Farmer's Weekly (South Africa)
Adapting to the new reality of global agriculture
Global food and agricultural supply chains are taking strain due to the disruptions caused by the coronavirus disease (COVID-19) pandemic. This is the case whether one looks at meat or grain supply chains.
The US, Brazil and Canada, which accounted for nearly a third of global meat and edible offal exports in 2019, closed some of their meat processing plants during the last week of April. This was in response to the spread of COVID-19 among employees. In the US and Canada, the main closures are in beef and pork processing plants, while in Brazil, the closures are of poultry-related plants.
Given the significant contribution of 28% these countries make to global meat exports, if the closure of processing plants is extended and they remain closed for a prolonged period, fears of a global meat shortage and a potential uptick in prices may be realised.
Fortunately, from a beef perspective, South Africa is a net exporter. Hence the closures of certain plants in key exporting countries presents minimal risks from a food security perspective.
In terms of pork, however, South Africa remains a net importer of mainly ribs from Europe. These imports accounted for roughly 6% of domestic consumption in 2019. Similarly, with poultry, about 20% of domestic consumption is imported, mainly from Brazil, the US and the EU, among other suppliers, according to data from Trade Map. This essentially means that if the disruptions to various meat plants in the US and Brazil persist and spill over to the global market, South Africa will be affected, specifically in terms of poultry imports.
Meanwhile, wheat continues to be plagued by the spectre of export limitations. In March, Russia placed a quota of seven million tons on wheat exports 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 whether 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, the exports account for 45% of Russia’s wheat production of 77 million tons. With the International Grains Council currently forecasting a 9% year-on-year increase in Russia’s wheat production in 2020/2021, I doubt that further wheat export restrictions will be announced post-July 2020. Nonetheless, the policy direction that Russia takes will have implications for South Africa, which imports half of its annual wheat consumption, with Russia among the leading suppliers.
Looking further afield, there are rising concerns about food insecurity in Africa this year. The concerns stem from unfavourable weather conditions, which negatively affected agriculture in various countries, along with the continuing spread of locust infestations.
SOUTH AFRICANS ARE STILL IN A RELATIVELY BETTER POSITION THAN OTHER COUNTRIES
SOUTHERN AFRICAN WOES
Within Southern Africa, Zimbabwe suffered drought and floods in 2019, leading to the production of staple crops falling by more than half, and agriculture in Zimbabwe also started the 2020 production season on the back foot due to unfavourable weather.
The International Grains Council forecasts that Zimbabwe’s 2019/2020 maize production will amount to 800 000t, which is less than half of what the country needs for the annual consumption of two million tons.
In East Africa, Kenya, Somalia and Uganda could experience crop losses as locust swarms continue to spread.
The next couple of months could reveal more challenges and opportunities as the world tries to cope with the new realities of COVID-19. As things stand, the South African consumer and farmer are still in relatively better positions than other countries that are going through the challenges highlighted.