South Africa is not an insignificant player in global agriculture. The country ranked 32nd among the world's top agricultural exporters in 2023 and the only African country in the top 40.
South Africa should be able to plug the gap in the event that its neighbours on the continent experience shortages of agricultural commodities such as maize, wheat and sunflower oil because of supply-chain constraints caused by the Russia-Ukraine war.
Since the war began on 24 February, there have been fears — some of which have already materialised — of a negative impact on global trade networks given that Russia and Ukraine are major exporters of grains, oilseeds, fertilisers and crude oil.
The prices for agricultural commodities have already begun to soar, as a result of higher oil prices and the increasing cost of fertilisers.
The global prices of sunflower and wheat have increased by 44% and 18%, respectively, since the beginning of the war, according to nonprofit organisation the Bureau for Food and Agricultural Policy (BFAP).
“Russia and Ukraine are major suppliers of sunflower and wheat to the world market. Global price increases are transmitted to South Africa’s import and export parity prices, and, therefore, prices of maize, wheat, soybeans and sunflower are all trading at record levels,” the BFAP told Mail & Guardian.
Although the global trade of wheat has been severely affected, the war has had the largest effect on sunflower vegetable oil markets , because Russia and Ukraine account for 56% of global sunflower exports, the BFAP said.
Africa imported agricultural products worth $4-billion from Russia in 2020. Of this, 90% was wheat and 6% sunflower oil, data from the International Trade Centre shows.
In Egypt — one of the largest importers of Russian wheat — bread prices have rocketed. An Egyptian resident who preferred not to be named, told the M&G that the price of the bread that is not subsidised by the government has already jumped higher. The price of government-subsidised bread has remained contained for now, but an increase is expected soon. Other commodities have also seen an uptick in prices and Egyptians are also expecting another gas price increase.
From Ukraine, the African continent imported $2.9-billion worth of agricultural products in 2020, of which 48% was wheat and 31% maize; sunflower oil, barley and soybeans made up the rest.
The Thomson Reuters Foundation noted Africa’s “chronic” dependence on food imports and wrote: “If ever there was a time to drastically raise food production in Africa, it is now”.
South Africa exports about $12.4-billion worth of agricultural products annually and about 40% of that goes to the African continent, Wandile Sihlobo, chief economist at the Agricultural Business Chamber of South Africa, told the M&G.
These annual exports from South Africa to African countries are continuing “without any disruptions”, he said.
The BFAP anticipates that the war will bring medium- to long-term changes to trade flow patterns, raising the question: Would South Africa be in a position to increase its exports to neighbouring countries, should the need arise?
Should the rest of the continent experience a trade void in sunflower oil from Ukraine, South Africa might be in a favourable position to assist.
The BFAP said the country was expected to harvest its largest sunflower crop since 1999, “which is sufficient to meet all local requirements and have some surplus available for potential regional exports”.
The bureau noted that grain and oilseed stocks were “at very healthy levels” because of high summer crop expectations.
Despite increasingly high input costs, including fuel and fertilisers, the BFAP’s early projections for the winter planting season are that planting of wheat and canola will rise.
“If weather conditions are favourable, [South Africa] should be able to produce around 60% of its local requirements of wheat, translating to 2-million-tonnes to 3.5-million tons for domestic use,” it added.
“With global canola prices that have exploded due to the war, we are projecting that more canola will be planted in the Western Cape, and under favourable weather conditions, South Africa could breach the 200 000 tonne production level for the first time.
“This implies that ample canola seed will be available to meet the growing demand in vegetable oil in the local market, and some seed might be exported,” te BFAP added.
Two weeks ago Sihlobo wrote that, with regard to wheat supplies “over the foreseeable future, South Africa shouldn’t have shortages amid the Russia-Ukraine war and the disruptions it has caused in the global grains market”.
Speaking to the M&G this week, Sihlobo remained confident that the volumes of wheat South Africa had imported “will carry us through” and that plantings for the season ahead were expected to increase.
South Africa’s seasonal imports for the 2021-22 marketing year were less than forecast, after a large domestic harvest, coming in at only 762 989 tonnes compared with the anticipated 1.48-million tonnes.
Currently, South Africa imports the majority of its wheat from Western Europe, and not directly from Ukraine or Russia, mitigating the effects of the war on the country.
“South Africa’s agriculture products exports, in general, are continuing fairly well. We are not experiencing any challenges,” Sihlobo said.
Farm organisations Grain SA and the National Agricultural Marketing Council’s maize stocks forecasts for the end of April indicate a surplus.
On average, South Africa has sufficient white and yellow maize supply to last for the next two-and-a-half months, according to Heleen Viljoen, Grain SA’s intern economist. After pipeline stocks of 45 days, there is an exportable surplus of 617 384 tonnes of white maize, and 323 091 tonnes of yellow maize.
Additionally, South Africa will produce a surplus of about 3-million tonnes of maize, the BFAP said, adding: “Traditional export markets are not directly influenced by the war and we are expecting maize trade flow to continue.”
Sihlobo also believes South Africa would be in a position to export additional agricultural goods to Africa, should there be a requirement.
“If the demand increases in the African continent for a range of products, I think we are sitting comfortably to be able to supply them with that,” he said.
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