The early months of 2025 are set to bring financial challenges for South African consumers as forecasts indicate a significant rise in the prices of white maize, a staple food, coupled with an increase in fuel costs.
This double whammy poses serious concerns for households already grappling with economic pressures.
The expected uptick in white maize prices stems from various factors, including fluctuating weather patterns and changes in production levels, which have historically led to shifts in agricultural output. With white maize being a crucial part of the South African diet, a hike in its price could ripple through the economy, impacting everything from meal planning to the broader food inflation rates.
The South African Cereals and Oilseeds Trade Association (Sacota) pointed out the seriousness of the situation, noting that this past week South Africa imported white maize for the first time since 2017.
Wandile Sihlobo, Agbiz's chief economist, warned that tighter maize stocks are likely to drive prices higher and become a reality in the first quarter of 2025.
“Relief may start in the second quarter of the year. On January 9, South Africa's white maize spot price traded around R6,724 per tonne, up 55% from the previous year,” he said.
“If we continue using about 428 667 tonnes of white maize monthly, the 2024-25 marketing year may end with closing stocks of just 277 884 tonnes by April 30, 2025. To understand how tight such closing stocks are, consider the 2023-24 marketing year: the white maize closing stocks were 1.3 million tonnes, and in the 2022-23 marketing year, they were 1.1 million tonnes,” Sihlobo said.
Business Report reached out to a few retailers to find out if they will be able to keep the impact of rising maize prices to a minimum for the consumer.
“We are aware of the predictions and monitoring the market, analysing the factors contributing to the anticipated increase. While market conditions are challenging, we are exploring various options to mitigate the risks associated with this, including optimising our supply chain and exploring alternative suppliers. We are committed to providing value to our customers and will continue to work hard to manage pricing while maintaining quality,” Mpudi Maubane, PR, communications and sponsorship manager at The SPAR Group said.
Popular bulk retailer, senior vice president at Massmart Corporate Affairs, Brian Leroni, said, that the retailer aims to keep their prices as low as possible for their customers, especially on staple items.
“Our proactive efforts to do so have included the expansion of our private brand portfolio and periodically implementing price freezes on items such as meat, bread and milk. Under our ECONO private brand we have developed a range of commodities such as rice, samp, maize meal and flour which provide customers with quality alternatives, at affordable prices. We will continue to explore ways to help our customers save money,” Brian Leroni said.
Neil Roets, the CEO of Debt Rescue said that maize prices skyrocketing is a grave concern for consumers.
Roets said, “Maize meal is not just a dietary staple, it is a lifeline for millions who depend on it for daily sustenance. With white maize prices having already risen by 55% compared to last year, the projected increases will severely impact families already grappling with a cost-of-living crisis. The drought that ravaged the 2024 maize production season has left us with significantly reduced yields and tighter stocks than we’ve seen in years.”
“At Debt Rescue, we witness daily how rising food prices push families further into financial distress. When prices for such essentials soar, families are forced to make heartbreaking choices, such as skipping meals or sacrificing other necessities like school fees or utility payments. The combination of economic pressure and food insecurity could lead to widespread hardship for millions of South Africans, not least of which an increase in child hunger which is inevitably exacerbated by any drop in food security,” Roets added.
Moreover, upcoming adjustments in fuel prices are anticipated for the coming month, further exacerbating the financial strain on households.
Investec economist, Annabel Bishop, said that the oil price has lifted above US$81.0/bbl (Brent crude) this year, while rand weakness as the US dollar strengthens has added to the pressure for the rand oil price, with a large petrol price hike now building for February.
“A 75c/litre increase in SA’s petrol price, and around a 45c/litre rise in the diesel price are currently signalled for February, with this the largest rise in the petrol price for SA, if it occurs, since February 2024,” she said.
BUSINESS REPORT