For the past 17 years, the World Economic Forum’s Global Risks Report has warned about deeply interconnected global risks. Conflict and geo-economic tensions have triggered a series of deeply interconnected global risks, according to the World Economic Forum’s Global Risks Report 2023. These include energy and food supply crunches, which are likely to persist for the next two years, and strong increases in the cost of living and debt servicing. At the same time, these crises risk undermining efforts to tackle longer-term risks, notably those related to climate change, biodiversity, and investment in human capital. These are the findings of the Global Risks Report 2023 which argues that the window for action on the most serious long-term threats is closing rapidly and concerted, collective action is needed before risks reach a tipping point. The report, produced in partnership with Marsh McLennan and Zurich Insurance Group, draws on the views of over 1 200 global risk experts, policymakers and industry leaders. Across three timeframes, it paints a picture of the global risks landscape that is both new and eerily familiar, as the world faces many pre-existing risks that previously appeared to be receding. Please click here to peruse.

A majority of the World Economic Forum’s Community of Chief Economists expect a global recession in 2023, see geopolitical tensions continuing to shape the global economy, and anticipate further monetary tightening in the United States and Europe. These are the key findings of the Chief Economists Outlook, launched earlier this week at the World Economic Forum (WEF) annual meeting in Davos-Klosters, Switzerland. Almost two-thirds of chief economists believe a global recession is likely in 2023; of which 18% consider it extremely likely – more than twice as many as in the previous survey conducted in September 2022. A third of respondents consider a global recession to be unlikely this year. Read more in the linked WEF media release.

As we start the new year, there is probably no issue more urgent than the worsening energy crisis for South Africa's agriculture and agribusinesses. Farmers who rely on irrigation have all expressed concerns that persistent load-shedding negatively affects production. In crucial field crops, roughly 20% of maize, 15% of soybean, 34% of sugarcane and nearly half of the wheat production are produced under irrigation. Fruit and vegetables also heavily rely on irrigation and thus face similar challenges. In red meat, poultry, piggery, wool, and dairy production, there are also concerns that load-shedding beyond stage two makes operations and planning challenging, as these industries all require continuous power for their usual activities. Similarly, agribusinesses face similar challenges in various downstream processing activities, such as milling, bakeries, abattoirs, wine processing, packaging, and animal vaccine production. Exporting agribusinesses, especially those with products susceptible to delays, such as fruit, red meat, and wine, are also worried about the port activities, which fortunately haven't been primarily affected. Agbiz chief economist Wandile Sihlobo shares his insights on load-shedding's impact on the agricultural sector in the linked article.

Agbiz has submitted its comments on the proposed CPI plus 2 increase in the national minimum wage as recommended by the majority of minimum wage commissioners in their report released on 15 December 2022. The business representatives on the National Minimum Wage Commission only recommended a CPI adjustment. Agbiz acknowledges in its submission the very important contribution of workers to the agricultural sector and stated clearly that we support a fair wage dispensation for all workers in the sector, including those receiving the minimum wage. This, however, needs to be balanced with the ability of employers in the sector to absorb a further increase in cost. Agbiz pointed out that business confidence in the sector is trending downwards and highlighted the challenges experienced in the sector with input costs, floods, load-shedding, service delivery issues, and sharp increases in the interest rate. In the linked article, Agbiz head of Legal Intelligence Annelize Crosby discusses Agbiz's submission.

The data released by Statistics South Africa this week shows that consumer food price inflation slowed marginally to 12,7% in December 2022 from 12,8% in November. The product prices underpinning this moderation include meat, oils, and fats. For the whole of 2022, the consumer food price inflation averaged 9,5% (compared with 6,5% y/y in 2021 and 4,8% in 2020). Broadly, the high prices of grains, vegetable oils, and meat for much of 2022 were the primary drivers of consumer food price inflation. This was not a unique occurrence to South Africa, but a global challenge mirrored the surge in agricultural commodity prices in the first three quarters of 2022 and the year before. The agricultural commodities price increase emanated from various factors such as the drought in South America, higher shipping costs, strong agricultural product demand in China, and the Russia-Ukraine war. Agbiz chief economist Wandile Sihlobo discusses the latest food price inflation data in the linked article.

