The use of agricultural inputs in South Africa

COVID-19 has caused widespread turmoil and volatility since the start of 2020 and the measures implemented to contain it have sent shockwaves throughout the global economy. Investor appetite for risk has declined drastically, resulting in a major sell-off in financial markets, as well as a drastic depreciation in many emerging market currencies.

In South Africa, the situation is further exacerbated by consecutive downgrades to the sovereign credit rating – by Moody’s to sub-investment level for the first time and by Fitch to a level further into sub-investment grade. At the same time, reduced economic activity, especially in mining and manufacturing output, the grounding of commercial airliners and the on-going price war in major oil-producing countries have caused the largest oil price crash in decades.

Amidst this perfect storm, food security remains paramount and, while South Africa is a net exporter of agricultural products, it imports a substantial share of the inputs required to produce this surplus. Futhermore, while most agricultural value chains have been exempted from the lockdown restrictions, many of the support services required for the agriculture and food system to function efficiently are not operating at full capacity. Amidst concerns related to continued efficiency of the logistics associated with international trade, this 6th COVID-19 brief takes a closer look at agricultural input supply – particularly the extent of import dependence, the rising cost structure and the commodities most likely to be impacted in the short and medium-term.

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