20110110
reuters

JOHANNESBURG (Reuters) - The United Nations may have sounded the alarm about soaring global food prices, but in Africa a string of bumper harvests and a changing diet means the political fallout may be more muted than to past price bumps.

On the financial side, a little bit of inflation will help push up domestic debt yields in the region's frontier markets, making bonds more attractive to foreigners and thereby giving currencies a boost.

But in contrast to the Food and Agriculture Organisation's global food index hitting 2008 crisis levels last week, maize, Africa's predominant staple, is showing few signs of stress, suggesting a repeat of the unrest of two years ago on the continent is unlikely.

South Africa, its biggest economy and maize grower, has just harvested its heaviest crop in 30 years and maize prices are 1,281 rand/tonne -- 22 percent above a 2010 low but only just over half a record 2008 high of 2,240 rand.

The supply story is much the same in many other states in Africa, where food makes up a much larger chunk of the average inflation basket than developed countries, making their economies far more susceptible to food supply crunches.

A five-year fertilizer subsidy programme has caused steadily rising crops in Malawi, which had a surplus of nearly 1 million tonnes in August compared to consumption of 2.5 million.

Zambia had a maize export surplus of 1.1 million tonnes in November after its second record harvest in two years, based on good rains and growing investment in the farming sector.

Even Niger, which needed $250 million in food aid last year to help feed 10 million hungry people, said last week favourable weather had put it on course for its best cereal crop in 20 years, with a forecast surplus of 1.5 million tonnes.