As droughts sweep across much of southern Africa threatening the food security of millions, value chains for other industries that depend on agriculture are also under threat.
In Zimbabwe, the livestock industry is being forced to import some 200,000 metric tonnes (mt) of maize to sustain stock feed production in 2016 following a poor harvest.
A severe El Niño weather pattern, exacerbated by the impacts of climate change, has caused a drought across southern Africa and parts of east Africa. Supplies of key crops such as maize are now in short supply.
The grain is a staple food for the bulk of the region’s population and a raw material for the agro processing and feed industries. Now, these sectors must survive on pricey imports.
Maize shortages are poised to push prices up all down the value chain. Higher dependence on imports may increase the food prices in South Africa by 20 percent across the board this year, according to some estimates.
In Zimbabwe, it costs $320 to $350 to import a tonne of maize from Mexico compared to $240 when it comes from neighbouring Zambia, whose harvest has also failed this year.
In 2014, a good harvest allowed Zimbabwe’s feeds sector to meet most of its requirements locally. However, due to a poor 2014-2015 rainy season Zimbabwe only managed to produce 742,000mt of maize leaving a gap of 650,000mt to feed populations, let alone to fuel industries.
With all local white maize earmarked for human consumption, Israel Muchuchu, the chairman of the Stock Feed Manufacturers’ Association of Zimbabwe, says his industry has no choice but to import.
“To supply livestock farmers with stock feed, as well as keep the wheels of local industry turning and play our part in value addition, we are switching to yellow maize this year,” Mr Muchuchu told This Is Africa.
“Within the region, non-GM yellow maize is only available from Zambia, and to secure the balance we are looking as far afield as the Ukraine.”
Since dollarisation - the policy that swapped out Zimbabwe’s near-valueless national currency for a basket of foreign ones - Zimbabwe’s livestock industry has grown. Indeed, it is one of the few industries that has in the isolated, unorthodox economy.
Poultry has grown the most, but requires a lot of maize feed to sustain. Currently the industry consumes 68 percent of all feed produced in the country.
The cattle industry, which at first was hugely impacted by president Robert Mugabe’s expulsion of all white ranchers in the early 2000s, had recovered somewhat and is now valued at an estimated $2.5bn per year. However most farmers supplying the country’s beef industry are smallholders whose margins are narrow even in good years.
Costs of imports are driven up by poor logistics and coordination. Inspections fees on maize imported into Zimbabwe can be as high as $450 per truckload.
“Such regulatory costs...affect the viability of the livestock producer and ultimately increase the cost of meat and eggs and dairy products to the consumer,” Mr Muchuchu explains.
These difficulties in pricing for consumers are compounded by the country’s slow uptick in inflation and a serious cash shortage countrywide.
South Africa’s crop fails
Zimbabwe is not the only country struggling to cope with shortages.
The maize industry plays a big role across the 15 economies of the Southern African Development Community (SADC), led by South Africa which usually produces 40 percent of the region’s maize.
However South Africa, traditionally a maize exporter, is also struggling. This year it will import about 3.8m tonnes of the grain. Prices are already up 45 percent year on year for the yellow variety, and 80 percent for white.
South Africa’s livestock industry had been thriving and well supplied with feed until this drought, its worst since the early 1980s.
According to industry association Grain SA economist Wandile Sihlobo, South Africa imported 1.8m tonnes of yellow maize for feed from South America and Ukraine in 2015 to make up shortfalls. That is expected to rise to 2.7m tonnes of imports in 2016/17.
Malawi and Zambia, the second and third biggest maize producers in the sub-region are also importing. Reports from Zambia indicate that farmers are deeply concerned by the ever-escalating cost of livestock feed.
Unfortunately these look unlikely to abate anytime soon. “All the negative news is already priced in – so, one can expect prices to remain at higher levels until mid-2017,” says Mr Sihlobo.
Extracted from "This is Africa," 30th March 2017.
