GMOs and Precision Farming Drive South Africa's Food Price Deflation

South Africa's recent 5% consumer inflation rate has been fueled by surging oil prices, but food inflation is actually at an almost 16-year low of 1.4%. This is largely due to two trends in South African farming: genetically modified organisms (GMOs) and precision farming.

According to Wandile Sihlobo, chief economist of the Agricultural Business Chamber of South Africa, grains were a key factor in moderating consumer food price inflation. The 2025-26 maize harvest is forecasted to be a record 17.4 million hectares, with overall grain and oil-seed production reaching a whopping 2.15 million tonnes.

Corné Louw, head of applied economics at Grain SA, notes that moisture retention is crucial for grain farming in South Africa's semi-arid climate. The adoption of GMOs in the late 1990s improved water retention and boosted yields. Precision farming has also increased yields, with maize production surging from 2.6 tonnes per hectare (t/ha) to 5.4 t/ha between 1995 and 2020.

Maize meal is in deflationary territory, with its price almost 6% lower in June than it was a year ago. Yellow maize is critical for animal feed, reducing meat costs and feeding into inflation expectations and wage demands.