• South African farmers believe Russia has great potential in the field of agriculture and are interested in sharing experience with the country, Omri van Zyl, the executive director of federation of South African agricultural organisations AgriSa, told Sputnik. 

  • Although unfavorable weather conditions contributed to a drop in Russia’s grain harvest from a record setting 2017-18, it is still higher than the 10-year average.

  • Farmers from South Africa will visit the Russian peninsula of Crimea to exchange experience in winemaking, as they face the possibility of losing their farms as part of their country's land reform.

  • The first Russia-Africa Summit that was held last week concluded with an announcement that urged all participants to increase cooperation in security, science, environmental protection, trade and economic matters. On this last point, the declaration highlights that participants should “make efforts to substantially expand the trade between the Russian Federation and the African States and diversify it, including by increasing the share of agricultural products in import and export operations.”

     Russia is an important player in global agricultural markets, ranked as the 13th largest importer, valued at US$28.8 billion annually, on average, over the past five years. The countries that have benefited from Russia’s agricultural import needs are Belarus, China, Germany, Brazil, Ecuador, Italy, Turkey, Paraguay, Indonesia and France, amongst others. The African countries are down on the list of key agricultural exporters to Russia. In fact, while Russia’s agricultural trade balance is negative, the country has a trade surplus with the African continent. In 2018, Russia had an agricultural trade surplus of US$2.8 billion with the African continent, according to data from Trade Map.

     Over the past five years, wheat has been the dominant product in Russia’s agricultural exports to Africa. It accounted for an average of 79% of all exports into the continent over the past five years (Figure 1 of the attached file). The other products that Africa imports from Russia are sunflower oil, soybean oil, barley, maize, and linseed. Also, this is not widespread across the continent. Nearly half of Russia’s agricultural exports into Africa go to Egypt, and it is mainly wheat. Sudan, Nigeria, Algeria and Kenya are other key markets for Russia, which when collectively added to Egypt account for about 73% value of Russia’s agricultural exports to Africa.

     Here at home, South Africa, the picture is different. South Africa enjoys an agricultural trade surplus with Russia. The products that South Africa exports to Russia include citrus, apples, pears, wine, grapes, apricots, cherries, peaches and fruit juices. These are amongst the products that Russia generally imports from the world (Russia’s top ten agricultural imports are citrus, bananas, wine, soybean, cheese, beef, palm oil, apples, pears and tobacco).

    In 2018, Russia was South Africa’s 16th largest agricultural market. The call for increased agricultural trade between Africa and Russia sets a good basis for South Africa to explore the means of increasing its share within the Russian agricultural market. In terms of reciprocity, Russia is already a notable supplier of wheat to South Africa and could increase its share if it were to compete comparatively with wheat suppliers such as Ukraine and Lithuania, amongst others.

    Overall, the announcement of increased agricultural trade by the Russia-Africa Summit is positive for South Africa’s agricultural sector. The growth that South Africa envisages in this particular sector will be export-led, therefore, any talks that encourage trade should be viewed positively. In 2018, South Africa’s agricultural sector exported nearly half of its production in value terms which means the sector is export-orientated. South Africa’s agricultural sector already participates within Russia’s market, although ranked as the 29th country supplying agricultural products to Russia in 2018.

    The current engagements with Russia should seek to improve South Africa’s position by promoting more exports in that market. If Russia was to insist on reciprocity within the agricultural sector, wheat would be their targeted space. In there, South Africa imports roughly half of its annual consumption. An increase in Russia’s wheat would displace other suppliers rather than add pressure to the local market in the near term.

    SA farmland is dry

    In a normal season, by this period, farmers would be hard at work planting, especially in the central and eastern regions of South Africa. But this has not been the case because of dryness that has prevented farmers from planting. Soil moisture in South Africa’s farmland is rated very short (dry) in nearly all regions of the country with the exception of a few areas near the border of Eastern and Western Cape where soil moisture was rated marginally adequate on 25 October 2019, as illustrated in Figure 2 in the attached file.

