by Wandile Sihlobo | Apr 30, 2020 | Africa Focus
This essay first appeared on Business Day, April 28, 2020
Global food and agricultural supply chains are taking strain from disruptions caused by the Covid-19 pandemic. This is the case whether one looks at meat or grain supply chains.
First, the US, Brazil and Canada, which accounted for nearly a third of global meat and edible offal exports in 2019, have closed some of their meat processing plants over the past few days in response to the spread of Covid-19 among employees. In the US and Canada, the major closures are beef and pork processing plants, while in Brazil the closures are of poultry-related plants. Given these countries’ significant combined contribution to global meat exports of 28%, if the plant closures spread and they remain closed for a prolonged period there could be a global meat shortage and a potential uptick in prices.
Fortunately for SA, from a beef perspective, it is a net exporter. Hence the closures of certain plants in top exporting countries present minimal risks from a food security perspective. However, when it comes to pork SA remains a net importer of mainly ribs from Europe. These imports accounted for roughly 6% of domestic consumption in 2019. Similarly, about 20% of domestic poultry consumption is imported, mainly from Brazil, the US and EU, according to Trade Map data. This essentially means that if the disruptions to meat processors in the US and Brazil persist and spill over to the global market, SA will be affected, particularly when it comes to poultry imports.
Second, wheat continues to be plagued by the spectre of export limitations. In March Russia placed an export quota of 7-million tonnes of wheat in the three months to June to protect its domestic supply during the pandemic before the July harvest of its new crop. This quota has now been reached, and it is unclear if the country will issue a new quota for the remaining months leading to July.
Russia is the world’s leading wheat exporter, accounting for 19% of global wheat exports in the 2019/2020 season. On average, exports account for 45% of Russia’s wheat production of 77-million tonnes. With the International Grains Council forecasting a 9% year-on-year increase in Russia’s wheat production in 2020/2021, I doubt further wheat export restrictions will be announced post-July 2020. Nonetheless, the policy direction Russia takes will have implications for SA, which imports half of its annual wheat consumption, with Russia among the leading suppliers.
Third, looking further afield to the rest of Africa, there are rising concerns over food insecurity in 2020. These stem from unfavourable weather conditions, which has negatively affected agriculture in various countries and spreading locust swarms.
Zimbabwe suffered from drought and floods in 2019, and the production of staple crops fell more than half. Agriculture in Zimbabwe also started the 2020 production season on the back foot due to unfavourable weather. The International Grains Council forecasts the country’s 2019/2020 maize production at 800,000 tonnes, which is less than half of what it needs to satisfy annual consumption of 2-million tonnes. In East Africa, as locusts continue to spread Kenya, Somalia and Uganda could experience crop losses.
It is important that the disruptions to meat supply chains in the US, Brazil and Canada are monitored, but I don’t foresee an immediate threat to SA’s supplies. This is because of the country’s relatively lower dependence on imports of meat. In the case of wheat, Russia is a big enough wheat market to warrant policy attention. On the rest of the continent, the lingering challenge of food insecurity has only been accentuated by the Covid-19 pandemic.
To mitigate societal risk, food insecurity should be on the front burner when the continent mobilises resources from the public purse and multinational and developmental institutions.
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by Wandile Sihlobo | Apr 24, 2020 | Africa Focus
The COVID-19 pandemic will exacerbate an already dire situation of food shortage in some African countries. Professor Mzukisi Qobo (Head of Wits School of Governance, University of Witwatersrand), Isaah Mhlanga (Chief Economist at Alexander Forbes) and I have an essay out this morning which discusses this matter. You can access it here.
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by Wandile Sihlobo | Jan 27, 2020 | Africa Focus
If you read the international news on Africa this past weekend, you probably noticed that Time magazine (here), The Guardian (here), New York Post (here), The Japan Times (here), and the Financial Times (here) ran a similar story about the worst swarms of locusts currently spreading in Kenya.
The estimates suggest that 70 000 hectares of land in Kenya has thus far been invested by these locusts, and thus threatening the agriculture sector. The Kenyan authorities seem to be struggling to control the spread of these locusts, which means it could spread to a number of regions in the coming weeks.
The Food and Agricultural Organization of the United Nations (FAO) has also warned about the potential threat these locusts pose to Kenya’s food system (see here). The FAO has called on the international donor community to assist, acknowledging that the local authorities are not moving at speed required and also not endowed with resources needed to curtail this impending crisis.
