Russia agreed not to attack Ukrainian grain vessels, which could restore the grain trade in the Black Sea region. The deal was a multinational effort to avert the global food crisis and will likely contribute positively to grain supplies. The immediate benefit should be through softening of grain prices, although possibly marginal.
The obstacles faced by the SA wool and citrus industries illustrate growing protectionism across the world and a strong need for the SA government to actively assist in preserving these export routes. The threats to agribusinesses are severe, in a country that has flagged agriculture as a critical industry for economic growth and job creation.
Recently we have seen how the Covid-19 pandemic and the Russia-Ukraine war destabilised global supply chains, with many countries looking inward for long-term security of supply. The pandemic and geopolitical friction have also increased protectionism, especially in the EU.
We now have the trade data for the first quarter of 2022, and positively, exports are up, modestly, by 1% y/y to US$2,96 billion. This is also up by 6% quarter-on-quarter.
Governments worldwide should do all they can within their fiscal abilities to support agricultural production, avert a global food crisis, and not rely on trade policy instruments that hurt the developing world.
The session focused on the impact of the Russia-Ukraine war on the South African economy. There were excellent speakers, Professors Nicola Viegi and Heinrich Bohlmann, from the University of Pretoria. They provided valuable inputs on energy and macroeconomy dynamics. My input was mainly on agriculture and food supply dynamics. I also commented on the effects of the KZN devastating rains on the sector.
Indonesia has recently banned palm oil exports to protect domestic consumers from rising prices. Such a policy approach by a country that accounted for an average of 54% of global palm oil exports in value terms over the past five years will have profound price implications for the global vegetable oils market.
South Africa’s agricultural import bill in 2021 was US$6,9 billion. The top five imported products that year were palm oil, rice, wheat, poultry meat as well as whiskies and other spirits.
Wandile Sihlobo is the Chief Economist of the Agricultural Business Chamber of South Africa (Agbiz) and the author of “Finding Common Ground: Land, Equity and Agriculture“.
He is a Senior Lecturer Extraordinary at the Department of Agricultural Economics at Stellenbosch University and a Visiting Research Fellow at the Wits School of Governance, University of the Witwatersrand.
Sihlobo was appointed as a member of President Cyril Ramaphosa’s Presidential Economic Advisory Council in 2019 (and re-appointed in 2022), having saved on the Presidential Expert Advisory Panel on Land Reform and Agriculture from 2018.
He is also a member of the Council of Statistics of South Africa (Stats SA) and a Commissioner at the International Trade Administration Commission of South Africa (ITAC).
Sihlobo is a columnist for Business Day, The Herald and Farmers Weekly magazine.
His weekly podcast, “Agricultural Market Viewpoint with Wandile Sihlobo“, is available on all podcast platforms.
He holds a Bachelor of Science degree in Agricultural Economics from the University of Fort Hare and a Master of Science degree in Agricultural Economics from Stellenbosch University.