WINDHOEK – A price hike in maize meal early in October looks unavoidable.
The table is set for an inevitable price hike of one of Namibia’s premium staple foods after the commodity’s price was still untouched by increases, as compared to wheat flour, mahangu and pasta, which were increased recently. But this is about to change due to various uncontrollable factors that will most certainly lead to an increase in maize meal prices as early as next week.
However, Namib Mills Managing Director, Ian Collard, assures the already panicked general public of sufficient maize meal in the country, thus effectively laying their anxieties to rest. Predicting the unwelcome news of a price increase for maize meal consumers, Collard cites three main factors as the culprits for the expected price increases in times of various economic uncertainties and the on-going weakening of the Namibian dollar against the US dollar.
“The fall of USA corn prices is already factored into our current maize prices and the weakened exchange rate will increase prices. Fuel prices had increased, which will have an upward effect on transport of products. We are exposed, as everybody else to the increased municipal charges, electricity and other services and increased annual remuneration to employees,” Collard explains.
He says all this will most certainly lead to an upward price adjustment on maize meal in October this year. “Namibia was hit very hard by the drought this year, regarding maize and livestock farming. The total harvest on local maize reduced from ±80,000 tons in 2012 to a mere 35,000 tons in a season that is regarded as the worst drought in 30 years. This was also true to a certain extent regarding the South African harvest, but only for the western side of that country. The end result is that South Africa has sufficient maize for the region, but the location of the maize is not as favourable as in the past. South Africa is also currently exporting maize to other countries, bar its immediate neighbours that it normally exports to,” he notes.
Initial expectations were that maize prices in the region would increase sharply, but this did not happen for the following reasons:
- The corn prices in the USA dropped after the high prices of the previous year due to a drought in that country. Therefore South African prices did not increase as expected.
- The initial drought damage anticipated for South Africa was less, due to the higher than expected yields in the eastern parts of South Africa, expecting a harvest of between 12 and 12.5 million tons.
Although Namibia is one of the driest countries in the southern African region, it produces substantial portions of staple foods, such as maize and mahangu, under rain-fed conditions. This year’s insufficient rains resulted in a serious threat to food security, as the dry land harvest has been severely affected as a result. “Namib Mills has procured sufficient maize for the ensuing year, and even more as we expect consumption to increase as there is limited or no mahangu available. “Unfortunately the location of the maize is not as favourable as in the past in South Africa. Transport costs will therefore have a negative effect on future pricing of maize meal. I am referring to South African maize, because it is the only available origin of maize in Southern Africa, in quantities that will facilitate our consumption. Other neighbouring countries of Namibia do not have excess maize available to keep local customers supplied in quantities as expected,” says Collard.
Therefore, Namib Mills do not foresee any problems regarding the supply of maize meal or any other basic food products in our current basket to our Namibian customers. Food security should thus not be a problem as well. Affordability there-of can be an issue, taking into account that northern subsistence was derived of an income due to the drought. Unfortunately the above will over the medium term have a negative effect on prices due to the above mentioned reasons, Collard concludes.
By Deon Schlechter