• Global geopolitical tensions to continue affecting agriculture supply chains
• Citrus exports to the EU Countries banned from Southern Africa
• Load shedding set to affect winter wheat farming, if electricity supply is not improved 

Harare - A myriad of challenges from global warming to supply-side disruptions in supply crop and food sciences are contributing to overall food production volumes and alterations in crop demand. The geopolitical impact due to the raging war in Ukraine has had a similar dampening impact on supply as COVID-19 before it.

The magnitude of impact is even estimated to be higher under the new threat of geopolitical dynamics in Eastern Europe. Ukraine is a major global supplier of grain to the rest of the world, while Russia is a top exporter of oil, which is essential for cross-sectoral production. The globe is currently witnessing the highest inflation levels in 50 years driven by food price increases due to war.

Other countries such as Zimbabwe are continuously being challenged to optimise and maximise land endowment and leverage a good climate to push for food sufficiency, thus increasing their own production of the staple diet and a variety of other imported grains such as wheat.

In Southern Africa, however, a set of different challenges are at play or should I say a set of challenges adding on top of the above mentioned are at play. The region is battling massive power outages driven by low production levels. At least four countries including the region’s biggest economy, South Africa, Zimbabwe and Zambia are bearing the consequence of poor power generation and provision management.

These consequences spiral into sectors such as agriculture. Agriculture holds the largest number of people employed in Zimbabwe. It contributes between 10% to 15% to GDP. Farmers, especially those in poultry and milk production have not been spared and fears of the raging Cyclone Freddy cannot be underestimated. According to an online tabloid Fewsnet, as the lean season progresses, household food stocks are dwindling, increasing market demand and resulting in seasonal increases to maize grain prices in Zimbabwe.

In December 2022, maize grain prices were 30 to 122 percent higher than respective prices in 2021 due to regionally lower maize stocks than in 2021, higher production costs, and weaker exchange rates in 2022. Maize grain prices are expected to rise seasonally, peaking around March 2023. However, in April, prices will likely begin declining with the start of the main 2023 harvest season. Cereal prices in 2023 are expected to remain higher than prices in 2022 due to the high cost of fuel, energy, and fertilizer according to a Fewsnet update.

The largest suppliers of citrus to the EU region are South Africa, Zimbabwe and Eswatini and have recently received a restriction to export citrus to the EU countries. South Africa which has been the leading supplier of citrus to the EU, accounting for about 12%, is the most affected in the Southern Africa block with spillover effects set to be felt in the neighbouring countries if the ban is not lifted in the medium to short term.

According to Wandile Sihlobo, an agric economist, South Africa had already put rigorous measures to control the False Codling Moth, which the EU used as a pretext to restrict citrus imports from Africa. It appeared that the EU used the new regulations to protect citrus-growing countries like Spain, which had to compete with products from Southern Africa.

Sihlobo further highlighted that the EU imposed protectionist measures on SA agriculture by changing its regulations on plant safety for citrus without notifying its trading partners within a reasonable time. The new regulation purports to protect the EU from a quarantine organism, “False Codling Moth”, by introducing stringent new cold treatment requirements, particularly on citrus imports from Africa, mainly impacting South Africa, Zimbabwe, and the Kingdom of Eswatini.

Maize and rice stocks globally have been tight with prices expected to be above-average trading amounts. FAO’s Cereal Price Index averaged 147 points in January, marginally up from December levels and 5% higher than the corresponding period a year ago. This uptick in global grain prices is primarily underpinned by maize and rice, whose stocks are tight, while wheat prices continue to soften in response to improved global harvest.

According to Sihlobo, the key takeaway is that international rice and maize prices will not soften notably this year, although they will likely be lower than the price levels we saw following Russia’s invasion of Ukraine, while wheat and soybean prices will likely soften notably. In the case of wheat, South Africa remains a net importer of roughly half of annual consumption, therefore the decline in global prices is positive for Southern African consumers. 

 I am of the view that declining global prices for wheat pose a challenge to Zimbabwe’s mission to self-sustain. While the country achieved sufficient tonnage to cover its own needs in 2022, the general cost levels per tonnage remain high, meaning any slightly reduced global prices, spontaneously lower the local margin as prices deflate. This may discourage the localisation of wheat production. Moreso to self-sustain on a sustainable scale, power availability has to be guaranteed for the winter crop and at present, this appears a tall order for the country.

Crop consultant Michael Cordonnier cut his Argentine soybean crop estimate by another 2Mt to 34Mt. He noted, “Everything that could go wrong with the 2022-23 soybean crop in Argentina did go wrong – from the worst drought in 60 years to record-high temperatures and now light to moderate frost in what is essentially the middle of summer.” Dr Cordonnier left his Argentine corn crop estimate at 43Mt, indicating “the weekend frost appeared to hurt soybeans more than corn.” He also left his Brazilian crop estimates unchanged at 151 Mt for soybeans and 123 Mt for corn. 

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Commodities Perspective Corner is a weekly publication focusing on general commodities from Agriculture, Energy to Metals. The column seeks to highlight global developments narrowing down their impact on the local economy and vice versa.