For years Zimbabwe has maintained a ban on the importation or growing of genetically modified (GM) maize. While the policy disadvantaged farmers who couldn’t produce higher yields from GM seeds as their counterparts in neighbouring South Africa could, it also provided protection through phytosanitary barriers that protected the country’s non-GM maize producers.
The policy also disadvantaged consumers who were compelled to purchase higher-priced maize and maize products, which would have been relatively cheaper if the country produced higher volumes from GM seed.
The import policy has, however, changed recently. Zimbabwe has lifted the ban on GM maize imports as the country seeks to improve local supplies following yet another poor harvest season. Zimbabwe’s maize production fell by 53% year-on-year (y/y) in 2018/19 production season to 800 000 tons, according to data from the United States Department of Agriculture. This was far below the country’s annual maize consumption of between 1,8 and 2 million tons. Therefore, the country had to import at least a million tons of maize in order to meet the local supply requirements.
Meeting consumption needs
But the dearth of timely and credible data has made it a challenge to track the maize imports activity into Zimbabwe. But observing from reports of food shortages at the beginning of the year, we are inclined to believe that the country was unable to import the required maize volume for the 2019/20 marketing year (this corresponds with the 2018/19 production season).
As best as we can tell, Zimbabwe imported 100 000 tons of maize from Tanzania in 2019 and 79 283 tons from South Africa between May 2019 and January 2020, according to data from the South African Grain Information Service (SAGIS). This supports our view that the country has thus far imported less than the required maize quantities to meet consumption requirements. The slow pace of imports might have been caused by a lack of purchasing power on the back of the country’s current macroeconomic crisis. The stringent regulations on the importation of GM maize might have also contributed to the slow pace of imports.
South Africa had about 1,2 million tons of maize for export markets but produces roughly 80% of its maize from GM seeds. This means that South Africa’s capacity to supply the Zimbabwean market was limited under its stringent GM policy. This is evident from South Africa’s maize exports data; the country exported 900 585 tons of maize between May 2019 and January 2020. But Zimbabwe imported only a 9% share of this total volume.
South African maize exporters to benefit in the near term
With international humanitarian organisations such as the World Food Programme actively assisting Zimbabwe in averting the current food shortage crisis, we believe that the lifting of the GM maize import ban will accelerate maize import activity into Zimbabwe in the coming months. The maize might originate from South Africa and other leading maize-exporting countries such as the United States (US), Brazil, Mexico and Russia, among others, who have in the past exported maize to Zimbabwe.
The challenge for countries aside from South Africa and Mexico is that they are not major white maize producers, which is a preferred staple food across Southern Africa. Hence, we believe the recent policy change will benefit maize exporters from South Africa and Mexico in the near term.
Moreover, Zimbabwe’s maize needs might not end in May 2020, which would have been a harvesting period. The country’s 2019/20 maize production season started on a bad footing because of delayed rainfall. The plantings were delayed and so far, the area planted and the expected size of the maize harvest in the 2019/20 production season remains unclear.
Consumers could benefit from reduced maize prices
Fortunately for Zimbabwean consumers, neighbouring South Africa and other major maize producing countries are expected to remain maize exporters in the 2020/21 marketing year (this corresponds with the 2019/20 production season). Imports from such countries will help ease pressure on Zimbabwe.
In the long run, however, the Zimbabwean authorities should consider legalising the growing of GM maize in order for domestic farmers to produce higher yields such as those of South Africa, Brazil, US and other GM-growing countries. Exhibit 1 below shows the vast difference in maize yields between Zimbabwe and South Africa. This gap could be narrowed by embracing technological developments.
The ultimate beneficiaries would be consumers as an increase in maize production would lead to relatively lower prices. Moreover, in seasons of unfavourable weather conditions, GM crops wouldn’t be as badly affected as the conventional seeds that are currently grown in Zimbabwe.
In the short run, the challenge of food needs in the country could be prolonged to 2021. This means that South Africa might have to factor in Zimbabwe in its maize demand dynamics. The magnitude of potential needs for 2020/21, however, will be clear as the season progresses. – Wandile Sihlobo, Agbiz
Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets. Click here for the full report on agri markets for the major commodities.