South Africa

GIEWS Country Brief: South Africa (07-October-2020)

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  • Favourable production outlook for 2021 cereal crops

  • Second largest cereal harvest estimated in 2020, following reduced output in previous year

  • Export quantities of maize forecast to rise in 2020/21 marketing year, driven by weaker currency and large domestic supplies

  • Prices of maize strengthened in recent months and were higher on yearly basis as of September

  • Food insecurity aggravated by effects of COVID‑19 pandemic

Favourable planting prospects for 2021 cereal crops

Planting of the 2021 maize crop, the principal cereal grown in the country, is expected to begin in October in eastern regions. In western growing areas, the optimal planting period falls between November and December.

The maize planted area is foreseen to remain broadly unchanged compared to the above‑average 2.6 million hectares sown in the previous season. This expectation is underpinned by a generally favourable weather outlook and moderately higher year‑on‑year maize prices. Weather forecasts, reflecting the prevailing albeit weak La Niña event, indicate a slightly higher probability of above‑average rainfall between November 2020 and January 2021. However, weather conditions in October are expected to be mixed and this may slow down planting activities in some areas. The second factor supporting the favourable planting prospects are the higher year‑on‑year prices of maize grain, which farmers are expected to respond positively to and sustain a similar acreage.

Second largest maize output harvested in 202

Harvesting of the 2020 winter wheat crop is expected to conclude in November. Wheat production is forecast at approximately 2 million tonnes, well above the five‑year average and, if it materializes, would be the largest output since 2008. The buoyant expectations are driven by favourable yield prospects, with weather conditions in the main growing western regions particularly conducive for crop growth.

The summer cereal crops were harvested by July and the total output, mostly comprised of maize, was estimated at 16.1 million tonnes, a well above‑average level. This year’s production upturn was the result of favourable weather conditions and an above‑average planted area.

Overall, the 2020 cereal output is forecast at 18.6 million tonnes, nearly 30 percent higher than the five‑year average and the second largest output on record.

Cereal exports expected to grow significantly in 2020/21

The substantial domestic cereal output and a weak national currency, which has boosted the competitiveness of South African grain in the international market, are expected to lead to a sizeable growth in maize exports in the 2020/21 marketing year (May/April). Exports of maize are forecast to reach at least an above‑average level of 2.5 million, more than 1 million tonnes above the previous year’s level. About 1.5 million tonnes of maize have already been exported between May and September, mostly yellow maize shipped to Asia. Exports of white maize are generally concentrated within the region, with Zimbabwe foreseen to be one of the main destinations in consideration of the well below‑average harvest in 2020 and the lifting of import restrictions on genetically modified grains, mainly produced in South Africa.

Imports of cereals, mainly rice and wheat, are forecast to fall by nearly 40 percent in 2020/21, reflecting the bumper 2020 domestic harvest that will satisfy a larger share of national consumption requirements.

In addition to the reduction in import requirements, the large harvest is also expected to lead to an increase in maize stocks, with national inventories forecast at the high of level of about 3 million tonnes, 1 million tonnes above the previous year’s level.

Prices of maize strengthened in recent months

Wholesale prices of maize grain increased for the third consecutive month in September 2020, underpinned by robust export demand, particularly for yellow maize from East Asian countries and white maize from Zimbabwe. On a yearly basis, prices of maize were above those in September 2019, as upward pressure from export demand and the effects of a weaker currency offset the downward supply pressure from this year’s bumper harvest.

Prices of wheat remained relatively stable since August, following the sharp increases in the previous months, as the market responded to an upturn in domestic production prospects.

Loss of income aggravates food insecurity

Although the effects of the COVID‑19 pandemic have had minimal impacts on the agriculture and food sectors, households’ food security conditions are expected to have worsened as the lockdown measures to contain the virus slowdown and, in some cases, halted economic activities, causing widespread job losses. As such, the shock to food insecurity has been channeled not through the lack of food, but due to a decrease in households’ capabilities to access sufficient quantities of nutritious foods. Official statistics indicate a year‑on‑year decrease of 2.2 million people in employment in the April‑June 2020 period. However, job losses in the agriculture sector were comparatively small, reflecting the designation of this sector as an essential service.

Although daily wages earners are expected to have been impacted most by the slowdown in the economy, social safety net mechanisms, including cash transfers, have partially offset the impact of wage reductions. The containment measures were scaled back on 1 October 2020, allowing the resumption of most economic and social activities, if sanitary protocols are adhered to. In addition, 18 land borders that had previously been partially closed became fully operational, while 35 land borders still remained closed. Although the easing of the movement restrictions is anticipated to help recuperate economic activities, serious concerns about the overall food insecurity situation are expected to remain in the near term.