South Africa must continue improving food security through expansion in agricultural production and job creation, Agricultural Business Chamber (Agbiz) chief economist Wandile Sihlobo said yesterday.
Sihlobo made the comments on World Food Day, which is held on October 16, a celebration of the founding of the UN Food and Agriculture Organisation in 1945. This day is also an opportunity for countries to reflect on their food security conditions and on efforts to boost agricultural production.
While South Africa fared better in food security in comparison with various countries in the world, this did not mean that it should now rest on its laurels, he said.
According to The Economist’s Global Food Security Index last year, South Africa ranked 59th out of 113 countries in the index and was the most food-secure in sub-Saharan Africa. This was an improvement from the previous year’s ranking of 70th. South Africa was ranked the second-most food-secure country in the African continent after Morocco.
The organisation said South Africa experienced a mild deterioration in the food affordability sub-index of 7 points last year. Meanwhile, it said the other sub-indices had improved significantly.
“This decline in the affordability sub-index is unsurprising as the country has witnessed a broad acceleration in consumer food price inflation since the start of the year. South Africa’s consumer food price inflation averaged 9.5% y/y (year-on-year) in 2022, from 6.5% up from in 2021.
“Food inflation was also elevated in the first half of 2023, with only the second half (showing) moderation. In the first eight months of this year, South Africa’s food inflation averaged at 12.2%,” it said.
At a technical level, Sihlobo said, the ideas of expanding agriculture and agro-processing capacity to boost growth and job creation were well-established as far back as in the National Development Plan 2012.
They were again highlighted in the 2019 National Treasury paper, in the 2022 Agriculture and Agro-processing Master Plan and, most recently, in a book titled A Country of Two Agricultures: The Disparities, The Challenges, The Solutions.
The chief economist said these include expanding agricultural activity in the former homelands and government land, the release of PLAS (Proactive Land Acquisition Strategy) land with title deeds, effective blended finance scheme, enhancing government-commodity organisations partnerships in extension services, investment in the network industries (water, electricity and road infrastructure), port infrastructure, and state laboratories.
“Across the regions, Limpopo, KwaZulu-Natal and the Eastern Cape are the most food-insecure provinces, but these provinces also have vast tracts of under-utilised land. These provinces should be a priority in agricultural development plans, with a commercial focus where conditions permit so that job creation can be achieved, all to boost South Africa’s food security conditions,” Sihlobo said.
He said the higher food inflation in the past months was a global challenge not unique to South Africa.
“Admittedly, in an environment such as South Africa with higher unemployment, the effects of food inflation shocks tend to be more severely felt by consumers,” he said.
Over the past few years, several factors had added upward pressure on global food prices. The first was the drought in South America in the 2019/20 season which had reduced the harvest notably, primarily in Brazil and Argentina. These countries collectively account for 14% and 50% of global maize and soya bean production.
The drought had persisted for roughly three seasons since 2019/20, exacerbating the grain price increases from 2020 to last year.
Secondly, Sihlobo said, China’s imports of grains and oilseed, as the country was rebuilding its pork industry after a devastating African swine fever, had added to the surge in demand at a period when global stocks were tight.
China’s growing demand had a consequential impact on global grain prices because of its share size of imports. The country imports about 60% of globally traded soya beans.
As Covid-19 spread in early 2020, several major grain producers, such as India, Kazakhstan and Vietnam, worsened global price increases by temporarily banning exports. As this unfolded, shipping costs soared, increasing global grain prices further.
In sum, a combination of trade policy actions by other countries, logistics and weather conditions placed upward pressure on food prices, Sihlobo said.
Agbiz said these challenges were worsened by the Russia-Ukraine war. Russia and Ukraine were substantial players in the grains and oilseeds market. The former produces about 10% of global wheat, while Ukraine accounts for 4%. Together, the two countries account for a quarter of global wheat exports. Moreover, Russia and Ukraine were notable players in maize, responsible for 4% of production combined.
However, their contribution was even more significant in exports, accounting for an average of 14%. Both countries were also among the leading producers and exporters of sunflower oil. Before the war, Ukraine’s global product exports accounted for 40%, with Russia accounting for 18%. Thus, the war led to a surge in grains and oilseeds prices for much of 2022.
As a small, open economy, Sihlobo said South Africa was interlinked with the world and was not insulated from these agricultural and food price shocks.
BUSINESS REPORT