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March 2015 Executive summary The weakening rand, rising fuel and electricity costs, electricity shortages, the maize shortfall and the need to import expensive maize are some of the reasons for an expected rise in inflation. This will result in higher food prices in the months to come. The price of maize will go up and, because maize is used to feed poultry and livestock, this will increase poultry and meat costs. As at 11 March 2015, the average monthly exchange rate was R11.92 to the US dollar. This was 3% weaker month-on-month (m/m) and 11% weaker year-on-year (y/y). The rand has come under significant pressure in March 2015 and the exchange rate was R12.32 to the US dollar on 13 March 2015. A significant increase in domestic fuel prices is expected in April 2015. On 1 April, the price of petrol is expected to go up by R1.92 a litre and the price of diesel by R1.57 a litre. From early to mid-March 2015, the price of Brent crude oil once again started to go down. It fell by nearly 10%, to USD56.43 a barrel. There are signs that the global oversupply will continue. In February 2015, the average monthly prices of yellow maize, white maize and sunflower seed (crops affected by drought) were up m/m. Prices for wheat and soya beans were down m/m. All these crop prices were down y/y, except wheat, which was up y/y. It is expected that prices of commodities will go up in the following weeks because of the ongoing drought in some parts of the country. In February 2015, the prices for:

All lamb classes (A2/A3, AB2/AB3, B2/B3 and C2/C3) were down m/m, but all were up y/y.

All beef classes (A2/A3, AB2/AB3, B2/B3 and C2/C3) were also down m/m, except class AB2/AB3, which went up. All beef classes were up y/y.

Weaner calves were down m/m, but up y/y.

Milk were unchanged m/m, and up y/y.

Porkers were down m/m, but up y/y.

Baconers were up m/m and y/y. In February 2015:

The prices of onions were down m/m and y/y.

The prices of potatoes and tomatoes were up m/m, but down y/y.

The volumes of onions, potatoes and tomatoes traded went down m/m. Onions and tomatoes were up y/y, while potatoes were down y/y.

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1 Weather forecast and dam levels

Figure 1: Current rainfall conditions Source: National Agro-meteorological Committee, 2015 Figure 1 shows that in December 2014 there was near-normal to above-normal rainfall in most parts of the country, but below-normal rainfall in the Northern Cape and Western Cape. In January 2015, rainfall decreased, becoming near-normal to below-normal over most of the country. During the first 10 days of February 2015 rainfall was below-normal, with patches of above-normal rainfall in Limpopo, KwaZulu-Natal and the Eastern Cape. From July 2014 to January 2015 rainfall was near-normal to below-normal in many areas, with patches of above-normal rainfall mainly in the Eastern Cape (National Agro-meteorological Committee, 2015). Rainfall has been near-normal to below-normal in most areas. Crops in most provinces have been affected by heat stress. Drought was reported in the Free State, Mpumalanga and KwaZulu-Natal. A locust problem was reported in avocado orchards in parts of the Eastern Cape. There were livestock mortalities due to drought and lightning in KwaZulu-Natal, and veld fires were reported in parts of the Western Cape (National Agro-meteorological Committee, 2015). To save water now and in future seasons, irrigation farmers should service their irrigation systems, and improve the management and operation of these systems. The strategy for all

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farmers to follow is to minimise and diversify risk, optimise water availability for soil, and manage renewable resources (rainwater and grazing) to support sound farming practices. Long-term strategies include improving in-field water harvesting by reducing run-off and improving water infiltration. Reduced tillage methods and basin tillage are very important for capturing rainwater in drier areas (National Agro-meteorological Committee, 2015). The rain forecasting system in Figure 2 does not show particularly strong probabilities for any category of rainfall, so the forecast as a whole is uncertain. There may be wetter conditions in the winter rainfall regions, to the south-west of the country, during early winter; however, it is recommended to monitor the forecasts for early winter in the coming months (National Agro-meteorological Committee, 2015).

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Figure 2: Rainfall forecast – March to July 2015 Source: National Agro-meteorological Committee, 2015

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Figure 3: State of dams and rivers Source: The Reservoir, 2015 The level of major dams has increased in some provinces but decreased in others. The state of dams and rivers is shown in Figure 3.

