The PwC South Africa Economic Outlook highlights the risks posed by erratic weather patterns to the production of crucial agricultural commodities, such as maize and wheat.
CLIMATE CHANGE PUTS KEY CROPS AND FOOD PRICES AT RISK
Maize, wheat, and rice account for 90% of global cereal crops. They are vital food sources for billions worldwide. In South Africa, grain-dependent products, including cereals, meat, and dairy, make up 70% of the food budget. Moreover, they comprise 10% of total household spending.
PwC estimates that by 2035, nearly a quarter of maize production and 35% of wheat production in South Africa face significant risk from heat stress.
Anita Calitz, BDO South Africa’s director, warns, “The risk of ‘Day Zero’ becomes more real with each passing day. So do the prospects of increased water restrictions and compromised water quality.”
INFRASTRUCTURE WOES WORSEN FOOD SECURITY RISKS
In addition to climate change, South Africa’s unique infrastructure challenges further exacerbate the potential for food shortages and price hikes.
The agriculture sector, which consumes 70% of freshwater, is particularly vulnerable to water shortages.
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Adele Botes, senior audit manager at BDO South Africa, cautions that “if we remain on our current trajectory, the next 2 to 10 years could see even more severe water shortages.”
Consequently, this could lead to operational disruptions, increased costs, and potential revenue losses for businesses.
LOAD-SHEDDING HAMPERS AGRICULTURE AND FOOD PROCESSING
Although South Africa’s power supply has improved recently, sporadic outages persist due to inadequate municipal distribution infrastructure.
As a result, unexpected power cuts disrupt irrigation schedules, heating, fruit and wine processing, milling, bakeries, abattoirs, cold chain logistics, and exports.
Farmers have reported losses of up to 50% due to extreme bouts of rotational power cuts and sporadic changes to load-shedding stages.
These disruptions compound the challenges posed by water shortages and climate change, further threatening food prices and security.
RISING FOOD PRICES AND POTENTIAL SHORTAGES ON THE HORIZON
The combination of climate change impacts and infrastructure challenges points to higher costs and constrained supply of key agricultural commodities in the coming years.
Consequently, this will likely result in rising food prices being passed on to consumers, driving up food inflation and potentially leading to food shortages.
As South Africa grapples with these challenges, it is crucial to address the impacts of climate change on agriculture.
Furthermore, investing in resilient infrastructure is essential to ensure long-term food security and stable food prices for the nation.
