September 8, 2010

 

China may absorb South African corn surplus

The Chinese government yesterday (Sep 7) brought hope to South African (SA) grain farmers who are struggling to find alternative markets to dispose of surplus corn following a bumper crop that drove prices down.

 

Agriculture, Forestry and Fisheries Minister Tina Joemat-Pettersson said SA is talking to China about a much-needed alternative market.

 

The government is also hoping to attract new investment in agro-processing plants, she said.

 

SA, the continent's largest producer of corn, produced a surplus of about four-million tonnes for the 2009-10 season, but strict competition rules mean farmers are not allowed to pool the surplus in order to sell it internationally to the highest bidder.

 

"We've had our first round of negotiations with the minister of agriculture as well as the minister of imports in China," Ms Joemat-Pettersson said yesterday, ahead of her departure to China.

 

She said that although China does not import corn as a necessity, "they import value-added products which would be cattle feed and poultry feed, so the discussions we are having would be to use some of the corn for value-addition, which would then mean that we set up systems for agro-processing for the surplus corn that we do have".

 

Argentina, Brazil and China account for more than 60% of total corn output in the developing world, with China alone accounting for 45%.

 

The Agricultural Business Chamber welcomed the department's efforts last night, saying that if the deal goes through it will "help stabilise the price" to acceptable levels.

 

John Purchase, CEO of the chamber, said it will be ideal for the farmers and for agricultural businesses if the minister succeeds in negotiating a long-term agreement with China.

 

That will encourage farmers to plant more of the grain to supply a big market such as China's, he said. Grain SA, the body that represents most of SA's corn, wheat and soy producers, last week estimated that up to 10,800 small farmers face bankruptcy due to a record corn harvest of 13-million tonnes, which has driven prices down.

 

It warned that almost 30% of commercial farmers could be out of business by next season.

 

Last month, Grain SA chairman Neels Ferreira called for the interventions of the departments of trade and industry as well as agriculture, forestry and fisheries, saying the farmers want an urgent solution, given the danger of their produce being wasted because they cannot dispose of all of it in the local market.

 

He said the government also needs to reopen the debate on the ban on using corn for biofuel, imposed in 2008 when world corn stocks were dwindling and there was fear of compromising food security.

 

Allowing corn to be sold for biofuel use would contribute to SA's production of oil and also help the country reach its objectives for renewable energy, he said.

 

Grain SA estimated that the renewable energy, or biofuel, option would add 9% to the volume of oil produced in SA, create an extra 39% of protein feed for animal use, and add to the production of commercial carbon dioxide. It also estimates that 105,000 jobs could be created by the biofuel process.