Maize (Zea mays L.) is the most important grain crop in South Africa and is produced throughout the country under diverse environments. See fuller discussion under “Local business environment” heading.
Successful maize production depends on the correct application of production inputs that will sustain the environment as well as agricultural production. These inputs are, inter alia, adapted cultivars, plant population, soil tillage, fertilisation, weed, insect and disease control, harvesting, marketing and financial resources.
In developed countries, maize is consumed mainly as second-cycle produce, in the form of meat, eggs and dairy products. In developing countries, maize is consumed directly and serves as staple diet for some 200 million people. Most people regard maize as a breakfast cereal. However, in a processed form it is also found as fuel (ethanol) and starch. Starch in turn involves enzymatic conversion into products such as sorbitol, dextrine, sorbic and lactic acid, and appears in household items such as beer, ice cream, syrup, shoe polish, glue, fireworks, ink, batteries, mustard, cosmetics, aspirin and paint.
International business environment
- With strong demand for maize from food companies, livestock producers and ethanol makers, American maize (corn) production is considered a critical component in global supply and demand. The USA is the largest producer of maize, followed by China, Brazil, the EU and Argentina (USDA, 2021).
- The largest exporters of maize are the USA, Argentina, Brazil and Ukraine (USDA, 2021).
- Top importers are the China, Mexico, EU, Vietnam and South Korea, (USDA, 2021).
- The annual Bureau for Food and Agricultural Policy (BFAP) Baseline includes an overview of the global maize situation and trends. Find it at www.bfap.co.za.
- Maize (corn) is included in the “Grain: World Markets and Trade” circular available from the United States Department of Agriculture (USDA). Statistics of global role players (countries) are listed. Production, consumption, exports etc are looked at. This circular is available on the Foreign Agricultural Service Home Page. The address is https://apps.fas.usda.gov/psdonline/circulars/grain.pdf.
- Visit the National Corn Growers Association (USA) website – www.ncga.com.
- The maize price is determined by the prices of the Chicago Board of Trade (CBOT) – www.cmegroup.com (refer also to the “Commodity trading” page).
- The SADC Secretariat and German Development Corporation‘s Profiling of the Regional Agro-Processing Value Chains in the SADC Region (March 2019) included a look at maize.
South Africa: exports and imports
Find the latest presentation and other information on the SAGIS website, www.sagis.org.za.
From the Bureau for Food & Agricultural Policy (BFAP) Baseline 2021-2030, available at www.bfap.co.za:
Exceptional growth in maize production volumes in 2020 yielded a substantial exportable surplus and 2.8 million tonnes was exported successfully from South Africa. Of this, 45% was white maize, which is predominantly destined for the African region. With export volumes set to increase further in 2021, consideration of possible destination markets becomes increasingly important. Box 3 [of the Baseline] indicates that many countries across Southern Africa produced bumper crops in 2021 and prices have declined sharply in the region. This would suggest that South Africa will struggle to move large volumes of white maize into the region, instead opting to substitute white maize into animal feed, particularly in the Western parts of the country, and exporting more yellow maize, for which there is ample market space. This would imply however that white maize will trade at a discount to yellow maize in 2021, as is often the case in surplus years.
- An analysis of South African imports and exports is given in the annual Department of Agriculture, Land Reform and Rural Development (DALRRD) Maize Market Value Chain Profile (find it under “Annual publications” on the Directorate Marketing web pages at www.dalrrd.gov.za).
- The DALRRD-NAMC TradeProbe Issue 85 (May 2021) includes the report “The rise of South African maize in the international markets”. Find the document at www.namc.co.za/wp-content/uploads/2021/08/Trade-Probe-Issue-85-May.pdf
Understanding the Economics of the Maize Industry
The maize market is an open and deregulated market. What you get for your crop is very much what the market prices at the time are.
A number of factors influence what this price is:
- The international price of maize. People want to save money. If they can buy maize from somewhere else at a price lower than yours, they will do so.
- The current exchange rate. The balance between the South African rand and the American dollar might make it a bad idea for a miller to buy your maize when he could be getting it cheaper somewhere else. This is the reason why the exchange rate is watched with great interest.
- Local production (influenced by weather conditions and hectares planted to maize). If there is not a lot of maize around, you will have many people wishing to buy your maize and so the price you get will be higher.
