Following USGC Engagement, South Africa Buys U.S. Sorghum, Open To U.S. Corn

Article from the U.S. Grains Council Global Update

Following USGC Engagement, South Africa Buys U.S. Sorghum, Open To U.S. Corn

New engagement by U.S. Grains Council (USGC) staff and members in South Africa over the past year has helped achieve export victories there, with recent sales of U.S. sorghum and biotechnology trait approvals that will allow imports of U.S. corn.
In 2015 and 2016, as a result of El Nino, the country suffered a severe drought, leading its feed industry to import U.S. corn for the first time in almost a decade. South Africa uses both yellow corn for animal feed and white corn for a staple food known locally as pap or mieliepap.

While the United States had plenty of corn available for export at a reasonable price, lagging biotech trait approvals limited the amount of possible exports to South Africa.

More than 140,000 metric tons (5.5 million bushels) of U.S. white corn was shipped to South Africa in 2016, but a lag in getting biotechnology traits approved prevented more corn from the U.S. being shipped last marketing year.

To address these constraints and set the stage for new sales, USGC and its members responded quickly to this opportunity and ramped up outreach efforts in the South African market.

In May 2016, USGC sent a team of staff and member delegates to meet with key stakeholders in South Africa, learn more about these constraints and explore the possibility of imports of feed grains beyond corn. Immediately following that visit, USGC hosted a team of representatives from one of the largest corn milling companies in South Africa in the United States, offering them information about the U.S. grain handling system and quality standards. In the fall of 2016, the U.S. Grains Council hosted another team of commercial grain traders and end users from South Africa to showcase the 2016 U.S. sorghum harvest.

This outreach prompted South African buyers to make purchases of U.S. sorghum of about 45,000 metric tons (1.7 million bushels) in 2015/2016.

The country’s Department of Agriculture, Forestry and Fisheries (DAFF) also announced in December 2016 that it would immediately eliminate the biotech restrictions on corn imports from the United States. This month, the South African government issued 15 permits authorizing the import of 1.3 million metric tons (51 million bushels) of white and yellow corn from the United States.

While the drought has eased, it’s likely South Africa will need corn imports until their local new crop becomes available in April, demand that can now be met by U.S. corn. This represents an estimated market potential of approximately 400,000 metric tons (15.7 million bushels) of yellow maize and 300,000 tons (11.8 million bushels) of white maize this year 2017.

The Council plans to continue to monitor and respond as necessary to the grain situation in Southern and Eastern Africa. While the drought may be over in South Africa, drought conditions are now affecting East Africa and Madagascar, which will likely create additional feed grain demand for U.S. exporters in 2017.

More about the Council’s outreach in South Africa is available in past newsletter stories available here, here and here.