June 27, 2012

 

South Africa seeks for Asian farm commodities

 

 

The corn and citrus farmers of South Africa are setting their sights on Asia as they struggle with rising competition in Africa and Europe's falling consumption.

 

With promises of booming demand in the East and low shipping costs, South African farmers are vigorously courting Asian buyers, focusing on China.

 

"We have met with some Chinese buyers. They are already in South Africa looking at opportunities to buy South African maize," Grain SA chief executive Jannie de Villiers said.

 

China's 2012/13 corn imports are forecast at seven million tonnes, a USDA June supply-demand report showed.

 

South Africa's grain trade is market-driven and producers face few government restrictions. The government's May forecast for the 2012 crop was 11.056 million tonnes, against a 10.36 million tonnes harvest in 2011.

 

Traditionally South African corn farmers have exported surpluses to destinations within Africa, mainly to neighbouring countries, while fresh-fruit producers have cultivated close ties with buyers in Europe.

 

However, a series of bumper corn harvests in Zambia and Malawi have trimmed South Africa's market share in the region. Another problem has been that some African countries remain wary of genetically modified crops, which account for most of South Africa's corn production.

 

"It is not a question of moving away from the traditional markets, but securing more alternative markets," Piet Faure, a soft-commodities analyst at CJS Securities, said.

 

Asian markets are attractive because of their proximity to South African ports and the reduced delivery times compared with the EU, US and South America, Faure said.

 

In the past year, Africa's largest corn producer has sold to countries such as South Korea, Kuwait, Japan, Iran and Taiwan after a vigorous marketing campaign in Asian markets.

 

"The trade balance in the East is beginning to favour South Africa," agriculture minister Tina Joemat-Pettersson said.

 

The National Agricultural Marketing Council and the Department of Agriculture have now identified China, Ukraine, Kazakhstan, Singapore and Malaysia as attractive new markets for South Africa, a report in May said.