September 9, 2010

South Africa seeks markets for grain surplus

The South African government brought hope to 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 South Africa is talking to China about a much-needed alternative market. The government is also hoping to attract new investment in agro-processing plants, the minister said.

South Africa is the continent's largest producer of corn and produced a surplus of about 4 million tonnes for the 2009-10 season.

However, strict competition rules mean farmers are not allowed to pool the surplus in order to sell it internationally to the highest bidder.

Joemat-Pettersson 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 between them account for more than 60% of total corn output in the developing world, with China alone accounting for 45%.

Grain SA, the body that represents most of South Africa'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 had a deleterious effect on prices.

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 as they cannot dispose of all of it in the local market.