Can the SA economy or your pocket handle another increase in maize prices?
The drought that's battering Southern Africa right now is going to wreak havoc on your pockets in the near future. South African corn farmers are expected to produce the lowest maize produce in 8 years.
The last time production numbers were this low was in 2008.
The numbers are concerning and it seems that South Africa will have to drastically increase the amount of maize it imports to 3.8 million metric tonnes this year.
The problem is, with a weakening rand and falling maize production numbers across the world, it doesn't seem like we are going to make this target.
As a result, you and I will pay for this at the shopping tills.
As domestic maize supplies dwindle you will be forced to pay more
According to a News24, “The price of South African white maize more than doubled since the start of 2015 as drought caused by the global El Nino weather pattern led to the least rainfall in the country since 1904. The rand also fell, raising local-currency prices for imports.”
Maize prices hit record levels in January 2016. While some farmers are enjoying the short-lived increase in prices, this is certainly not sustainable. If maize prices do not stabilise, farmers can expect production numbers to fall even further and you and I can expect the price of maize related products to increase even more.
Why you should prepare for a serious knock on your pocket
Of course, with the constant increase in fuel, electricity and the general cost of living already battering your budget, the knock of effect of higher maize prices will only add to the financial pressure in all households.
You see, a shortage of grain doesn’t only increase the cost of goods like bread and mielie meal, it’s also the primary feed for farm animals in South Africa.
You can expect the cost of meat to increase too. Poultry, beef and pork producers are already paying exorbitant prices to get their products to the markets.
The last time the price of grain increased in February 2015, the price of pork increased 70% in the coming months. Because of the tough economic situation here at home, these prices have still not pulled back.
Poultry and meat producers are already struggling to overcome cash flow hurdles. This increase in maize prices will inevitably make it more expensive for them to run their businesses.
With constant economic hurdles like these destroying your personal finances, it’s time to start taking your personal finances more seriously. You need to start looking for new ways to grow your income if you want to survive in this ailing economy.