2 Exchange rates

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Figure 4: Rand exchange rate Source: Standard Bank Research, 2015 The rand dropped to a 13-year low against the US dollar in March 2015. The cause of the weaker rand was the release of US nonfarm payroll (NFP) data on 6 March 2015. The better-than-expected data, which is expected to strengthen the US dollar, supported the case for an interest rate increase in the US as early as June 2015. The strengthening US dollar is expected to keep the rand under pressure for most of 2015. Other reasons for the weakening of the rand to the US dollar include:

Electricity shortages and labour strikes;

Lower demand from trade partners like the EU and China; and

As at 11 March 2015, the average monthly exchange rate was R11.92 to the US dollar. This was 3% weaker m/m and 11% weaker y/y. The rand has come under significant pressure in March 2015 and the exchange rate was R12.32 to the US dollar on 13 March 2015.

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Falling mining and manufacturing production because of load shedding and lower demand. According to analysts, the rand's slide is unlikely to stop any time soon unless the Reserve Bank starts increasing interest rates. They believe that the rand could fall to its previous low of R13.85 to the USD, reached in December 2001, unless the Reserve Bank increases the repo rate (the rate at which the Reserve Bank lends money to commercial banks). The Reserve Bank is expected to start a cycle of increasing rates in the second half of 2015.

3 Fertiliser World demand for fertiliser nutrients is expected to grow at 1.8% a year from 2014 to 2018. During that time, demand is expected to go up by:

1.4% a year for nitrogen;

2.2% a year for phosphate; and

2.6% a year for potash. Over the next four years, the global volume of fertiliser products, intermediates and raw materials will increase further. Africa is likely to remain a major exporter of phosphate, followed by nitrogen, but would continue to depend on imports for potash (Food and Agriculture Organization of the United Nations, 2015).

4 Fuel

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Figure 5: Monthly Brent crude oil price Figure 6: Monthly fuel prices Sources: Ycharts, 2015 Source: The Automobile Association of South

Africa, 2015 Figures 5 and 6 show the average monthly prices of Brent crude oil and fuels, respectively. In March 2015, the price movements of fuels were as follows:

Petrol: o Reef unleaded 95 costs R11.27 a litre, 9.3% higher m/m and 21.3% lower y/y. o Coast unleaded 95 costs R10.86 a litre, 9.7% higher m/m and 22.2% less y/y.

Diesel: o Reef 0.05% costs R10 a litre, 8% higher m/m and 25.3% lower y/y. o Coast 0.05% costs R9.7 a litre, 8.3% higher m/m and 26.1% lower y/y.

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A significant increase in domestic fuel prices is expected in April 2015. On 1 April 2015, the price of petrol is expected to go up by R1.92 a litre and the price of diesel by R1.57 a litre. From early to mid-March 2015, the price of Brent crude oil once again started to go down. It fell by nearly 10%, to USD56.43 a barrel, and there are signs that the global over-supply will continue. In the meantime, a slowdown in crude oil experts from Venezuela to its neighbours has allowed African oil producers to gain a foothold among Latin American buyers. Latin America is a region with a strong demand for crude oil and sales are expected to keep growing. 5 Electricity According to media reports, frustration over Eskom’s “confused and confusing” response to its electricity generation and cash-flow crises led to the Cabinet war room and the utility’s board suspending Eskom’s chief executive and three other top executives. The move has raised alarm across the political spectrum. Credit rating agencies and trade unions believe it will further destabilise Eskom and increase uncertainty about how the energy crisis will be resolved. 6 Labour The results of an employment survey released on 9 March 2015 show that employers in South Africa are planning to increase staffing levels in the coming quarter of the year. This gives some hope in an environment of high and long-term unemployment. According to the survey, job opportunities will be strongest in the manufacturing, transport, storage, communication, electricity, gas and water supply sectors, and weakest in mining. Manpower Group, a global workforce solutions company, increased its employment outlook for the second quarter from 10% to 13% – its strongest since the fourth quarter of 2008. Of the 750 employers surveyed in South Africa as part of the global employment survey, 18% expected to hire more employees in the second quarter, 7% expect retrenchments and the majority expected an unchanged workforce. Analysts believe that most employers preferred not to change their headcount because of the fair outlook for economic growth in an environment of energy supply constraints. The limited hiring opportunities in mining and quarrying were not surprising. These sectors have a number of challenges, including output disruptions from strikes, weak demand and lower commodity prices. Although the manufacturing sector is one of the hardest hit by load shedding, analysts expect employment to go up because of private sector investment.

