan, South Korea, and Japan.
More significantly, Zimbabwe’s decision to ban maize imports will inconvenience South African exporters that had built relations with importers in Zimbabwe. However, the policy on its own will have a short-term impact on South African maize prices. Local prices are at export parity prices and underpinned by broader global developments than the regional policy changes. Moreover, market players already anticipated the possible decline in maize demand from Zimbabwe, as it has been long known that the country’s maize crop this year is in good shape.
Article is culled from Tridge