    Over the weekend, some regions in the central parts of South Africa received light rainfall, which is a welcome development. But this was not sufficient to make meaningful improvement on soil moisture. The country needs a consistent and slow rainfall which will help to replenish soil moisture and thereafter support planting and growing of the crop.

    We are generally positive that such rainfall is likely. The weather forecast for the next two weeks – Figure 4 in the attached file – shows prospects of rainfall across the summer rainfall (or crop-growing) areas of South Africa. More importantly, the South African Weather Service forecasts above-normal rainfall in the central and eastern regions of South Africa between November 2019 and January 2020. As encouraging as this is, it comes with some level of uncertainty and hence it will be important to monitor the weather conditions over the coming weeks as that will influence farmers decisions to plant.

    From a data front

    We start off on Monday, with the US Department of Agriculture’s US crop conditions data for the week of 27 October 2019. This data should give us a sense of the US crop-growing conditions, and thereafter the potential size of the harvest.

    On Tuesday, the Quarterly Labour Force Survey data for the third quarter of 2019 will be released. To recap, Quarterly Labour Force Survey data for the second quarter of this year showed that South Africa’s primary agricultural employment fell by 0.2% from the corresponding period last year to 842 000. The subsectors that faced a notable reduction were mainly field crops, the game industry and forestry. In the case of field crops, the reduction in employment was unsurprising following a reduction in activity in the fields on the back of a poor harvest in the 2018/19 season, all of which is underpinned by unfavourable weather conditions earlier in the season. From a regional perspective, a notable decline in employment was recorded in the Northern Cape, Free State and Limpopo, whilst other provinces saw a marginal uptick.

     On Wednesday, the South African Grain Information Service (SAGIS) will release the grain producer deliveries data for the week of 25 October 2019. This covers both summer and winter crops. What we will particularly be interested in, however, are data for winter crops. This provides an indication of the progress in harvest activity which recently started in parts of the Western Cape wheat-producing regions. In the week of 18 October 2019, about 93 563 tonnes of the expected 1.8 million tonnes of wheat in the 2019/20 season had been delivered to commercial silos.

    On Thursday, we will get the weekly grain trade data (wheat and maize) for the week of 25 October 2019. In brief, maize exports for the 2019/20 marketing year have thus far amounted to 532 045 tonnes. Looking ahead, we expect South Africa to remain a net exporter of maize this marketing year, although the volume will most likely fall by half from 2018/19 to about 1.1 million tonnes. At the same time, we expect maize imports of about 450 000 tonnes, all yellow maize, mainly for the coastal provinces of the country. This is up from an estimated 171 500 tonnes in the 2018/19 marketing year. The country has thus far imported 320 617 tonnes of yellow maize. About 88% from Argentina, with 12% from Brazil.

     In terms of wheat, South Africa’s 2019/20 wheat imports could increase by 14% y/y to 1.6 million tonnes because of expected lower domestic harvest on the back of unfavourable weather conditions in the Western Cape. The third import consignment of the 2019/20 marketing year was 67 476 tonnes. This placed total imports for the 2019/20 season at 135 270 tonnes, which equates to 12% of the seasonal import forecast. This week we will receive data for activity in the week of 25 October 2019.

     Also, on Thursday, Stats SA will release the Producer Price Index (PPI) data for September 2019. In August, South Africa’s food producer price inflation slowed to 5.4% y/y, from 6.1% y/y in the previous month.

  • Russia’s egg industry’s net profit dropped by $ 254 million in 2017, as the wholesale prices on the domestic market fell during the year, ending up at $ 0.56 per ten eggs. Market research by the Russian Union of Poultry Farmers (Rosptitsesoyuz) notes a 14% drop compared to 2016.

  • Russia’s agriculture ministry said on Nov. 8 that it projects grain exports in 2018-19 at 38 to 39 million tonnes, up from its projection of 35 million tonnes in September.