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7 Grains and oil seeds

Because of the drought the country is facing, the yield of all summer crops is expected to be lower y/y. The estimated area planted and first production forecast for summer crops in South Africa in 2015/16 are shown in Table 1:

The yield for white maize is expected to be 4.7 million tons. This yield is 39% lower y/y.

The yield for yellow maize is expected to be 4.97 million tons. This yield is 24% lower y/y.

The total expected maize yield (9.67 million tons) is 32% lower y/y.

The yield for soya beans is expected to be 938 350 tons. This yield is 1% lower y/y.

The yield for sunflower seed is expected to be 574 300 tons. This yield is 31% smaller y/y. Table 1: Area planted and first production forecast in 2015/16

Area planted First forecast Area planted Final crop Change

2015 2015 2014 2014

Ha Tons Ha Tons

(a) (b) (c) (d)

White maize 1 460 000 4 696 390 1 551 200 7 710 000 -39%

Yellow maize 1 204 800 4 968 900 1 137 000 6 540 000 -24%

Total maize 2 664 800 9 665 290 2 688 200 14 250 000 -32%

Soya beans 687 300 938 350 502 900 948 000 -1%

Sunflower seed 568 000 574 300 598 950 832 000 -31%

Commodity

Source: Crop Estimates Committee, 2015a The import and export parity prices of yellow maize, white maize, wheat, soya beans and sunflower seed on the JSE Commodity Derivatives Market (Safex) show us how much incentive there is to trade in and produce these agricultural commodities in South Africa. Maize

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Figure 7: Yellow maize monthly prices Figure 8: White maize monthly prices

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In February 2015:

The average monthly price of yellow maize was R2 317 a ton. This price went up by 14.3% m/m but went down by 27% y/y.

The average monthly price of white maize was R2 553 a ton. This price went up by 26.4% m/m but went down by 19.7% y/y.

These prices are shown in Table 2. The price of white maize has been rising to the highest level seen in almost a year. Maize prices are going up because of a weakening rand and the expected fall in maize supply because of the ongoing drought. South Africa’s maize production is now expected to decrease from 14.3 million tons in 2014 to 9.67 million tons this year. As at 10 March 2015:

The spot price of white maize had gone up by 8% m/m to R2 678 a ton; and

The spot price of yellow maize had gone up by 7% m/m to R2 550 a ton. In Chicago, monthly maize prices were generally flat because of mixed bearish (negative) and bullish (optimistic) sentiment. US maize prices are being pressured by a strong US dollar. However, there is some optimism in the market as US ethanol production has shown significant increases, leading to a rise in demand for maize. This increased ethanol production came after some improvement in ethanol margins. The April contract was up 1.6%, to USD1.491 a barrel. There are also concerns that US weather might delay the spring planting season. Recent reports show a lot of dryness in parts of the Midwest, while the eastern maize belt might experience above-normal moisture. In the Black Sea markets (Russia and Ukraine), maize prices are still competitive on the world market. Ukraine’s domestic maize prices have been falling because of currency movements and slowing exports. Goldman Sachs believes that international maize prices will remain low this year because of good climatic conditions. With recently improved weather conditions in South America, global maize production for 2014/15 is expected to be plentiful. South Africa exported 13 878 tons of maize in the week ending 6 March 2015. This included 11 099 tons of white maize and 2 779 tons of yellow maize. This brings total maize exports for the season to date to 1.498 million tons, comprising 465 620 tons of white maize and 1.383 million tons of yellow maize (Unigrain, 2015). An import consignment of yellow maize is expected to come through the Port of Cape Town. South Africa is importing maize for the first time in 11 months as the worst drought since 1992 destroyed summer crops. We will need to import 934 000 tons of yellow maize, worth about USD137 million at current import parity prices, from countries such as Argentina and Ukraine, from now until the end of March 2016. Three shipments of about 30 000 tons each from Latin America are on their way to Cape Town to provide feedstock for dairy cows in the Western Cape.

