El Nino piles pressure on food prices
Mbongeni Mguni - Pauline Dikuelo | Monday May 6, 2024 06:00
El Niño is a cyclical weather event which, in Botswana and neighbouring countries, is associated with drought, including prolonged dry spells and frequent heatwaves. In Botswana and neighbouring countries, the recently ended cropping season experienced the most prolonged dry spell for February in 40 years, decimating crops and endangering food security.
South Africa, the region’s breadbasket which traditionally supports Botswana’s grain requirements, expects a 20% drop in white maize harvests this year and countries such as Zimbabwe are already looking as far afield as Brazil for imports.
The Bank of Botswana says the situation bodes badly for inflation, as pressure mounts on food prices.
The central bank expects generally benign inflation in the short to medium term but has warned that food prices are an area of risk.
“Inflation may be heightened by possible upward adjustment in prices controlled by government that is not factored in the current projection and any increase in domestic food prices due to the prevailing El Niño induced drought conditions in Southern Africa,” the Bank said in a briefing last week.
Other agencies monitoring both harvests and food prices are issuing similar warnings.
The United Nations Food and Agriculture Organisation (FAO) said the effects of drought on agricultural production this year are expected to be a key source of domestic inflationary pressure, given the weight assigned to food in many Southern African consumer price indexes.
In Botswana, food carries the third heaviest weighting in the calculation of inflation done by Statistics Botswana, meaning any changes in food prices tend to be reflected in overall inflation numbers.
The dependence on South Africa for grains such as white maize and others, exposes local consumers to the forecasts of higher prices in that country.
“In South Africa, prices of white maize grain continued to rise steeply in March 2024, reaching record levels, as markets reacted to the impact of harsh drought conditions on crops,” the FAO said. “Currently, production forecasts point to a below-average maize harvest in 2024, with a particularly poor outturn expected for the white maize crop.”
The FAO said with drought conditions affecting neighbouring countries, a strong upturn in export demand for South African grain is expected to add further upward pressure on prices in 2024.
According to FAO’s report, production prospects for the 2024 cereal crops across Southern Africa have taken a sharp downturn since the beginning of the year mainly due to deficits in rainfall early this year, exacerbated by record high temperatures, a particularly damaging combination for crops.
“Considering the harvest period is expected to commence in May, the likelihood of a recovery is negligible. “Cereal harvests, predominantly made up of maize, are therefore expected at below average levels in 2024, with several areas likely to experience extensive crop failures,” the researchers said.
Already, the governments of Malawi, Zambia, and Zimbabwe have declared drought emergencies, while Botswana will almost certainly do the same once experts at the Ministry of Local Government and Rural Development finalise their assessments.
For Botswana, which generally struggles with food self-sufficiency, the prospects of hunting for grain imports beyond South Africa raise the possibility of even higher costs and food price inflation.
To some extent, however, government has cushioned consumers through measures passed last year to zero-rate Value Added Tax on commodities such as salt, vegetables, cooking oil, and infant formula.
In addition, when government declares a drought emergency, the announcement triggers various measures to cover the country’s food security needs, particularly the most vulnerable in the community.
Citizens in other parts of the regional neighbourhood are not so fortunate.
A report by the United Nations Office for the Coordination of Humanitarian Affairs this week noted that hundreds of hundreds of thousands of citizens in neighbouring countries were dependent on rain-fed agriculture and exposed to both escalating prices and food insecurity.
“Food prices are significantly rising in many drought-affected areas, making it difficult for families to afford basic items and reducing children’s access to a nutritious diet. “The highest food inflation rates in the region stand at 84% in Zimbabwe, 42% in Malawi, and 25% in Angola as of March 2024. “A peak in the increase in admissions for wasting is expected in the first quarter of 2025. “The region already has concerning nutrition indicators with one in every three children stunted. “An estimated 21 million children under five years are stunted in the region, which is an increase from 18.6 million reported in 2022,” OCHA researchers stated.
Batswana will be watching for the Ministry of Local Government and Rural Development’s assessments and recommendations on the drought, which are expected before the end of the month.
Many will take comfort from statements made by President Mokgweetsi Masisi in his State of the Nation Address last November where he said government is closely monitoring the El Niño situation and is poised to respond.