CAPE TOWN - The Western Cape agricultural sector is set to explore market opportunities offered through the African Free Trade Agreement as a viable option to offset the potential negative impact of the Russian attack on Ukraine.
Agriculture MEC Ivan Meyer said he had met with Agri Western Cape, Vinpro, WOSA, the Fresh Producers Exporters Forum, GrainSA, the South African Table Grapes Industry, Citrus Growers Association, and the Wool Growers Association on Monday over concerns about the impact of the Russian invasion of Ukraine on the Western Cape's agricultural trade.
Meyer said South Africa's agricultural exports to Russia and Ukraine combined were valued at R4.1 billion in 2020.
“The horticultural products, oranges, pears, apples, mandarins, lemons, fresh grapes and wine containers holding 2 litres or less collectively contributed a share of R3.4 billion. About 88% of this value is attributable to the Western Cape, a dominant player in the horticultural sector,” Meyer said.
South Africa's wheat and meslin imports from Russia and Ukraine were meanwhile valued at R2.3 billion in 2020, and the Western Cape absorbed about 28% of those imports in value terms.
Statistics show that about 70% to 80% of all wheat flour produced is used for bread baking. “In the Western Cape, 76% of all bread consumed is white bread. Therefore, a limited supply of wheat in the global markets will impact the domestic markets, and the increase in the price of bread will be one of the signs indicating a limited supply of wheat.
“This will have a direct impact on food security and the poor.
“Disruption in shipping, production and security concerns already resulted in a 50% increase in the price of wheat,” Meyer said.
Russia is also responsible for 14% of global fertiliser exports, while the inability to export and the increase in the price of oil will largely impact fertiliser, fuel, and agrochemical prices.
“Industry role-players highlight that the most significant challenges currently facing the sector are logistics, financial losses and the diversion of fruit to other markets. Major shipping lines are not accepting any bookings or commodities.
“Ports in Rotterdam, Antwerp, Bremerhaven are extremely congested due to the time-consuming scanning of containers for explosives.
“The implications are that a 23-day journey of fruit from Cape Town to St Petersburg can be accompanied by various diversions and take up to 93 days to reach its final destination, resulting in the fruit being completely non-edible,” Meyer said.
He noted that diverting fruit to other markets is not easy as they have different specifications and requirements. At the same time, all the Southern Hemisphere countries are diverting their fruit to the same markets. This is causing an oversupply and thus lower prices/income for SA exporters, and producers.
“The Western Cape Department of Agriculture (WCDoA) will approach the Bureau for Food and Agricultural Policy (BFAP) to monitor the development of blockages in the Western Cape's agricultural value chain with due consideration to both our trade's export and import. During the Covid 19 pandemic's height, the WCDoA closely monitored the province's agricultural value chains. This approach will now be applied to this conflict.
“Given that market access is an apex priority for the Western Cape, the agricultural sector will explore the market opportunities offered through the African Free Trade Agreement as a viable option to offset the potential negative impact of the Russian attack on Ukraine.
“We are already engaging with the Department of Agriculture, Land Reform and Rural Development (DALRRD) to ensure that a sector response plan is developed to support our producers in the short to medium term while constantly monitoring the conflict,” Meyer said.
Cape Times