How Coronavirus Impacted Agriculture Worldwide

FarmBiz|June 2020

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How Coronavirus Impacted Agriculture Worldwide
Just as the South African agricultural sector started to win the fight against the 2019 foot-and-mouth disease outbreak, the coronavirus jumped in to change society in ways we could not imagine.
Claudi Nortje

President Cyril Ramaphosa declared the coronavirus a national disaster on Sunday, 15 March 2020, as the number of confirmed COVID-19 started to climb locally.

Besides its health aspect, the global spread of the virus has had a devastating effect on multiple industries, economies and also the global agricultural sector.

The World Health Organization's (WHO) declaration of the COVID-19 outbreak as a global pandemic in February, resulted in governments increasing their containment measures. As a result, the global market lost in excess of $6 trillion in just six days during late February, mirroring economic conditions last seen in the 2008 global recession.

SA’s agricultural outlook

In a press release on the issue, Omri van Zyl of Agri SA stated that South Africa’s agricultural sector exports approximately 25 commodities with a value of $10 billion on an annual basis. In the short term, he said, supply chain and logistical disruptions would harm export-driven agricultural sectors.

Agbiz in turn reported that the lowered demand from Asian countries could also damage the South African export market. Asian countries account for 25% of South African agricultural exports and import products such as wool, fruit, grains, red meat, vegetables and beverages.

China takes up 8% of global agricultural imports and is the second biggest importer in the world. Japan is responsible for 4% of global agricultural imports and is the sixth biggest importer in the world. South Korea and Hong Kong collectively account for 4% of global agriculture imports.

South African farmers who sell most of their agricultural products to Asian countries, can therefore expect lower profits. Agbiz also cautioned that a longer duration of the outbreak could further affect the global demand of South Africa’s agricultural products.

Agricultural imports were also being affected seeing as other countries imposed their own trading restrictions at the time, also enforcing nationwide lockdowns in a bid to control the spread of COVID-19.

The rice industry

One of the sectors severely affected by import restrictions is the rice industry. The level of production of rice in South Africa is insignificant, and we have to import rice from India and Vietnam to meet local demand.

India is the world’s largest rice exporter and stopped signing new export contracts during the country’s own nationwide lockdown. Meanwhile, Vietnam introduced a rice export quota. Seeing as India produces roughly 20% of South Africa’s rice consumption, the impact on the local rice supply chain will be felt for some time. Thailand and India together supply more than 95% of South Africa’s rice demand, with Thailand’s contribution amounting to more than 75% of rice imports.

The fruit industry

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June 2020