  • Russian feed production has been increasing for more than two decades, and all forecasts expect this trend to continue for the foreseeable future with record-breaking state aid promised to the feed industry by the federal government and many avenues to increase domestic grain production.

  • Since the start of the Russia-Ukraine war there have been rising concerns about global food security. Both Ukraine and Russia are major agricultural producers and exporters. In 2021, these countries together 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.[2]

    The destruction of economic infrastructure within Ukraine, combined with various shipping lines avoiding the Black Sea region and the extensive sanctions that Western countries have imposed on Moscow, mean there will be limitations on the movement of the agricultural products from these countries. This will be exacerbated by other factors, such as the agreement to exclude some Russian banks from global payment systems such as SWIFT.

    Notably, the Russia-Ukraine war occurs at a time when the global agricultural commodity prices were already elevated as a result of relatively lower grains and vegetables oils stocks.[3] The drought in South America, specifically Brazil and Argentina, which together account for 14% of global maize and 50% soybean production, has already pushed up global prices for much of the past two years.

    Additionally, the rising demand in China and India for soybeans and other vegetables oil, combined with poor palm oil produce in Indonesia, has added upside pressures to global vegetables oils prices. As the Russia-Ukraine war began, the Food and Agricultural Organization of the United Nations (FAO) Global Food Price Index averaged 141 points in February 2022, which is an all-time high, exceeding the previous peak in February 2011.[4] On a year-on-year basis, the FAO reflected an increase of 21% in February 2022.

    Given these realities, it is important that we understand South Africa’s linkages to Russia and Ukraine agricultural trade, and how the unfolding war could potentially impact domestic food supplies.

    SA’s agricultural trade with Russia-Ukraine

    South Africa has relatively weak agricultural import ties with both Russia and Ukraine. Russia is the 17th-largest agricultural products supplier to South Africa, and Ukraine the 44th. In value terms, agricultural imports from these two countries accounted for just 2.4% of South Africa’s total agricultural imports of US$5.9 billion in 2020.The major products both countries export to South Africa are wheat and sunflower oil. Over the past five years (2016-2020), South Africa imported an average of 1,8 million tonnes of wheat per calendar year, roughly half the annual wheat consumption needs. Of this, wheat imports from Russia and Ukraine averaged 34% and 4%, respectively.

    The significance of Russia in South Africa’s wheat imports basket may raise concerns about the near-term supplies. And from this perspective, in the current wheat marketing year of 2021/22 that ends in September, South Africa has already imported 40% of its estimated imports of 1,5 million tonnes. However, it will likely be able close the import gap for the remaining balance for the year from various countries such as Germany, Canada, Australia, Latvia, Argentina, and the Czech Republic, amongst others. But this will probably be at higher cost than the volumes already imported because of the upside pressure the war has added in the commodities market.

    Moreover, South Africa imported an average 174 138 tonnes[5] of sunflower oil per year from the world market between 2016 and 2020. During this period, imports from Ukraine averaged 4% of the total. Bulgaria supplied 40% of South Africa’s imported sunflower oil, Romania about 22%, and Argentina 15%.

    That said, these data do not minimize the importance of these countries for South Africa’s food basket. Russia and Ukraine may not be major supplies of agricultural products to South Africa, but they have strong ties with the global grains and oilseeds market given their large export share contribution and this has an important bearing on commodity prices.

    This means the impact of the disruption in trade will, in the near term, be felt through prices rather than through a shortage of products. The FAO Global Food Price Index, which was already at all-time high in February, could register a new high when March 2022 results are released on 07 April 2022, and remain elevated for the months thereafter, depending on the length of the conflict and market uncertainty.

    Conversely, from an export perspective, Russia is a notable market – the 13th largest. South Africa's products to Russia and Ukraine are mainly citrus, nuts, vegetables, and tobacco. Importantly, in 2020 Russia accounted for 7% of South Africa’s citrus exports in value terms, and for 12% of apples and pears exports in the same year – the country’s second largest market.