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Figure 9: Wheat average monthly prices Locally, monthly wheat prices have generally moved sideways (supply and demand were much the same in trading). The price was usually above R3 830 a ton; however, prices had not yet gone above the R3 950 a ton resistance level. Internationally, wheat prices were lower because of the strengthening US currency, limited fresh export interest and ample world supplies. In 2015/16, France is expected to have a good crop thanks to mild winter weather, which is good for crops. Oregon Department of Agriculture analysts expect production to reach 37.5 million tons, which is the same as the previous season. In the UK, 2015/16 winter wheat conditions are good across the country.

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Figure 10: Soya bean average prices Local soya bean prices have been low since December 2014, following the international market trend. International soya bean prices have been low because of the increasing harvest in Brazil. There are also talks that US plantings for the 2015/16 crop are likely to increase. In Brazil, 2014/15 soya bean harvest in the key producing state of Mato Grosso is 81% complete, compared with 67% last week and 85% this time last year.

Soya beans In February 2015, the average monthly price of soya beans went down by 7.1% m/m and by 19.5% y/y. The average monthly price was R5 265 a ton (Table 2).

Wheat In February 2015, the average monthly price of wheat fell by 1.7% m/m and by 0.6% y/y. The average monthly price was R3 844 a ton (Table 2).

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Figure 11: Sunflower seed monthly prices The domestic sunflower seed market has generally remained bullish (prices have been rising) since September 2014. This trend is expected to become stronger as there have been reports that the 2015/16 sunflower seed yield will be 31% lower y/y, at 574 300 tons. In contrast to soya beans, world stocks of sunflower seed are significantly limited. The y/y lower supplies will result in a decline in crushings. Prices are already much higher compared to soya beans. Although sunflower seed production is expected to recover in the southern hemisphere (especially in Argentina), global crushings of sunflower seed will still decrease, by an expected 1.7 million tons. In Argentina, the 2014/15 sunflower seed harvest is reported to be 44% complete, compared with 49% at this time last year. Table 2: Monthly price movements in grain and oil seeds

Yellow maize R 3 180.15 R 2 026.82 R 2 316.90 14.3% -27.1%

White maize R 3 177.55 R 2 019.14 R 2 553.00 26.4% -19.7%

Soya beans R 6 541.20 R 5 667.95 R 5 265.10 -7.1% -19.5%

Wheat R 3 821.75 R 3 909.05 R 3 843.80 -1.7% 0.6%

Sunflower seed R 5 762.70 R 5 005.45 R 5 076.90 1.4% -11.9%

Change (y/y)Feb 2014 Change (m/m)

Average SAFEX

spot pricesRand/ton

Commodity Category Units Jan 2015 Feb 2015

Source: Grain SA, 2015a Table 3 shows the price trends of commodity futures as at 17 March 2015. The continuing drought in some parts of the country means prices of commodities are expected to rise in the coming months. Table 3: Commodity futures prices per ton

Commodity Mar 2015 Apr 2015 May 2015 Jul 2015 Sep 2015 Dec 2015 Mar 2016 May 2016 Jul 2016

White maize R 2 635 R 2 587 R 2 669 R 2 708 R 2 757 R 2 792 R 2 790 R 2 593 R 2 295

Yellow maize R 2 445 R 2 452 R 2 449 R 2 457 R 2 465 R 2 525 R 2 519 R 2 458 R 2 327

Wheat R 3 890 R 3 930 R 3 920 R 3 942 R 3 841 R 3 730 R 3 727 NA NA

Sunflower seed R 5 014 R 5 000 R 4 890 R 4 930 R 5 058 R 5 160 NA NA NA

Soya beans R 5 085 R 5 035 R 4 980 R 5 040 R 5 145 R 5 150 NA NA NA

Futures prices per ton as at 17 March 2015

Source: Grain SA, 2015b

Sunflower seed In February 2015, the average monthly price of sunflower seed went up by 1.4% m/m, but fell by 11.9% y/y. The average price was R5 077 a ton (Table 2).

