Due to the sudden devaluation of the Namibia Dollar against the United States Dollar and other currencies, Namib Mills recently announced a price increase on all of their product categories, effective as of 25 January 2016.
The local miller said market pressure as a result of the drought in southern Africa has increased maize prices dramatically, as supply dwindled under the extreme conditions.
However, in an effort to allay fears of any immediate shortages, Namib Mills said in a statement that it has procured enough maize for the expected usage until the end of June. But the miller cautioned that it is still exposed to the volatile pricing as seen currently on SAFEX, the commodity exchange in South Africa.
Prices went through the roof, increasing by N$514 per ton in the second week of December over a period of 5 days.
This was an increase of 15%. Prices increased further over the festive season reaching levels of N$5000 per ton.
The expected price increase on average for each category will be Maize Meal ± 10%, Wheat Flour ± 6%, Mahangu Meal ± 20%, Rice between 15% – 23% (two categories), and Sugar ± 15%.
Most soft commodities are exposed to the exchange rate, the sudden weakening of the Namibian Dollar against the United States Dollar has made raw material of Wheat Flour, Mahangu Meal, Rice and Sugar considerable more expensive.
“Current levels for White Maize ex-Randfontein in South Africa are around N$4600 per ton, compared to N$3300 a short while ago. This sudden increase is mainly due to the persistent drought and the weakening Namibia Dollar” according to Namib Mills.
The increase in the sugar price is mainly due to the drought currently experienced in South Africa (specifically Kwazulu-Natal), along with the weaker Namibian Dollar. Rice prices also increased due to the weakening currency.
The persistent drought in Namibia resulted in a very small Mahangu harvest which necessitated imports from abroad. There is also a certain scarcity of the product, as the only excess Mahangu producing country is India.
Although wheat has been cheap in historical terms, prices start gaining as soon as they are converted from USD to NAD along with very competitive shipping rates and Eastern Europe and Russia coming on the market the past few years with constant wheat supply.
Namibia along with the rest of Southern Africa does not use yellow maize for human consumption.
This translates into a lost opportunity as the world harvest reached 70 million tons, while the production of white maize was severely impacted by the drought.
Namib Mills said that they will continue to ensure good quality products and good service levels as well as strive to ensure constant availability of these basic food stuffs.