    Aside from the Black Sea region, South Africa generally has stronger agricultural export ties with the African continent, Asia, the United Kingdom, and the European Union. In the third quarter of 2021, the African continent and Asia were the largest markets for South Africa's agricultural exports, accounting for 35% and 33% in value terms, respectively. The European Union was the third-largest market, taking up 23% of South Africa's agricultural exports. The balance of 9% value constitutes the Americas and other regions of the world.[6]

    Dependence on imported agricultural inputs

    Russia is also integrated in global agriculture through inputs market, and here lies a major risk for import dependent countries such as South Africa. Russia is the world's leading exporter of fertilizer materials in value terms, followed by China, Canada, the US, Morocco, and Belarus (see Figure 1). These fertilizer mixtures include a variety of complex minerals and chemicals, including nitrogenous fertilizers, phosphoric fertilizers, and potassic fertilizers.

    Figure 1: Share ranking of the world's top fertilizer exporters by value (2016 and 2020)   


    Source: Trade Map and Agbiz Research

     Fertilizer prices increased sharply throughout 2021 and have remained elevated since the beginning of this year. For instance, in January 2022, international ammonia, urea, di-ammonium phosphate, and potassium chloride prices were up by 220%, 148%, 90%, and 198% from January 2021, respectively.[7] There are many factors behind these sharp input cost increases, such as the supply constraints in critical fertilizer-producing countries, mainly China, India, the US, Russia, and Canada. Rising shipping costs, and oil and gas prices are also contributing factors to the price increases, along with firmer global demand from growing global agriculture.

    The Russia-Ukraine conflict will add upside pressure to these already higher fertilizer prices, particularly if Russia's exports suffer as a result of sanctions. The primary markets for Russia's fertilizer material are Brazil, Estonia, China, India, the US, Finland, Mexico, Poland, Romania, and Latvia, among others (see Figure 2). Still, even countries that have minimal direct fertilizer imports from Russia, such as South Africa, which is the 36th largest fertilizer materials market for Russia, will experience the price pressures from the international market.

    Figure 2: Russia's top fertilizer materials markets by share between 2016 to 2020 (value)     


    Source: Trade Map and Agbiz Research

     Unlike the US and Canada, with notable domestic fertilizer production capability, South Africa's domestic fertilizer production capacity is weak, in part, because of the lack of some input minerals. South Africa imports about 80% of its annual fertilizer needs and is a minor player globally, accounting for 0.5% of total global consumption. Therefore, local prices tend to be influenced by developments in the major producing and consuming countries, such as Russia and the other major fertilizer players mentioned above.

    Much of the fertilizer imported by South Africa is utilized in maize production, accounting for roughly 41% of total consumption. The second-largest consumer is sugar-cane farming, at 18%. Fertilizer constitutes about 35% of grain farmers' input costs and a substantial share in other agricultural commodities and crops.[8] Farmers have already planted the 2021/22 summer crops with these higher input costs. They will not be procuring fertilizers until around mid-year and into the third quarter of the year when they prepare for the next season (i.e the 2022/23 production season).

    Depending on the how long the Russia-Ukraine conflict continues, and the extent of the response measures such as sanctions by other countries, fertilizer prices could still be elevated when the next planting season starts.

    In the near term, the winter-crop producing areas such as wheat, barley, canola and oats, among others, which have to start the new planting season at the end of April, are most exposed to higher fertilizer prices, along with a range of horticulture (vegetables and fruit) products.

    How the war will affect the South African consumer

    Aside from the products discussed above, South Africa is generally a net exporter of agricultural products and has sufficient supplies for domestic consumption and exports to the typical markets. Still, given the possible spike in demand for major grains such as maize, South Africa should keep a close eye on its supplies to ensure that while exports continue, the country keeps sufficient supplies for domestic use.

    To be clear, this is not a call for policy intervention on the movement of crops per se. Rather, regular monitoring and publication of output and export volumes allows market pricing to adjust accordingly, as is already the usual practice for most major commodities such as grains.[9] The information about the supplies and domestic stocks will be a sufficient signal to the market, which will adjust the export volumes through price. When South Africa's stocks are stretched, the price increases will force buyers to look elsewhere, and thus ensure that there is availability of supplies in the country.