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8 Livestock

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Figure 12: Average monthly lamb prices Source: Red Meat Abattoir Association (RMAA), 2015 Lamb and mutton prices continued to fall because of increased supplies and lower demand. Prices are expected to trade sideways in March, increasing towards the Easter holidays in April.

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Figure 13: Average monthly beef prices Source: RMAA, 2015 Beef prices are expected to remain low because of lower demand. Poor grazing conditions are forcing farmers to sell weaners and other slaughter stock earlier, which is increasing supply on the market and putting pressure on prices. However, prices are expected to recover in the lead up to the Easter holidays, from the end of March into April.

Lamb In February 2015, the average monthly prices (per kg) of lamb classes were as follows:

A2/A3: R53.19; down 6.5% m/m, but up 8% y/y.

AB2/AB3: R43.87; down 5% m/m, but up 7% y/y.

B2/B3: R38.83; down 10.4% m/m, but up 8% y/y.

C2/C3: R37.97; down 9% m/m, but up 12.6% y/y.

See Table 4 for these prices.

Beef In February 2015, the average monthly prices (per kg) of beef classes were as follows:

A2/A3: R33.32; down 0.8% m/m, but up 11.2% y/y.

AB2/AB3: R30.94; up 0.1% m/m and 10.9% y/y.

B2/B3: R28.10; down 3.7% m/m, but up 13.7% y/y.

C2/C3: R26.83; down 3.5% m/m, but up 18% y/y.

Weaner calves: R19.93; down 6% m/m, but up 19% y/y.

See Table 5 for these prices.

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Figure 14: Average pork prices Source: RMAA, 2015 Pork prices are generally lower because of limited demand and increasing supplies. It is expected that prices will recover slightly as supplies decrease. Rising maize prices are expected to support pork prices in the coming months.

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Figure 15: Average monthly milk prices Source: Milk Producers Organisation, 2015 Average milk prices were generally stable in 2014, and continue to be so in 2015. However, rising maize prices, due to drought and expensive maize imports, are expected to make producer prices in the dairy industry more volatile in the coming months. Table 4: Monthly price movements in lamb

Average price

Feb 2014 Jan 2015 Feb 2015

Class A2/A3 R 49.25 R 56.87 53.19 -6.5% 8.0%

Class AB2/AB3 R 40.97 R 46.21 43.87 -5.1% 7.1%

Class B2/B3 R 35.97 R 43.31 38.83 -10.4% 7.9%

Class C2/C3 R 33.71 R 41.72 37.97 -9.0% 12.6%

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Lamb (R/kg)

Pork In February 2015 the average monthly porker price was R25.64 a kg; down 2.4% m/m, but up 18.5% y/y. The average monthly baconer price was R24.05 a kg; up 1.1% m/m and 9.6% y/y. See Table 6 for these prices.

Dairy In February 2015, the average milk price remained flat m/m, at R4.40 a litre, but was up 4.8% y/y.

See Table 5 for these prices.

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Table 5: Monthly price movements in beef and dairy

Average price

Feb 2014 Jan 2015 Feb 2015

Class A2/A3 R 29.97 R 33.59 R 33.32 -0.8% 11.2%

Class AB2/AB3 R 27.91 R 30.91 R 30.94 0.1% 10.9%

Class B2/B3 R 24.72 R 29.18 R 28.10 -3.7% 13.7%

Class C2/C3 R 22.73 R 27.79 R 26.83 -3.5% 18.1%

Weaner calf R 16.75 R 21.19 R 19.93 -5.9% 19.0%

Dairy Class 1 (R/L) R 4.20 R 4.40 R 4.40 0.0% 4.8%

Change (m/m) Change (y/y)

(R/kg)Beef

Commodity Category Units

Table 6: Monthly price movements in pork products

Average price

Feb 2014 Jan 2015 Feb 2015

Porker R 21.63 R 26.26 R 25.64 -2.4% 18.5%

Baconer R 21.94 R 23.79 R 24.05 1.1% 9.6%

Commodity Category Units Change (m/m) Change (y/y)

(R/kg)Pork

9 Vegetables

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Figure 16: Onion prices and volumes Source: Department of Agriculture, Forestry and Fisheries (DAFF), 2015

Onions In February 2015, the average monthly price of onions for all markets went down by 7.7% m/m and 39% y/y. The average monthly price was R2 480 a ton (Table 7). The total monthly volume traded, 27 436 tons, was down by 4.8% m/m, but up by 9.3% y/y (Table 8).

