Drought Forces South Africa to Bring in Corn

South Africa is importing corn for the first time in 11 months as the worst drought since 1992 is destroying crops. Neighboring Malawi, which also supplies corn to surrounding countries has also been hit by drought, which is expected to put even more pressure on demand.

South African farmers are expected to harvest the smallest corn crop since 2007, harvesting 9.67 million tons of combined white and yellow corn in 2015 – a 32% drop from the year before, according to the country’s Crop Estimates Committee. As a result, the country will need to import 934,000 tons of yellow corn used for animal feed from Ukraine and Argentina at a cost of $137 million for the year ending March 2016, according to Grain SA.

The drought has caused extensive damage in South Africa’s top producing regions of the North West and Free State provinces. Prices for white corn, a staple food on the domestic market have risen 27% so far this year, and prices for yellow corn used as animal feed have increased by 13%. The marketing year has been changed to the end of March, and analysts forecast that as food contributes 14% to South Africa’s inflation, the country could see double digit food inflation by May as the more expensive new crop corn gets absorbed into the market.

South Africa is the largest producer of white corn on the continent of Africa, and Mexico is the world’s top producer. Globally, the vast majority of corn traded is yellow corn, and the limited availability of white corn means that importing the variety will be unlikely. Grain SA estimates however, that South Africa should have a stockpile of 100,000 tons to cover demand.