Wheat and other grains are back at the heart of geopolitics following Russia’s invasion of Ukraine. Both countries play a major role in the global agricultural market.
That was the clear-eyed assessment of Wandile Sihlobo, chief economist of the Agricultural Business Chamber of South Africa (Agbiz), a member of the Presidential Economic Advisory Council, and a visiting research fellow at South Africa’s University of the Witwatersrand.
According to the economist, African countries imported agricultural products worth $4 billion from Russia in 2020. About 90% of this was wheat and 6% was sunflower oil. At the same time, Ukraine exported $2.9 billion worth of agricultural products to the African continent in 2020.
But Russia’s military action has raised fears that the conflict could disrupt trade with significant consequences for global food stability.
“I share these concerns,” writes Sihlobo, “particularly the consequences of big rises in the price of global grains and oilseed. They have been among the key drivers of global food price rises since 2020.”
He attributed higher costs to dry weather conditions in South America and Indonesia causing poor harvests combined with rising demand in China and India.
A disruption in trade would add to higher prices for farm goods. Rising prices were already evident just days into the conflict, Sihlobo said.
To top it off, parts of the African continent, a net importer of wheat and sunflower oil, are struggling with drought. Kenya’s agricultural lands, for example, are becoming dried out and barren as weather patterns change.
Drought has left farmers without the crops they have relied on for generations.
For farmer Safari Mbuvi, it’s a devastating blow. He sank 50,000 Kenyan shillings (US $439) in this season alone in planting.
“Since I was young, my father used to get a bounty harvest in this farm, but now, there seems to be a change in climate and the rains are no longer dependable,” he told the AP news service.
“I will not harvest anything, not even a single sack of maize is possible. I have cultivated four or slightly above three acres and the expense I incurred is not recoverable. And I am not the only one. Every farmer in this area has lost everything.”
From an African agriculture perspective, the impact of the war between Russia and the Ukraine will be felt in the near term through the rise or fall of farm product prices.
A rise in prices will be beneficial for farmers, Sihlobo said. This will be particularly welcome given higher fertilizer costs which have strained farmers’ finances.
But rising commodity prices are bad news for African households, the agricultural sector and food security which have already experienced food price hikes over the past two years.
“There’s still a lot that’s not known about the geopolitical challenges that lie ahead. But for African countries there are reasons to be worried given their dependency on grain imports,” wrote Sihlobo for The Conversation, a network of media outlets. “In the near term, countries are likely to see the impact through a surge in prices, rather than an actual shortage of the commodities.”
Other wheat exporting countries such as Canada, Australia and the U.S. stand to benefit from any potential surge in demand.
Meanwhile, the rising price of oil on global markets—sparked by the crisis in Europe—will have a direct impact on the cost of transport and fuel prices, now already at record levels, South Africa’s automobile association predicts.
Much to the disappointment of the IMF, Nigeria has already backed away from its plans to cut fuel subsidies after planned protests from labor unions and opposition parties.