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Figure 17: Potato prices and volumes Source: DAFF, 2015

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Figure 18: Tomato prices and volumes Source: DAFF, 2015

Table 7: Average monthly price movements in vegetables

Average price

Feb 2014 Jan 2015 Feb 2015

Onions R 4 041 R 2 686 R 2 480 -7.7% -39%

Potatoes R 3 318 R 2 649 R 2 716 2.5% -18%

Tomatoes R 6 580 R 3 661 R 5 887 60.8% -11%

Rand/Ton

Change (y/y)Change

(m/m)Commodity Units

Table 8: Monthly volume movements in vegetables

Tons

Feb 2014 Jan 2015 Feb 2015

Onions 25 097 28 817 27 436 -4.8% 9.3%

Potatoes 77 123 93 928 75 885 -19.2% -1.6%

Tomatoes 17 545 24 995 17 659 -29.4% 0.6%

CommodityChange

(m/m)

Change

(y/y)

Onions The average price of onions is expected to go up from March to early winter because of growing seasonal demand. Potatoes March prices for potatoes are expected to move sideways. However, there is a possibility that prices might experience downward pressure if we have rainfall with high temperatures, which

Potatoes In February 2015, the average monthly potato price for all markets was up by 2.5% m/m, but down 18% y/y. The average monthly price was R2 716 a ton (Table 7). The total monthly volume traded, 75 885 tons, was down by 19% m/m and 1.6% y/y (Table 8).

Tomatoes In February 2015, the average monthly tomato price for all markets went up by 60.8% m/m, but down 11% y/y. The average monthly price was R5 887 a ton (Table 7). The total monthly volume traded, 17 659 tons, was down by 29.4% m/m, but up slightly, by 0.6%, y/y (Table 8).

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causes decay. Rainfall could also cause prices to rise if farmers cannot lift (dig up) potatoes. Prices from April to June may be slightly higher than current prices because of the drought. Tomatoes In February 2015, the nearly 30% dip in tomato supply caused prices to go up by over 60%. Strong consumer demand is expected to keep prices rising from March to early winter, even as supply grows to a peak around August.

10 Other news and developments Governance issues Rural Development and Land Reform Minister Gugile Nkwinti clarified the foreign agricultural land ownership issue on 24 February. Long-term leaseholds for agricultural land will be available to foreigners for a minimum of 30 years. Land leased by foreigners will be limited to 12 000 hectares, the same limit that applies to South African landowners. Any excess land will have to be dispensed with. An improved offer by the local poultry industry to allow more US chicken imports into South Africa failed to win the approval of US poultry producers at a meeting in Washington on 6 March. South Africa’s delegation raised the annual tonnage of allowable imported US chicken it would accept free of antidumping duties by 50%, but the US industry rejected this as insufficient. The South African delegation was trying to solve a dispute about the entry of US meat products into the local market. This dispute was threatening South Africa’s continued participation in the African Growth and Opportunity Act (AGOA). According to US officials, there is still a lot of work to be done. The Gauteng provincial government is turning its attention to agro-processing with the aim of reviving areas that had depended on mining for growth. On 12 March, hundreds of representatives from agriculture and the agro-processing sector gathered in Kliptown, Soweto, to contribute to a strategy that the provincial government will use to stimulate the industry on the West Rand and in the Sedibeng district. Agribusiness The local wine industry is strengthening its campaign to export more bottled wines to Europe. South Africa exports more bulk wine to Europe than bottled wine. The campaign is expected to improve earnings and the country’s reputation as a premium producer, and boost job creation. The drought has taken a toll on local tractor sales. According to the South African Agricultural Machinery Association, February tractor sales, of 605 units, were six units up y/y. Year-to-date sales were almost 6% down y/y. February combine harvester sales, of 43 units, were significantly up, by 11 units y/y. Year-to-date sales, however, are about 9% down y/y. Rain which was essential for maize crops did not arrive on time in some areas and these areas suffered significant losses. Listed distribution group Barloworld and Munich-based BayWa plan to set up a joint venture to supply agricultural equipment to sub-Saharan Africa. The joint venture, in which each of the partners will hold an equal (50%) shareholding, must still be approved by the competition authorities. Astral Foods added 3.66% to its share price on 18 March. This followed a trading statement in which the company stated it expected headline earnings per share for the six months ended