- Local consumption of maize. If the demand for maize were to drop, then not that many people would be wanting to buy your maize and you would have to settle for a lower price.
- Production levels in the SADC region (South Africa is usually the main source of white maize for these countries in times of shortage). If a lot of maize has been produced, then the people who buy it will be able to buy from elsewhere if you are wanting too much for yours.
- Stock levels (both domestically and internationally). How much maize is available? In times of surplus, the price of maize is closer to export parity, whilst in times of shortages the price of maize will be closer to import parity. It should be emphasized that information on outlook and trends of the fundamental factors influence market perceptions of traders which eventually affect the price levels. Credible and timely information, especially on crop estimates, stock levels, imports and exports, is therefore critical for the proper functioning of the market.
Local business environment
- Maize is produced throughout South Africa with Free State, Mpumalanga and North West provinces being the largest producers, accounting for over four-fifths of total production. Maize is produced mostly on dry land with less than 10% produced under irrigation.
- White maize is primarily for human consumption. Yellow maize is the most important ingredient in feed rations for dairy, beef, poultry and egg production.
- The ratio between human consumption vs animal feed, white maize vs yellow maize, is changing for a number of reasons: (i) Maize production becoming less profitable in the western parts of the country, where most of the white maize is grown (ii) Yellow maize being easier to trade globally, the prices less volatile than for white maize.
- Maize is planted mainly between mid-October and mid-December. The rainfall pattern and other weather conditions of a particular season determine the planting period as well as the length of the growing season. This planting window is coming later than in previous years, and the period is shorter, placing pressure on farmers (BFAP, 2019).
- Improved maize yields over time are attributed to precision farming, mechanisation and improved seed varieties. However, South African farms are less competitive than major international role players on a cost of production basis, mainly due to lower yields and the high cost of selected inputs (BFAP, 2018).
- After consecutive drought years, weather conditions improved in 2020 and producers showed their resilience by delivering the second largest maize crop on record at 15.3 million tonnes. Demand for maize also strengthened as consumers spent more time at home which, together with budgetary constraints, resulted in many households returning to more basic and affordable food staples, even if preparation time is longer (BFAP, 2021).
- The maize industry is important to the economy both as an employer and earner of foreign currency because of its multiplier effects (maize also serves as a raw material for manufactured products such as paper, paint, textiles, medicine and food).
- The maize marketing season in South Africa commences on 1 May and ends on 30 April the following year.
Source: Maize Market Value Chain Profile (Department of Agriculture, Land Reform and Rural Development); BFAP Agricultural Outlook 2021-2030, 2020-2029, 2019-2028 and 2018- 2027; ABSA Agricultural Outlook Autumn Edition 2019.
Market value chain
The maize market value chain can be broken down into the following levels:
|Primary||Input suppliers |
Animal feed manufacturers
|Tertiary||Traders (hedgers, arbitrageurs and speculators) |
Transporters (used throughout the chain)
Useful references and documents
- Find the annual Maize Market Value Chain Profile under “Annual publications” on the Directorate Marketing web pages at www.dalrrd.gov.za. Much of the information from the “Local business environment” heading is drawn from there.
- The annual Bureau for Food and Agricultural Policy (BFAP) Baseline includes a look at the domestic maize market situation. Useful inclusions in previous Baselines included the mini-study “Maize production – How small is big ‘enough’?” (Baseline 2017-2026).
- Find the maize information (including crop quality, production regions and maps and much more) on www.sagl.co.za.
- Find the Grading Regulations for maize and requirements for grain exports at http://agbizgrain.co.za.
- Statistics (e.g. crop estimates, export/import etc) may be found on the South African Grain Information Service website – www.sagis.org.za – and on the National Department of Agriculture’s one (take the “Branches” and “Administration” menu options), www.dalrrd.gov.za.
- Find the standard contract format for the transport of grain in Southern Africa at www.grainmilling.org.za.
Grower points of interest
Options for when there is a maize surplus and prices are low
“There are still a lot of unexplored opportunities in the secondary maize industries e.g. ethanol production and protein extraction. If we invest in the downstream maize industries, we can retain our competitiveness in the grain sectors”, believes Andrew Makenete.
