September 18, 2007

Biofuel demand pushes up maize prices

Increased global demand for biofuel has pushed up the already buoyant price of maize in South Africa. After a second consecutive poor maize harvest in South Africa, which usually meets food shortfalls in the region, prices have been high, according to the latest USAID-funded Famine Early Warning Systems Network (FEWS-NET). A demand-driven world price, especially in the USA, where maize is increasingly used to produce ethanol, have also pushed up prices in South Africa, and is expected to keep them high for the rest of the year.
In dollar value, the price of white maize has shot up by 186 percent in the last two years: from US$89 per metric tonne (mt) in May 2005 to $254 per mt in August 2007, according to Phumzile Mdladla, who heads FEWS-NET's Southern Africa office. "But demand for biofuel is not the only reason for the increase, it is a combination of factors: the drought last season, high fuel prices and an increase in demand." The South African Grain Information Service also noted that in August the country had to import 504.904 mt of yellow maize from Argentina, and 5.537 mt of white maize from Zambia and Malawi to meet its domestic and export commitments to neighbouring Botswana, Lesotho, Namibia and Swaziland, as well as other countries with grain deficits. (Rts)

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