Industry experts predict that China’s latest Covid-19 outbreak – the most pervasive since the deadly pathogen first emerged in Wuhan in 2019 – has the potential to plummet agriculture’s contribution to Mzansi’s GDP if South Africa is unable to export to China.
Concurrently, the intensifying global supply chain and logistics crisis has the potential to ramp up prices of imported agricultural goods to South Africa, leaving consumers to pay steep prices for some of the food items in coming months.
The latest wave in China comes four months into the biggest Covid-19 outbreak since Wuhan, with the virus discovered this time in the Chinese city of Nanjing on 20 July. Since then, 1 080 new cases of the deadly pathogen have been reported by the national health commission of China (on 4 November).
To stop the local cases from turning into a wider outbreak, China implemented stringent lockdowns and travel restrictions from in and out of the country. This, however, spells trouble for South Africa if it is unable to maintain trade with the Asian country, experts believe.
Lucius Phaleng, an agricultural economist at the National Marketing Agricultural Council (NAMC), believes that if China closes its borders, it will have a dire impact on South Africa’s agriculture sector because it is going to affect most of the commodities we export there.
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‘Beef and lucerne exports will be hard hit’
“There are a lot of commodities that we are exporting to China and some of them, such as lucerne and beef, we had just recently exported for the first time. “
Any further delays in beef exports will be detrimental to the beef industry, cautions Phaleng. The industry recently had a foot-and-mouth disease outbreak, which halted exports to China.
He also explains that the lucerne industry signed the China lucerne hay protocol, which allows locally produced lucerne to be exported to the country. If exports to China are halted, it is likely to have a negative impact on the lucerne market.
“If we are prohibited from exporting any of our commodities to China, we will lose out on the foreign exchange earnings that we are used to, which is going to affect our economy – especially the agricultural sector’s contribution to the overall GDP.”
Because South Africa is still in a stage of recovery following Covid-19 and widespread unrest, any negative occurrence will hamper the recovery process. “If I can estimate, our fourth-quarter GDP might be lowered, especially when you look at the trade part and transport sector,” Phaleng says.
But amid the potential blow to the economy, Phaleng is of the view that an inability to import commodities from China will improve market competitiveness locally.
Global impact
While China remains on high alert at its international ports of entry, Christo van der Rheede, executive director of Agri SA, says the Covid-19 outbreak in the country could have a negative impact on economies across the globe.
This, due to exports to China and the global logistical networks potentially being disrupted. “It is very worrisome because one won’t know what the impact will be on our exports to China, and one won’t really know what the impact will be on the logistical network [beforehand],” Van der Rheede says.
“We have had serious problems last year with the shortage of containers and other issue related to logistics. So, I hope and trust this won’t really have a negative impact on the global supply again.”
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