    For the South African consumer, the inescapable effect will be higher prices. The rise in agricultural commodity prices, domestically and globally, along with rising fuel costs, presents significant upside risks to consumer food price inflation. However, it should be noted that farmers do not necessarily always produce food products, but rather agricultural commodities that are inputs into manufactured food. This means that the final food-products price consumers pay is a combination of a range of factors, including labour, transport, and processing.[10] This also means that an increase in commodities prices does not necessarily mean an instant rise in retail prices. There is typically a lag, especially for grain-related products, as manufacturers usually keep several months’ worth of inventories for their production processes.

    Moreover, we are in an environment of increasing grains and vegetable-oil prices, but fruits and vegetables could come under pressure. With Russia, a key market for some fruits, temporarily disrupted, products that would have been exported there will remain in South Africa or diverted elsewhere. The meat price inflation dynamics are also uncertain, as some farmers could increase slaughtering on the back of higher animal feed costs (maize and soybeans). This means that the food basket products are not all increasing at the same rate, and there is possibility of moderation in some products. But with fuel being an underpinning product for movement of most food products, the risks to overall consumer food-price inflation are generally.to the upside.

    At the Agricultural Business Chamber of South Africa (Agbiz), we had initially thought South Africa's consumer food-price inflation would average between 4% to 5% in 2022 (compared with 6.5% in 2021). When we made the current consumer food price inflation estimates, the war was not on our radar, even though the global food prices were already relatively high. However, we now see more upside risks to these numbers, and we are currently reviewing our forecasts, a tough exercise in the current volatile environment.


    Much remains unknown about the coming weeks and months. But there is little doubt that local agricultural markets and consumers will be affected by these geopolitical events, primarily through the price transmission of a range of commodities and inputs.


  • March 2019 World Agricultural Supply and Demand Estimates report by the United States Department of Agriculture (USDA) provided further evidence that the world will have fairly large maize, soybean, and rice supplies in the 2018/19 season. Meanwhile, wheat production could decline from levels seen in the 2017/18 season.

  • South Africa remains an efficient chicken producer in the global context and has consistently produced chicken cheaper than the European Union (EU) countries. This is according to the latest research from the Bureau for Food and Agricultural Policy (BFAP).

  • Russia’s difficulty exporting its sugar could slow the expansion of the industry that’s seen a big transformation in the past two decades.

  • The members of the Grain Handling Organisation of Southern Africa (GOSA) effectively handled 17,5 million tons of grain – produced locally and imported – during the past season.

  •  Ukrainian farmers have harvested 6.1 million tonnes of grain from an area of 1.9 million hectares, the press service of the Agrarian Policy and Food Ministry of Ukraine reported on July 3.

  • The Ministry of Agriculture of the Russian Federation has put forth a long-term strategy that could ramp up investment in the country’s grain sector by investing billions of dollars in infrastructure and logistics.

  • The revenue of the chicken egg market in Eastern Europe amounted to $9.7B in 2018, surging by 6.6% against the previous year.

  • The first Russia-Africa summit held last week concluded with an announcement that urged all participants to increase co-operation in security, science, environmental protection, trade and economic matters.

  • While few traders wish to go on record, many agree: it’s been a memorably bad season for South African citrus in Russia –  even “horrific”, in the opinion of an experienced trader.

  • Russia, Ukraine and Kazakhstan are turning to policy described as “food nationalism” — protecting their domestic grain markets amid the coronavirus (COVID-19) pandemic, including major grain export restrictions, a highly concerning development for countries dependent on their grain supplies.

  • Russia sells more wheat than any other country in the world. At the same time, its domestic grain consumption is growing, too.

  • Since the Russian embargo on European food was enacted in 2014, Russia has been witnessing a surge of growth as new farms work to produce healthy food to meet the demands of cities with over a million residents.