I use the word “crisis” intentionally. Kenya’s food system is already fragile. The country experienced drought in 2019 which saw its maize harvest falling 15% y/y to 3.4 million tonnes. Kenya utilizes about 4.7 million tonnes of maize a year, according to data from the United States Department of Agriculture. Therefore, the decline in domestic maize production saw the country needing maize imports of 1.3 million tonnes in a marketing year that ends in April 2020 in order to meet its annual needs. I don’t know how much they have managed to import thus far, as the 2019/20 marketing year will only end in three months’ time from now.
I was hopeful that 2020 could be a recovery year and Kenya’s maize import needs could be reduced. The spreading desert locust swarms locusts, however, threaten to bring the country back to food shortage challenges. Also, worth noting is that Kenya is not alone in this challenge. Ethiopia and Somalia are also at risk. This is a bad time for East Africa’s agriculture.
The effective way to control the spread of these locusts will be aerial spraying of pesticides. But that needs money, about US$70 million, according to the FAO estimates. I imagine the small-scale Kenyan farmers might not be able to cover such costs. Hence, the government and international donors will have to assist the affected communities.
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by Wandile Sihlobo | Oct 16, 2019 | Food Security
As we commemorate World Food Day on 16 October 2019 in honour of the founding of the Food and Agriculture Organization of the United Nations (FAO) in 1945, we should take a moment to reflect on South Africa’s standing on the global food security ladder.
Food security is achieved when three objectives are met: (1) food is available; (2) food is accessible; and (3) food quality ensures appropriate nutritional uptake for all citizens at all times. In 2018, South Africa has ranked the 45th most food-secure country out of 113 countries measured in The Economist Global Food Security Index, which was a one point lower than the previous year.
This was relatively good, compared to BRICS countries – Brazil, Russia, India and China. For example, although South Africa’ average income – as ranked in gross national income per capita of 2018 – was 25 spots behind Russia, 23 behind China and 19 behind Brazil, the country’s food security status was quite comparable to other BRICS countries – Brazil, Russia, India, and China. In the Food Security Index, South Africa has ranked just 6 spots behind Brazil, 3 spots behind Russia, one spot ahead of China, and 31 spots ahead of India.
What is worth reiterating is the fact that despite South Africa’s relatively lower average income compared to BRICS partners, the country still manages to punch above its weight in terms of food security. This is a testament to the country’s competitive agricultural sector, and its ability to supply food at a relatively lower cost and socio-economic initiatives.
Although the Food Security Index indicates South Africa is food-secure, there are pockets of food insecurity within the country when you consider a household-level perspective. This speaks to the general inequality in the country, where some households are food secure, and a sizeable portion of other low-income households are not, primarily due to affordability. This scenario is more prevalent in Limpopo, KwaZulu Natal and the Eastern Cape, according to Stats SA.
While there are a number of interventions that can assist in supporting households’ access to nutritious food, one form of intervention that can boost rural households’ income and therefore nutritious food is job creation in the agricultural sector. There is anecdotal evidence in parts of the Eastern Cape that in areas where government and the private sector have collaborated in agricultural development, some level of success in terms of job creation could be achieved.
With agriculture having gained prominence as one of the sectors that could bring about rural economic development and job creation in South Africa, the government’s approach to realising this vision should be regionally focused. Meaning, the aforementioned provinces should be the key priority in resource allocation, as the frontiers of agricultural expansion. Such an approach not only makes sense in terms of reducing poverty but also in exploiting the potential of underutilised land, as well as targeting resources effectively.
Limpopo, KwaZulu Natal and the Eastern Cape combined arguably have about 1.6 million to 1.8 million hectares of underutilised land which could be sustainably farmed for increased food security and livelihoods over the long-term. This is according to a 2015 study by McKinsey Global Institute.
Admittedly, the current land governance system – communal land – has been cited as one of the hindrances in agricultural development in these provinces, as it hamstrings investment. Naturally, solving such matters can take a long time and land reform policy is still being debated across the country.
The near-term practical approach that could make a difference is structuring an innovative agricultural finance instrument – such as blended-finance – which pulls in the capital and human capital from both private and public sectors.
In parts of the Eastern Cape, some agribusinesses are currently engaged in such arrangements with the provincial government and in areas where projects have been implemented, there has been some level of success. What is needed is designing programmes that are self-sustaining and viable where communities take ownership.
These are some of the approaches that are needed to boost household incomes and rural livelihoods in a manner that ensures nutritious foods are available in the near term and in the future. Meanwhile, broad developmental policies need to be put into operation.
Written for and first published on Business Day on 16 October 2919.