What are the options of using your harvested maize profitably?
- Store the grain until the prices are better (see the “Grain storage and handling” chapter).
- Clean the grain, bag it and market it to small maize buyers. Giving them exactly what they want can earn you a premium price. This can include neighbouring livestock farmers, informal traders or those wanting it for household use.
- Use it for your own livestock.
- Diversify into a small, on-farm milling operation of your own Long term solutions.
- Hedge your prices.
- Plant 50% less maize.
- Buy (and store) maize instead of planting it! Find the articles on www.landbou.com “Moenie mielies plant: koop jou oes” [Don’t plant maize: buy your harvest] and “Moenie mielies plant: Koop oes (deel 2)”.
- Plant other crops like groundnuts, soybeans or cowpeas. The latter, as a legume, fixes nitrogen in the soil benefiting follow-up crops. Cowpea can be grazed, baled or turned into silage.
- Diversify into livestock production.
The Maize Trust and assistance to emerging maize farmers
The Maize Trust currently funds most of its transformation projects through the Farmer Development Programme of Grain SA and by means of the Grain Farmer Development Association (GFADA).
- There are approximately 3 600 black farmers in the Grain SA study groups and 58 farmers in a 250 ton maize club. More than 120 black farmers are serviced currently as part of an advanced farmer project within the Development Programme of Grain SA.
- GFADA assists black emerging farmers by paying for, inter alia, soil correction, comprehensive crop insurance and the costs of mentors to assist the farmers for a five year period or longer. By not being limited to funding for one commodity only, GFADA has the added benefit of crop rotation opportunities for the farmers.
Over and above the funding granted by means of GFADA and Grain SA, the Trust also funds transformation projects through projects of the Agricultural Research Council.
Source: Maize Trust. Interested parties are invited to contact the administrators of the Trust. See https://maizetrust.co.za.
Contacts for the Grain SA Development Programme:
Information on the Grain SA Development Programme (including contact details for training courses) are at www.grainsa.co.za/pages/farmer-development.
National strategy and government contact
Find contact details and information on the different directorates at the Department of Agriculture, Land Reform and Rural Development (DALRRD) at www.dalrrd.gov.za (take the “Branches” menu option).
One of ten “Sectoral interventions” suggested in the Agricultural Policy Action Plan (APAP) from the previous administration is in the “Poultry/soya beans/maize integrated value chain”. It was envisaged that supporting the yellow maize sector would help keep animal feed costs down. This was to be done through “more targeted technical and input assistance, and encouraging stronger linkages between commercial and smallholder farmers, and feed companies via efficient market intermediaries such as cooperatives” (page 26). Maize also plays a role in animal feed for intensive beef production (feedlots).
Both the APAP and previous BFAP Baselines (2018, 2015) touched on the comparatively high cost of fertiliser in South Africa, making the cost of producing maize under dryland conditions in South Africa is significantly higher, compared to leading global producers. When you import something like fertiliser, a host of other costs kick in: the exchange rate, deep sea freight rates, unloading- and administrative cost at ports and inland transportation. What can be done about this? Find the Agricultural Policy Action Plan (APAP) discussion on this on the “Fertiliser” page.
- Agbiz Grain www.agbizgrain.co.za
- Animal Feeds Manufacturing Association (AFMA) www.afma.co.za
- Grain SA (GSA) www.grainsa.co.za
- Maize Trust www.maizetrust.co.za The Board of Trustees ensures that the income derived from assets of the Maize Trust is utilised for the benefit of the whole maize industry. Find the earlier heading “The Maize Trust and assistance to emerging maize farmers”. The Trust also annually grants approximately 12 bursaries for maize related MSc and PhD studies to qualifying students at all the South African Universities, of which at least 50% is from disadvantaged communities.
- National Chamber of Milling / Grain Milling Federation www.grainmilling.org.za
- South African Cereals and Oilseeds Trade Association (SACOTA) www.sacota.co.za
- South African Grain Information Service (SAGIS) www.sagis.org.za
- South African Grains Farmer Association (SAGRA) http://sagra.africa
See previous heading.
Training and research
- ARC-GC (Grain Crops) www.arc.agric.za In addition to research, ARC-GC provides short courses to farmers which cover soil preparation; fertiliser requirements; weed, pest, disease management; production practices of maize.
