South Africa approved imports of genetically modified corn from the U.S. for the first time after its worst drought since records began 104 years ago cut local output. Local white corn prices fell.
The nation will allow both white and yellow GM corn from the U.S. to be brought in, Dirk Kok, a spokesman for the secretariat of the Pretoria-based South African Cereals and Oilseeds and Trade Association, said in an interview on Monday. A call to the government’s Department of Agriculture, Forestry and Fisheries media department wasn’t answered.
“The door is open to imports from the U.S.,” said Kok, whose organization represents grain and oilseed traders. Local “prices will come down,” he said.
The country became a net importer of corn in the season that ended in April for the first time since 2008 this year after the drought slashed the total harvest by about a quarter to 7.97 million tons, the smallest in a decade. While rains in the current season are improving prospects for the next crop, concerns about supply of the white variety, used to make a local staple porridge known as pap, persist because this type is only widely produced in southern Africa and Mexico.
White corn surged to a record 5,296 rand ($385) a metric ton in January and has fallen 28 percent since on the South African Futures Exchange in Johannesburg. The contract for March delivery fell by the 100-rand limit, or 2.6 percent, to 3,755 rand by the close on Tuesday. The yellow type, used for animal feed, reached a high of 3,915 rand a ton in June and has dropped 20 percent since. It fell 55 rand, or 1.8 percent, to 3,092 rand a ton on Tuesday.
The decision “is critical,” Wandile Sihlobo, the head of economic and agribusiness intelligence at the Agricultural Business Chamber, said by phone from Pretoria, the capital. “We are going to see a stronger correlation between the yellow-maize price and the U.S. price. The reaction of the South African farmers is going to be interesting.” Maize is another term for corn.
By the end of April, South Africa may import 300,000 tons of GM white corn from the U.S. and 500,000 tons of yellow corn, he said.
South Africa imported 555,241 tons of white corn between May 1 and Nov. 25, or 65 percent of the forecast amount for the season ending April 30, according to the Agricultural Business Chamber. Almost all of that came from Mexico.
Grain SA, the biggest organization representing corn farmers, is opposed to the new imports, Chief Executive Officer Jannie de Villiers said.
“We think this is a bit of unfair trade because American farmers have better access to technology and now we have to compete with them,” he said in a phone interview. “The price should go down. If there was enough in Mexico, why are we opening it up to the Americans to have a shot at the South African market?”