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by Wandile Sihlobo | Aug 10, 2018 | General Comments
Today I am working off-site in a small coffee shop in my neighbourhood. I’ve just ordered coffee and asked also for a glass of water. For some reason, the waiter brought water, saturated with cucumbers and lemon, which was not what I longed for, but it was surprisingly refreshing. (Thanks to him).
Anyway, this reminded me of a post I shared a few months back about the history and production trends in South Africa of this widely cultivated “vegetable”, related to both the melon and squash families, which is technically a fruit. So, I will re-post it as a way to celebrate this ‘cucumber-laden glass of water’.
In terms of history, it is unclear when this crop was first introduced in South Africa. But, its origin can be traced from South Asia between the Bay of Bengal and the Himalaya. In terms of production, however, China is on the lead, accounting for 77 percent share of global cucumber production in 2016, according to data from the Food and Agricultural Organization of United Nations.
Trailing behind China is Russia, Turkey and Iran, each respectively accounting for 2 percent share in global production.
As you can imagine, South Africa is not a very big producer of cucumbers. Our production accounts for 0.03 percent of global output. With that said, South Africa’s cucumber production has increased significantly in the recent past, partially driven by an uptick in consumption – not sure if in salads or gin and tonic – you never know these days.
Between 1994 and 2016, South Africa’s cucumber production increased by 82 percent to 27 797 tonnes. Cucumbers are produced in almost all the provinces of South Africa. However, the cucumber production is more concentrated in Western Cape, Eastern Cape, Free State and KwaZulu Natal Provinces.
Overall, South Africa is a net exporter of cucumbers, mainly destined to the neighbouring countries.
In terms of South Africa’s market structure, the cucumber industry uses fresh produce markets, restaurants, processors, wholesalers and retailers as channels of marketing of their products.
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by Wandile Sihlobo | Aug 8, 2018 | General Comments
Regular readers of this blog might have noticed that the past week or so has been a hit-and-miss affair with broken links to online, and even emailed articles. A few weeks back I decided to revamp this blog, hoping to improve your reading experience. The service provider charged with this task is working tirelessly to take out these bugs. So, please bear with me if you encounter a few glitches in the near future.
Today I would like to discuss glitches that go beyond my blog page, which we are confronted with in African agriculture. Last night I posted a couple of tweets about Africa’s contribution to 2018/19 global grain and oilseed production, which is not significant, considering the available arable and unused land in the continent. The African continent accounts for 7 percent of the global maize production of 1.05 billion tonnes, 4 percent of the global wheat production of 721 million tonnes and 0.7 percent of global soybean production of 359 million tonnes.
This production deficit trajectory needs to change as the continent’s food and feed demand continues to grow. It is counterintuitive to perpetuate our net importer status for commodities that can be produced domestically in a number of countries.
Take maize for example. The continent has made strides in increasing the production of this commodity over the recent past, but this has been largely skewed to a few countries.
The International Grains Council forecasts Africa’s 2018/19 maize production at 75 million tonnes, which is slightly higher than the previous season (again, this accounts for 7 percent of global maize production).
South Africa is the leading producer, accounting for roughly 16 percent of the continent’s output in the 2018/19 season. Nigeria, Tanzania and Ethiopia are other major maize-producing countries in the continent, collectively accounting for a 33 percent share in the continent’s output.
Within the sub-Saharan region, Zambia and Malawi’s maize industries have seen good growth over the recent past, but they remain relatively small compared to major producers in the continent. The International Grains Council forecasts Zambia and Malawi’s 2018/19 maize production at 3.5 million and 2.5 million tonnes, respectively. These countries collectively account for an 8 percent share in the continent’s output.
In terms of trade, Africa’s 2018/19 maize imports are estimated at 23 million tonnes, up by 5 percent from the previous season. The leading importers are Algeria, Egypt, Morocco and Kenya. The typical maize suppliers to these countries are Argentina, Brazil, Ukraine, the US, Mexico and South Africa, amongst others. These are likely to remain the leading suppliers again in the 2018/19 season.
This begs the question of how we can achieve import substitution in Africa. The key to all of this is improving productivity and sustainability of agriculture at all scales (small to commercial) by embracing technology, and also land expansion. In terms of land expansion — land availability per se is only but one consideration driving investment decisions that could improve crop production. Also of importance are the land governance systems per country, and specifically tenure security considerations, as well as infrastructure provision, market considerations, access to and cost of finance, political arrangements and stability, local skills availability, and others.
It will only be a correct balance of these aforementioned policy considerations, and their consistent implementation, which could help Africa attain its befitting net exporter status in the long-term.
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
