An announcement by Zimbabwean authorities to suspend all maize and maize meal imports with immediate effect has Mzansi’s agricultural sector hot under the collar.
Until recently, Zimbabwe was the single largest maize export market for South Africa in the 2020-2021 marketing year. Of the 2,6 million tonnes of maize that the country exported, about 20% went to Zimbabwe.
The sudden decision left industry role-players gobsmacked and concerned over what this will mean for South Africa’s maize export market. What’s even more concerning, is what this suspension might mean for trade relationship with Zimbabwe.
Not a smart move by Zimbabwe
“Definitely the ban will affect our trade relations with Zimbabwe going forward. It wasn’t a smart, diplomatic move on their side.
“Yes, we know that the Zimbabweans have bumper crops this year, but this is a [extremely] special year. Next year, or the year after that, there’ll be food shortages again and then they will have to renegotiate.”
The suspension of imports comes as the country approaches its maize harvest period, which according to data from the United States department of agriculture (USDA), could reach 2,7 million tonnes.
The expected large maize output is primarily supported by the expansion in the area planted, coupled with favourable rainfall since the start of the season. More importantly, Zimbabwe will have the largest maize surplus in nearly three decades.
Venter maintains that Zimbabwe – after further consideration – will have a change of heart and retract its suspension.
“Once they have more detail about how much white and yellow maize they have, they will reconsider. I think we should give them the advantage of using their own maize and see where they go with this,” he says.
What caused the sudden ban?
Moreover, Venter states that historically, there have been much criticism against countries like Zimbabwe about the suddenness of policy changes and how policy changes are introduced.
“This was quite a sudden decision. I think what caused this suddenness is of course the monetary position that Zimbabwe is in,” says Venter. “If you don’t have to import maize, you don’t need foreign exchange. This means that you save a lot of money which brings us to the political side of their decision.”
This, the policy specialist adds, may have been the primary reason for the country stopping imports so abruptly.
“Zimbabwe’s decision to ban imports of maize will inconvenience South African exporters.”Wandile Sihlobo, chief economist at Agbiz
The Zimbabwean government says it expects to save an estimated US$300 million by banning maize imports, as local supplies from the successful 2020-2021 cropping season have been deemed to be enough to meet local consumption.
It is reported that the county spent last year US$298 million on maize imports after the 2019/2020 season was plagued by drought.
Venter says, luckily South Africa has great exports of maize to Spain and places like South Korea and anticipates that these countries will help pick up any slack. “I think we have enough markets to take us through the year,” he states.
Uphill battle for exporters
Chief economist at the Agricultural Business Chamber (Agbiz), Wandile Sihlobo, has a very different outlook on what Zimbabwe’s decisions will mean for Mzansi’s maize export market.
According to Sihlobo, “Zimbabwe’s decision to ban imports of maize will inconvenience the South African exporters that had established relations with importers in Zimbabwe.”
However, the policy action on its own, Sihlobo reckons, will likely have a limited impact on South African maize prices.
Prices are already at export parity level and mainly underpinned by broader global developments than the regional policy changes.
“It has been long known that Zimbabwe’s maize harvests this year is in good shape, and market participants already anticipated the possible decline in maize demand from the country.”
With Zimbabwe as a potential export market out of the picture, South Africa could have 2,8 million tonnes of maize surplus available for export markets, Agbiz believes.
This would be the largest volume since 1994-1995, when South Africa exported 4,7 million tonnes of maize, according to data from the South African Grain Information Services (SAGIS).
Many lessons to be learnt
While the announcement by Zimbabwean authorities is consequential for South Africa, senior agricultural economists at the Western Cape department of agriculture, Tshepo Morokong and Masego Moobi, both tell Food For Mzansi that there are valuable lessons to be learnt here.
The two write in a joint response, “This recent case puts emphasis on the importance of diversifying exports markets to reduce risk associated with one market.”
Furthermore, uncertainty and risk are inherent in agriculture hence contingency plans are a necessity, Morokong and Moobi explains.
“Planning and investing in business strategies which do not entirely (depend) on international markets builds resilience capacity in times like this.”