Andre Steenkamp

Position: Economist

Institution: National Treasury

Andre Steenkamp is an economist in the Economic Policy Unit at the National Treasury of South Africa. He completed his Master of Commerce Degree specializing in Economics at the University of Cape Town in 2014, before joining the National Treasury.

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Editor's Corner

How SA may avoid the global food crisis

For at least the past two months, the United Nations, analysts, and economists have been warning of an impending global food crisis as a result of the war between Russia and Ukraine.

As the New York Times reported in March: “A crucial portion of the world’s wheat, corn and barley is trapped in Russia and Ukraine because of the war, while an even larger portion of the world’s fertilizers is stuck in Russia and Belarus. The result is that global food and fertilizer prices are soaring.”

The war has caused significant price increases in oil, fertilizers, and wheat. The executive director of the United Nations’ World Food Program, David Beasley warned that the conflict in Ukraine had “compounded a catastrophe on top of a catastrophe…There is no precedent even close to this since World War II.” [1]

Shortly before this warning, South African agricultural economist, Wandile Sihlobo sounded a similar warning in Econ3x3 (http://www.econ3x3.org/article/how-south-african-agriculture-and-consumers-will-feel-war-ukraine)

He pointed out that together, Russia and Ukraine accounted for “nearly 30% of global wheat exports, about 14% of global maize exports, roughly 32% of global barley exports, almost 60% of global sunflower oil exports, and about 14% of global fertilizer exports.”

The combined effect of the destruction of economic infrastructure, including transport lines, in Ukraine, as well as the sanctions imposed against Russia by large parts of the world, could result in a dire shortage of key agricultural and food products.

As far as South Africa was concerned, he wrote that although the county had generally weak import ties with both countries, the disruption in trade may nonetheless affect prices. More pertinently, Ukraine and particularly Russia, were an important export market for South African fruit products.

In this edition of Econ3x3, Sihlobo has looked more closely at the impending global food crisis as a result of the war and how it will affect Africa. The answer is: badly. Africa is a net importer of food and combined with factors like conflict in Ethiopia and the drought in parts of Kenya, concerns about a food shortage are well-placed.

However, the situation in South Africa is markedly different. “South Africa is generally a net exporter of food and agricultural products and has had sizable harvests in the past few years, with an expected good crop in the 2021/22 season.” For primary food staples that it imports - wheat, rice, palm oil, and poultry products – his research shows that there are, at least in the medium term, sufficient supplies.

But local consumers will feel the war in the form of price increases, including of grain and oil and fat products. And of course, transport costs will increase as a result of the fuel price rise, adding pressure to these price increases.

However, his article tells a somewhat different and more nuanced story and that is about the strength and resilience of South Africa’s agricultural sector. While our exports may suffer, we are “well-cushioned” as he put it, against the impending global food crisis.

Agriculture is clearly one of the strengths of the South African economy. It indicates the need for policymakers to focus on it as a basis for building inclusivity and boosting growth overall.

Of course, in the short term the sector needs to navigate the current global crisis, but its resilience indicates that it should become a crucial building block of economic growth and better inclusivity in the future.

Pippa Green

May 26, 2022

[1] New York Times, Ukraine War Threatens to Cause a Global Food Crisis, March 20, 2022

Working Papers from the REDI3x3 project are available HERE

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Andre Steenkamp

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How SA may avoid the global food crisis

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