Drought damage may cut SA estimate corn yield by 2.5%

Wandile Sihlobo, Economist at Grain SA chats to Ray White about the prospects of the South African maize crop after the worst drought in more than a century.

It may sound like a large crop but our annual consumption is around 10.5 million tons...so as a group we are looking at something around 3.8 million tons of maize that will need to be bought in between 1st of May this year until the 30th April next year.

Wandile Sihlobo, Economist at Grain SA

The prices have already reacted, and we sitting on the upper levels which is around R5000 a ton of white maize, and yellow maize more affordable at around R3500 a ton.

Wandile Sihlobo, Economist at Grain SA

Sihlobo says recovery will be based on what happens in October this year.

There are two things that are the main determinants. One is whether the weather conditions will improve - if the rains begin in earnest.

The other major issue is whether farmers, who are currently sitting in enormous debt, can get out from under it.

Can the State maybe intervene and provide some sort of crop insurance and subsidising interest rates within the loans of the farmers.

Wandile Sihlobo, Economist at Grain SA

Agri-SA are saying that the overall agricultural sector in South Africa, will need roughly 12 billion rands to come out of this drought. That figure is way bigger than what you saw being pronounced in the Budget Speech.

Wandile Sihlobo, Economist at Grain SA
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