Determinants of maize exports from South Africa

Abstract

Maize is one of the major grain crops globally, as approximately 1.2 billion individuals in Latin America and Sub-Saharan Africa is dependent on it as a nutritious and accessible food source. South Africa is the ninth major producer and the eighth major exporter of both white and yellow maize globally. Since this grain crop plays such a vital part in the economy of South Africa and in food security, having a better understanding of the specific factors that influence South Africa’s maize exports is necessary. Therefore, the objective of this study is to determine the key factors that affect South African maize exports. Furthermore, this research aims to add to the body of existing literature to prove that the Coronavirus pandemic (COVID-19) and the strict restrictions imposed during the period barely impact on South African maize exports. The study uses annual secondary data from 1980 to 2023. The Autoregressive Distributed Lag (ARDL) technique for long-run association and the Error Correction Model (ECM) for the short-run were employed for the analysis of this study. The ECM analysis reveals that, in the short-run, both average rainfall and maize production were found to have a direct and statistically significant impact on export volumes in the short term with the coefficients 0.24% and 1.11% respectively. The elasticity of maize production was particularly high, with a 1% increase in production translating into a 1.11% increase in exports. This high level of responsiveness might be a result of South Africa's export infrastructure and effective maize value chain. The ECM term indicated that approximately 67% of the previous year’s disequilibrium in export volumes is corrected annually. Long-term findings showed that producer price, average rainfall and maize production were all significant at -0.84%, 0.31% and 1.21% respectively. Producer price was inversely correlated with exports, indicating that higher domestic prices diminish export volumes, which in turn encourages producers to sell in the domestic market. Furthermore, average rainfall and maize production showed positive and significant relationships with exports, which implies that better rain and production increases maize exports. These findings emphasize the climate-sensitive nature of maize production in South Africa, where 90% of maize is rainfed, and highlight the need for investments in irrigation systems, agricultural productivity, and price stabilization mechanisms to enhance long-term export. Trade openness and COVID-19 had positive, but insignificant relationship with maize exports, while world maize price had a negative and insignificant association with maize exports. With regards to Covid-19, the insignificant results confirm previous findings, which showed that theCOVID-19 pandemic did not have any significant effect on South African maize exports. This is partly due to the fact that the agricultural sector was exempted from lockdown restrictions and its production was not affected.