NEWS
WHAT UKRAINE- RUSSIA TENSION MEANS FOR SA
AGRICULTURE AND AGRI-BUSINESS
While we have started the year focusing on domestic factors affecting South Africa ' s agriculture and agri-business , especially given the recent excessive rains that have worried some farmers , geopolitical factors have now also come to the fore .
Wandile Sihlobo Agbiz
GLOBAL AGRICULTURAL OUTPUT Specifically , the rising tensions between Ukraine and Russia are worth monitoring , given the role of these two countries in global agricultural output . Both countries are key players in global agriculture , and thus disruption in production or export activity could impact global agricultural commodity prices .
For example , Russia produces about 10 % of global wheat , while Ukraine accounts for 4 %. Combined , this is nearly the size of the European Union ' s wheat production , according to the latest data from the International Grains Council . This wheat is not just for domestic consumption , but also for export markets . In 2020 , Russia accounted for 18 % of global wheat exports and Ukraine 8 %. Together , this is just over a quarter of global wheat exports from just two countries .
Moreover , these countries are also notable players in maize , responsible for a combined maize production of 4 %. In terms of exports , however , Ukraine and Russia ' s contribution is even more significant , accounting for 14 % of global maize exports in 2020 , according to data from Trade Map . Ukraine and Russia are also amongst the leading producers and exporters of sunflower oil . In 2020 , Ukraine ' s sunflower oil exports accounted for 40 % of global exports , with Russia accounting for 18 % of global sunflower oil exports .
THREAT TO GLOBAL FOOD SECURITY
We don ' t know how the tensions between Russia and Ukraine will unfold in the coming days and possibly longer . There are reports of 100 000 Russian troops along the Ukraine- Russia border . This has also caused panic amongst some analysts that an intensifying conflict between these two countries and the potential trade disruption would have significant consequences for global food stability . We share this view , especially concerning global grains and oilseed prices . These agricultural commodities have also been amongst the key drivers of global food prices since 2020 , primarily because of drought in South America , poor harvests in Indonesia and the rising demand in China and India .
Hence , a disruption in trade in this significant producing region of the Black Sea would add to elevated global agricultural commodity prices and potentially be consequential to global food prices . However , the scale of the potential upswing in the global grain and oilseed prices would primarily depend on the disruption and the time trade would be affected . For now , this can be viewed as an upside risk to global agricultural commodity prices .
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SENWES SCENARIO | HERFS � AUTUMN 2022