By Wendy Green
The outbreak of Covid-19, a natural human tragedy, has had immediate impacts on the agriculture value chain. However, the medium- and long-term impact and implications are still uncertain. Epidemiologists have predicted further waves of the pandemic across the globe. The disease has spread quickly and will continue to affect significant aspects of both food supply and demand for agricultural products.
As a result, there is the risk of a looming food crisis unless measures are taken fast to keep agricultural food supply chains alive and to mitigate the pandemic’s impacts across the food system. Currently, we are experiencing lockdowns in at least 33 of Africa’s 54 countries. According to the Food and Agriculture Organisation, about one in every five people in Africa, nearly 250 million, already didn’t have enough food before the virus outbreak.
The World Food Program was already feeding millions in Africa, mainly rural people, due to a myriad of disasters: natural disasters, armed conflict, government failures, even plagues of locusts. The Covid-19 pandemic has added another layer of hardship and complexity in terms of pure survival for many.
South Africa’s junk status and the rapid depreciation of the Rand has added to the difficulties that the country faces. This combined with the disruptions in the supply and demand of food will certainly be the main drivers affecting food availability and food prices for the rest of 2020.
South Africa has a world-class food system, and we are in a reasonably good position regarding food security as our exports exceed imports by a significant margin. However, we import a substantial share of the inputs required to produce this surplus. According to the ITC Trademap 2020 our main agricultural and food exports in 2019 included citrus fruit, wine, grain, apples, pears, maize and sugar with main imports being rice, poultry, wheat, sugar and palm oil. Pre-Covid-19, South Africa imported good mostly from China, Thailand, Brazil, Eswatini and Argentina.
With the current lockdown, the importance of agriculture has certainly gained relevance and awareness – food needs to be both available and at the right price. In the long term, we can expect major disruptions to trade in global food.
Various elements need to be considered and understood to ensure our food availability remains secure:
In South Africa, about 40% of all food sold and distributed is through the informal markets. This market system is enormous and extremely efficient. Fortunately, with quick industry intervention, the government realised the importance of such markets and did not close them in the March/April lockdown.
According to the Bureau for Food and Agricultural Policy, given the severe depreciation of the exchange rate, certain products, typically those where South Africa is well integrated with global markets, will exhibit significant cost-push price increases. This will be exacerbated in instances where countries such as Vietnam have put export restrictions on commodities such as rice.
Already changes in local and global market supply and demand are being seen. For example, there is a shortage of garlic; a decrease in demand for crops like barley, used for alcohol production; and an increased demand for eggs. We must use our data to track and forecast these changes as the pandemic changes. As agri-businesses, it is important to keep on top of the market changes and be proactive in unlocking new markets and investigate alternative ways to market and distribute products.
A critical element in maintaining food security is ensuring continuity of the logistics and supply chains across all levels – local, provincial, national, as well as imports and exports. Jaco Oosthuizen, CEO of the RSA Group, the country’s top fresh produce organisation says that they were most concerned about logistics at the ports, yet together with the government, these risks are being managed well. Initially, the capacity was reduced to about 30%, however, it has now been increased to about 70%.
South Africa is currently in its peak for fruit exports, exports which could be up to R25bn. The industry is working hard to ensure that barriers are lifted both at our borders and the destination ports.
In many instances, supply chains are being shortened and businesses are adapting through various forms of new business models, technology and innovation. At a more grass-roots level people are more aware of growing their own vegetables and buying locally, for example, farms such as Boschendal in the Western Cape are delivering vegetable parcels directly to customers in surrounding areas.
The health and security of farmers and farm workers and their ability to maintain production levels is a critical consideration, especially in industries where seasonal, and often migrant labour is used for harvesting, such as the citrus industry.
There is a direct link between food security and social security. Although South Africa’s national food security is good, household food security is a risk. Given the impact of the lockdown, many households don’t have the financial means to buy food and millions are going to bed hungry. Government and many organisations have stepped up to the plate and are supporting in terms of food parcels, but there will always be gaps amongst communities. The risk is that we will see an increase in social unrest and looting, as is already evidenced in various provinces.
There is a concern about ongoing investment across the agricultural value chain both at a local level as well as national and international level. With the raised awareness and importance of agriculture as a key element in the United Nations Sustainable Development Goals, we would hope to see increased investment into agriculture. At the farm level, if we see a major reduction in prices, as we have seen in the red meat market, farmers could go into further debt in trying to prepare for next season or they may not be able to invest for next year’s crop, thus exacerbating the food security issue.
Where there are risks, there are opportunities.
There are opportunities across the value chain for new products, new markets and new business models using innovation and technology, as has been the case in the development of the ‘HelloChoice’ online trading platform that links buyers and sellers. In cases such as poultry meat and vegetable oil, imports are only supplementary to our production, so these industries could have the opportunity to expand capacity and replace imported products.
Although this can be described as a black-swan event, it certainly won’t be the last time we are faced with similar situations – whether it is due to pandemics, wars or natural disasters.
We should use this opportunity to reimagine.
Reimagine our agricultural businesses, reimagine new markets and a new inclusive agricultural system. Farmers are known for their resilience, hard work and determination, this pandemic is certainly highlighting the crucial role that farmers and the entire agricultural value chain play in the country and the economy – no farmers no future!
We have an opportunity to emerge from this crisis with a more sustainable, resilient, robust food system across the country, continent and around the globe.
Register or Login to Comment
Registration also gives you access to both Positive Impact & Green Economy Journal Digital Magazines and Newsletters