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March to nearly triple, thanks to lower chicken feed prices and better-than-expected sales after the festive season. Pioneer Foods plans acquisitions in at least five more African countries after taking a majority holding in Nigerian competitor Food Concepts. Thushen Govender, the company’s head of international business, reported that Pioneer Foods is talking to entrepreneurs for opportunities to expand their investments on the continent within the next five years. The company’s focus is on larger economies with a higher population – Angola, Kenya, Ethiopia, Tanzania and Ghana.

11 Conclusion South Africa’s total maize crop is expected to go down by 32% in the 2014/16 marketing year. Crops, including sunflower and sorghum, have been damaged. We are importing maize for the first time in 11 months as the worst drought since 1992 destroyed summer crops. We will need to import about 934 000 tons of yellow maize, worth about USD137 million at current import parity prices, from countries such as Argentina and Ukraine from now to the end of March 2016. The weakening rand, rising fuel and electricity costs, electricity shortages, the maize shortfall and the need to import expensive maize are some of the reasons for an expected rise in inflation. This will result in higher food prices in the months to come. The price of maize will go up and, because maize is used to feed poultry and livestock, this will increase poultry and meat costs. Analysts have reported that South Africa could easily go to double digits in food inflation from about May 2015 because of maize being more expensive. Food makes up 14% of South Africa’s inflation basket, according to the national statistics agency. Maize, and chicken and beef, which rely on it, make up 74% of that 14%.

12 References Crop Estimates Committee. (2015a). Preliminary area planted estimate for summer crops in

2015. Crop Estimates Committee. Crop Estimates Committee. (2015b). Area estimate and sixth production forecast for winter

cereals for 2014. Crop Estimate Committee. DAFF. (2015). Summary report for certain products for all markets. Department of Agriculture

Forestry and Fisheries. Grain SA. (2015a). Price information (Domestic and International) - 17 February 2015. Grain

SA. Grain SA. (2015b). Market commentary. Grain SA. Grain SA. (2015c). Update on drought - 12 February 2015. Grain SA. Grain SA. (2015d). Fertilizer prices (Domestic and International) - January 2015. Grain SA. Milk Producers Organisation. (2015). Milk producer price - February 2015. Milk Producers

Organisation (MPO). National Agro-meteorological Committee. (2015). Advisory on the 2014/15 summer season.

26 January 2015. Department of Agriculture Forestry and Fisheries. National Sunflower Association. (2015). Daily market news - 18 February 2015. National

Sunflower Association. RMAA. (2015). National South African price information - February 2015. Red Meat Abattoir

Association. Standard Bank Research. (2015). Exchange rates - 24 February 2015. Standard bank.

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The Automobile Association of South Africa. (2015, February 17). Fuel Pricing - 17 February 2015. Retrieved from The Automobile Association of South Africa: http://www.aa.co.za/on-the-road/calculator-tools/fuel-pricing.html

The Reservoir. (2015, February 16). Dam level acentages - 16 February 2015. Retrieved from The Reservoir: www.reservoir.co.za

Unigrain. (2015). Weekly maize report - 17 February 2015. Unigrain. USDA. (2015). World agricultural supply and demand estimates - 12 January 2015. United

States Department of Agriculture. Ycharts. (2015, February 17). Brent crude oil spot price - 9 February 2015. Retrieved from

Ycharts: https://ycharts.com/indicators/brent_crude_oil_spot_price

Compiled by: Brian K. Mahumani

Analyst, Agricultural Economic Insights Tel: +27 11 721 7903

Email: brian.mahumani@standardbank.co.za