“SOUTH Africa’s wheat production has been falling over the past couple of years as crops such as maize and soya beans become much more attractive for farmers.
The shift away from the domestic production of wheat has meant we’ve had to rely on imports from major producers such as Russia and Argentina to meet demand.
On average, South Africa produces around 2-million tons of wheat a year, compared to the 3-million we consume. The attractiveness of maize and soya beans has meant output has been falling.
It makes wheat much more susceptible to developments in international markets and the whims of government policy makers in producer countries.
This vulnerability is set to be exposed once again as Ukraine, one of the top 10 global wheat exporters, has decided to ban exports of wheat after its harvest was cut by a third this year. This month alone, South Africa imported 60,000 tons of wheat from that country. We, along with other nations such as Egypt — the world’s biggest importer of the grain — are going to have to source the grain from somewhere else.
Which means higher prices of the grain globally. While we aren’t at the crisis levels of last year in terms of food inflation, it will nonetheless add upward pressure on prices. In a world struggling to overcome a sluggish economy, inflationary pressures are an unwanted development.
Global consumption of wheat is set to be the second-highest it’s ever been this marketing year, the US government estimates.
Locally, wheat prices have gained 25% this year. White maize is up by more than 16% and the yellow variant, used in animal feed, is up more than 20%.
A couple of years ago, Russia — the world’s third-largest wheat exporter — banned exports of wheat, barley and rye to guard against food inflation after an extreme heat wave and drought wrecked more than a third of the country’s crop.
The embargo pushed wheat to prices that were last seen before the Great Recession, and highlighted the precarious balance of the world’s food supplies. Russia had another bad season this year but has denied any plans to do the same this time around, constrained by World Trade Organisation agreements. The country joined the organisation last month after 19 years of talks.
For South Africa to achieve food security, we need to get farmers producing much more wheat — and soon. To do that there’s going to have to be a bigger carrot for farmers to increase their wheat tonnage.
Grain South Africa has been calling for higher import tariffs to help bolster local produce. Perhaps that’s a short-term solution, but something must be done to make us a lot less dependent on imports.
Earlier this week, Statistics South Africa released inflation data for last month that was considerably above expectations at 5.5%.
Pushing inflation above the 5.2% forecast were higher food and fuel prices. The Reserve Bank has a targeted inflation range of 3%-6%.”
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University of Cape Town