“On analysing the whole scenario around the stock levels and where we are, calculations come up to about 30 per cent more for maize meal. This is based on the exchange rate weakening by about 16 per cent year on year in 2011, [which] gave us a rise in the vicinity of about 30 per cent,” ABSA Agribusiness head Ernst Janovsky told CNBC Africa.
Janovsky explained that the expected price hikes are due to the current drought in the country, especially within the white maize producing areas. This results in limited stock and low inventories.
“[There will be] a hike in the sense that all of a sudden certain companies are running out of stock, but other companies still have stock. That means there’s a juggling for positions in terms of who is going to market what during this period, and who has the product to market,” he said.
He added that the consumer should therefore expect to pay more, with the basic consumer being hurt the most throughout the price hike process.
Janovsky however added that while beef, poultry and mutton industries were also exposed to the higher maize meal price, they would not be directly influenced by it.
“Imports are going to be a little bit lower so all of that is going to play into the hands of the poultry industry, to some extent up their prices slightly. My view is that [in terms of] food inflation, we’re now stuck in the vicinity of about eight to nine per cent,” he said.
“It is going to jump to [about] 12 [or] 13 per cent. I think that’s where we’re going to end up this year with food inflation, and that’s exchange rate play.”