Maize price fixing probe. Cosatu concerned traders manipulating drought.

CAPE TOWN, Jan 19 (Reuters) – South African competition authorities said on Tuesday they would investigate allegations that soaring maize prices were being manipulated by traders to the detriment of the poor majority.

The move followed a complaint from trade union federation Cosatu that it wanted an expediated investigation expedited and “perpetrators to be jailed for undermining South Africans’ food security through price manipulation”.

A barren maize field on a road to Parys.
A barren maize field on a road to Parys.

“I can confirm we received a letter from Cosatu in terms of which they request the commission to conduct an investigation,” Competition Commission spokesman Itumeleng Lesofe, told Reuters.

He said the regulator’s probe would commence once Cosatu completed the necessary form sent to them.

The price of maize, a staple in Africa’s most developed economy, has roughly doubled in a year as the worst drought in over a century scorched production across key farming regions.

The price for South Africa’s white maize March contract climbed 1.8 percent on Tuesday to close at a record high of 5,200 rand ($310.14) a tonne on concerns over the drought.

Read also: United Nations: Drought sees 14m face hunger in Southern Africa.

South African Agriculture Minister Senzeni Zokwana said on Friday the country needed to import between 5 and 6 million tonnes of maize after hot weather and poor rainfall ruined a third of the maize crop.

“It would seem that traders are manipulating the price of maize, where it is being bought and sold. This has a huge impact on poor communities who are dependent on maize as a basic food item,” Cosatu, a powerful ally of the ruling African National Congress said in a statement.

By Dane McDonald

Cape Town – The Congress of South African Trade Unions (Cosatu) on Tuesday called for a Competition Commission investigation into the alleged price fixing of maize.

Cosatu provincial secretary in the Western Cape Tony Ehrenreich told Fin24 that the price of maize was rising dramatically “overnight” and that the amount of trading was not justified.

Read also: Fanie Brink: Worst drought in 20+ years. Food crisis imminent.

“Cosatu is concerned that traders are using the drought to manipulate maize price increases,” he said in a statement.

Ehrenreich said that the amount of maize sold was within the amount available in South Africa in spite of the drought.

Reuters reported that the price for South Africa’s white maize March contract climbed 2.4% to a record high of R5 106 a tonne as concerns over the drought weighed.

The trade union federation has called for a “comprehensive” investigation into the pricing and demand and supply of maize in South Africa, while accusing traders of price manipulation and “buying and selling among themselves”.

Read also: SA turns to Mexico for maize as drought bites output

“There can be no other reason that justifies an increase of R150 per ton when all other factors driving cost remain the same except local purchases of 70 000 tons,” Ehrenreich said.

“Cosatu wants the trading of maize to be made public so we can follow the pricing and see who is driving price increases through purchases. These purchases should be publicly available.”

“We believe the government should intervene in the supply and pricing of maize given its central role in food security and hunger alleviation,” the union said.

Grain SA CEO Jannie de Villiers told reporters on January 15 that SA would need at least R20bn to import the 5 to 6 million tons of maize needed to mitigate the effects the drought has had on crop production in the country. – Fin24

Source: http://www.fin24.com/Economy/cosatu-calls-for-maize-price-fix-probe-20160120

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