South African corn production will fall back sharply next year, as falling prices weigh on planting, US officials said.
After two years of drought-reduced production, followed by the current bumper harvest, the crop will fall back to more normal levels next year, the US Department of Agriculture's Pretoria bureau said. "Expected lower local corn price levels will put downward pressure on the area to be planted with corn later in 2017," the bureau said.
Commercial planting of white and yellow corn are forecast down 9% year-on-year, at 2.40m hectares. Including corn planting by small-scale substance growers, total corn plantings will be down some 7.5%, at 2.80m hectares.
Corn prices in Johannesburg are currently breaking two-year lows, under pressure from the nearing harvest, with May white corn futures at 1,965 rand a tonne, and May Yellow corn futures at 2,080 rand a tonne.
White corn less attractive
Sowings of white corn in particular, which is used to for human consumption in the form of the country's staple food mealie meal, are expected to tumble. The bureau forecast a 15% drop in the area planted to commercial white corn, to 1.4m hectares. Yellow corn plantings will stay at around normal levels, the bureau said, as the level was not particularly elevated.
Assuming normal climatic conditions and yields, South African corn crop is forecast to fall by 18% to 12.0m tonnes, from the record levels seen in this year's harvest.
High prices boost plantings for this year's crop
The fall in plantings follows the very large levels seen for this year's harvest. After two years of drought, a combination of high prices and good climatic conditions encouraged a massive boost in plantings, particularly for white corn, which is hard to import as there are very few countries that produce the variety commercially. And with continued good conditions, yield expectations are also strong.
"The good rainfall between October and December of last year in many of the areas of South Africa that were affected by the severe drought the previous season was followed by even better rainfall in February," the bureau said.
No fall army worm problems
Although the fall army worm, which is devastating production in some other countries in the region, has been detected in South Africa, any impact on production will be "limited," the bureau said.
More than 85 percent of the South African corn crop has been planted with genetically engineered seed resistant to the pest, and the government has moved quickly to allow register many commercial pesticides for use by producers. This leaves hopes for this year's corn harvest at 14.6 m hectares, up 78% year-on-year
Extracted from "agrimoney.com," 30th March 2017
The Reserve Bank of Malawi has approved the merger of Malawi’s two smallest banks, New Finance Bank (NFB) and Opportunity Bank, to meet the central bank’s capital requirements, the lenders said on Friday.
Banks in the southern African nation are jostling with each other for market share and with telecommunications firms offering mobile money transfers, in a country where less than a fifth of the population have bank accounts.
In a joint statement, the two banks said that the Reserve Bank of Malawi (RBM) had approved the merger and that it would take effect in six weeks.
“The shareholders of the merged bank intend to increase capital and grow operations,” said Chairman and Chief Executive Francis Pelekamoyo, a former Central Bank Governor.
Opportunity is a unit of micro-lender Opportunity International, while NFB has Finance Bank Zambia as a shareholder.
The merger reduces the number of licensed banks in Malawi to nine, including National bank of Malawi and Standard Bank, a Unit of Africa's largest bank y assets.
Extracted from "African Markets," 30th March, 2017
Barclays said is in talks to sell its stake in its Zimbabwe unit to Malawi-based First Merchant Bank, as the British bank continue its exit from Africa.In a Cautionary Statement, First Merchant Bank said it was in exclusive talks to buy out the 68 percent of Barclays bank of Zimbabwe owned by the British company. The remaining 32% of Barclays Bank of Zimbabwe's shares are traded on the Zimbabwe Stock Exchange.
Neither party disclosed a value for the prospective deal. Barclays Bank of Zimbabwe has market capitalization of $60 million, according to African Markets data.
This is part of Barclays plan of a broader exit from Africa announced a year ago when Chief executive Jes Staley said the lender would instead focus on a transatlantic strategy in the United States and Britain
Barclays Bank of Zimbabwe is one of two banks together with Barclays Bank Egypt that do not form part of the lender's South Africa-based Barclays Group, which is also up for sale.