Senzeni Zokwana, South African Minster of Agriculture, Forestry and Fisheries recently told the news agency Reuters that government is considering using a strategic grain reserve as a possible cushion against shortages.
He said it is a possibility the inter-ministerial committee should consider.
CEO of Grain SA Jannie de Villiers, however, said the lobby group for the grain sector is not in favour of state interference in the market.
“We’d that government not take responsibility for such stock. If they want to purchase so-called paper maize, they’re free to do so, but they will have to explain that to taxpayers.”
He confirmed that the matter was discussed with Zokwana and that the minister indicated that he wanted an open debate on the issue.
De Villiers believes the plan is expensive, saying market intervention can scare role players – to the detriment of the country.
“Thus, we participate in the debate, but we don’t support the principle,” De Villiers said.
“The government can rather provide funds for research, so we can improve the resistance against heat and drought so that we are less vulnerable to droughts.”
Tinashe Kapuya, head of International Trade and Investment Intelligence at Agbiz also believes it will be more valuable to use the money for research.
He estimates the cost for a strategic white maize reserve could be R6 billion.
“Can South Africa really afford to spend so much money on something that the market can produce without any additional costs?”
He says Treasury should consider using an emergency fund to purchase stock, if necessary, rather than hoarding actual stock.