Western Cape scrambles for alternative markets for agricultural sector amid Russian-Ukrainian war

  • The Western Cape Department of Agriculture is scrambling to protect the agricultural sector as the Russian-Ukrainian war continues.
  • He is exploring alternative markets to offset projected shortages of wheat and vital agricultural inputs.
  • Suppliers and exporters also face port congestion, and not just in South Africa, which could lead to delays.

As the Russian-Ukrainian war continues, the Western Cape’s agricultural sector scrambles for alternative markets for its exports and for the import of wheat for bread and vital inputs, such as fertilizer for industry.

It will also explore the market opportunities offered by the African Free Trade Agreement.

At the same time, it needs to unblock congested ports to make goods flow in and out smoothly.

Agriculture MEC Ivan Meyer said he met with Agri Western Cape, Vinpro, [Wines of South Africa]the Fresh Producers Exporters Forum, GrainSA, the South African Table Grape Industry, the Citrus Growers Association and the Wool Growers Association on Monday.

“I did this because I am concerned about the impact of the Russian invasion of Ukraine on Western Cape agricultural trade,” Meyer said.

“The Russian and Ukrainian markets contribute to South Africa’s foreign income from exports of agricultural products, with a significant portion of these products coming from the Western Cape.”

The provincial government will start looking for other sources of wheat and imported inputs and will explore the African Free Trade Agreement to find other trading partners in the meantime.

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Meyer added that South Africa’s agricultural exports to Ukraine and the Russian Federation were valued at R4.1 billion in 2020. Horticultural products, oranges, pears, apples, tangerines, lemons, fresh grapes and containers of wine containing 2 liters or less, collectively contributed a share of R3.4 billion – with around 88% of the value attributable to the Western Cape.

He added that South Africa’s imports of wheat and meslin (mixed cereals) from Russia and Ukraine were valued at R2.3 billion in 2020, and the Western Cape took in around 28 % of these imports by value.

He said:

In the Western Cape, 76% of all bread consumed is white bread. Therefore, a limited supply of wheat in world markets will have an impact on domestic markets, and an increase in the price of bread will be one of the signs indicating a limited supply of wheat.

“It will have a direct impact on food security and the poor,” Meyer said.

He added that shipping, production and security issues have already caused the price of wheat to rise 50%.

Russia is also responsible for 14% of global fertilizer exports.

“Primary agricultural input prices in South Africa have already increased by more than 100% compared to January 2021.”

Meyer said major shipping lines were not accepting any bookings or cargo, and the ports of Rotterdam, Antwerp and Bremerhaven were extremely congested due to tedious scanning of containers for explosives.

This means that the 23-day journey of Cape fruit to St. Petersburg can take up to 93 days to reach its final destination, which affects the quality of the fruit.

He said:

It should also be noted that it is not easy to divert fruit to other markets, as other markets have different specifications and requirements. At the same time, all the countries of the southern hemisphere (competitors of SA) divert their fruits towards the same markets. This leads to oversupply and therefore lower prices/revenues for South African exporters and producers.

Meyer said the department anticipates disruptions in all agricultural supply chains, including storage costs.

The department will approach the Office of Food and Agriculture Policy to monitor developments in the lockdowns to help formulate a response.

READ | Wheat falls to record high

“Given that market access is a top priority for the Western Cape, the agricultural sector will explore the market opportunities offered by the African Free Trade Agreement as a viable option to offset the potential negative impact of the Russian attack on Ukraine,” he said.

According to the Food and Agriculture Organization of the United Nations (FAO), Ukraine is the fifth largest wheat exporter in the world, with a global market share of 10% between the periods 2016/17 and 2020 /21. It says most Ukrainian wheat comes from Kiev and the Mykolaiv region. The main Ukrainian grain ports, also on the Black Sea, are in Odessa and Mykolaiv.

FAO global global forecast is for an increase in wheat production to 790 million tonnes, most of it coming from North America.

However, the FAO said it was monitoring the situation in Ukraine and Russia and for the rest of the 2021/22 season (1 March – 30 June) Ukraine is expected to export around 6 million tonnes of wheat and 16 million tons of wheat. corn, while the Russian Federation is expected to export about 8 million tons of wheat and 2.5 million tons of corn.

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Lana T. Arthur