- Agricultural Colleges and Universities offering agricultural qualifications do research and training in maize production. Find their details in the “Agricultural education and training” article.
- AgriSETA accredited providers offer training on maize production. Examples include: (i) Agriskills Transfer www.agriskills.net (ii) Buhle Farmer’s Academy www.buhle.org.za (iii) Skills for Africa www.skillsafrica.co.za
- Grain Training Institute www.gtionlinetraining.co.za
- Southern African Grain Laboratory (SAGL) www.sagl.co.za
- The Syngenta Grain Academy is a partnership between Syngenta and the University of the Free State’s Business School. See http://grainacademy.co.za.
- AMT www.amtrends.co.za
- Bureau for Food and Agricultural Policy (BFAP) www.bfap.co.za The annual BFAP Baseline Agricultural Outlook covers the prospects for maize extensively. See also their 2017 study Adding value in the South African maize value chain.
- Southern African Grain Laboratory (SAGL) www.sagl.co.za Accredited [ISO 17025] as the reference laboratory for the grain and oilseed industries in Southern Africa.
Grain storage and marketing
Websites and publications
- Several publications and documents relating to maize can be found on the website of the DALRRD, www.dalrrd.gov.za. These include the Maize Market Value Chain Profile (find it on the Directorate Marketing web pages) and grower guides (find the “InfoPaks” and “Brochures & grower guides” options under the Resource Centre option). The 5th in the series Agricultural Marketing Extension Training Papers deals with field crop marketing with an emphasis on maize.
- Find the DALRRD web page on Fall Armyworm (FAW) at www.dalrrd.gov.za/Branches/Agricultural-Production-Health-Food-Safety/Food-Import-Export-Standards/Fall-armyworm
- The CD Production of maize, diseases and pests and the Maize Information Guide (MIG) are two comprehensive information sources, available from ARC-GC. This can be downloaded at www.arc.agric.za. Alternatively, contact the ARC-GC at 018 299 6100.
- CD Roms from the ARC-PPR (Plant Protection Research) include: (i) Crop Pests, Vol. 4: Field Crops and Pastures Pastures (ii) Medically Important Spiders And Scorpions Of Southern Africa. Write to booksales [at] arc.agric.za or infopri [at] arc.agric.za.
- Order online at www.arc.agric.za, call 012 842 4017 or send an email to stoltze [at] arc.agric.za for the following publications, available from the ARC Agricultural Engineering: Agro-processing of Cereal Crops Vol. 1 (Maize, oats, rice).
- Consult the AgriSETA Learner Guide Primary Agriculture “Harvesting agricultural crops”.
- BFAP undertook a study for the Maize Trust related to the potential of the domestic value chain to grow and diversify the production of value added goods. Refer to the report “Adding Value in the South African Maize Value Chain”.
- Find the “Technical information” option under “Products” on the Pannar website at www.pannar.com. “Maize Production Manual – Know the Maize Plant (SA)” is a comprehensive booklet that guides one from the time of planting through to harvesting.
- The results of maize research projects that were funded by the Maize Trust are available from the Administrators of the trust. See www.maizetrust.co.za.
- Find the Prospectus on the South African Maize Industry at www.sacota.co.za. .
- The Water Efficient Maize for Africa (WEMA) project – http://wema.aatf-africa.org
- www.sagl.co.za – read about national crop quality and other national projects on the Southern Africa Grain Laboratory website.
- Find the Nation in Conversation overview of the maize industry (April 2017) on YouTube.
- Dempsey P. 2021, July 31. “Striving for optimal maize yields”. Farmer’s Weekly. Available at www.farmersweekly.co.za/crops/field-crops/striving-for-optimal-maize-yields/
- Dean S. 2020, March 2. “Consistent quality ensures success for popcorn exporter”. Farmer’s Weekly. Available at www.farmersweekly.co.za/agri-business/agribusinesses/consistent-quality-ensures-success-for-popcorn-exporter/
- Du Toit, M. 2019, July 4. “We’ve moved from pap to umdoko, says KwaZulu-Natal small scale farmer”. Food for Mzansi. Available at www.foodformzansi.co.za/weve-moved-from-pap-to-umdoko-says-kwazulu-natal-small-scale-farmer/
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