Although we expect South Africa's agricultural gross value added for 2022 to have contracted, the year was generally favourable for the sector. The squeeze we anticipate results from mild declines in critical crop harvests such as maize, production challenges in the sugar industry, trade friction in fruits, vegetables, beef, and wool, and widespread foot-and-mouth disease weighed on the sector's performance this year. In a slightly more technical sense, the strong growth in the previous two years – 14,9% y/y in 2020 and 8,8% y/y in 2021 – created an exceptionally high base, setting the ground for some pullback. In the linked article, Wandile Sihlobo discusses the latest data.

South Africa’s agriculture remains an important sector of the economy and holds great potential to reduce poverty. It’s also central to the political economy of the country, as evident in the governing African National Congress’s (ANC) recent policy documents. The ANC acknowledges that agriculture holds the potential to uplift many poor South Africans out of poverty through increased food production, vibrant economic activity, and job creation. This is not a misplaced view. There is compelling evidence that, on average, growth in agriculture is more poverty-reducing than an equivalent amount of growth outside agriculture. This brings home the need to invest in and expand agricultural production, particularly for the benefit of poor rural communities. Wandile Sihlobo shares his views in the linked article, first published in The Conversation.

The interlinked problems of poverty, unemployment and weak economic activity continue to plague rural towns and communities in South Africa. However, the two industries that could help ease some of these challenges – agriculture and tourism – face various constraints that limit their growth potential. Beyond the big topics of ambiguous land reform and international trade in the case of agriculture, the everyday challenge for farmers, agribusinesses and tourism entities is the dire state of local road networks, deteriorating water infrastructure and high crime levels. Wandile Sihlobo covers this and other issues in this week's podcast. Please click here to peruse.

South Africa's decision to buy land for black farmers has not been well implemented. The purpose of land reform was to bring black farmers back into the mainstream agricultural economy. Most of the farmers that were given land have not achieved commercial status. Agbiz chief economist Wandile Sihlobo weighs in on this topic in a conversation with Newzroom Africa. Please click here to watch the interview.

As policymakers and business leaders gather at the World Economic Forum in Davos, they are facing a Gordian knot of challenges . From the global economic slowdown and climate change to the cost-of-living crisis and high debt levels: there is no easy way to cut through it. Added to this are geopolitical tensions that have made it even more difficult to address vital global issues. Indeed, even as we need more international cooperation on multiple fronts, we are facing the specter of a new Cold War that could see the world fragment into rival economic blocs. This would be a collective policy mistake that would leave everyone poorer and less secure. Read more in the linked International Monetary Fund blog post.

A combination of factors – including greater poverty and supply chain disruptions in the wake of the Covid-19 pandemic, the war in Ukraine, rising inflation, and high commodity prices – has increased food and nutrition insecurity. This is a multifaceted crisis, affecting access to and availability of food, with long-term consequences for health and productivity. The World Bank has scaled up its efforts to bolster food security, reduce risks, and strengthen food systems over the short and long term. Urgent action is needed across governments and multilateral partners to avert a severe and prolonged food crisis. Read more in the linked article published by the World Bank.

Disrupted supply chains and worsening food security are among the fallout in Africa from the twin shocks of the Covid-19 pandemic and Russia’s invasion of Ukraine. This has awakened interest in the state of agricultural production and productivity and its role in the sustainable economic transformation of the continent, write David Luke and E. Olawale Ogunkola. The economist Nicolas Kaldor argued that the growth rate of an economy is positively related to the growth rate of its manufacturing sector. The large body of work in the applied economics of growth that he influenced has recognised manufacturing as the engine that induces productivity and growth not only within the manufacturing sector but also in agriculture. This is key to why agro-industrialisation (AI) that builds upon Africa’s distinctive farming system of smallholders is essential for the modernisation of the continent’s agricultural sector. Please click here to peruse.

Ships deliver over 80% of world trade, so disruptions in ports and on shipping lanes mean food, manufactured products and components, energy, medicine and other essential items are significantly delayed. And prices for producers and consumers soar. Although delays have improved and dry cargo rates are coming down, maritime transport – and thus world trade – remains vulnerable. The linked UNCTAD report notes that industry must invest now to shore up its resilience to future crises and climate change.

The European Union is South Africa’s third-largest regional agricultural export market. With the Berlin Fruit Logistica 2023 just around the corner in early February, the linked video interview with Philippe Binard, general delegate of Europe’s fresh produce industry association Freshfel Europe, covers challenges such as inflation, climate change and energy supply and what these mean for the European fresh produce sector in 2023 and how can the fruit and veg business overcome them. Please click here to peruse.

Port operations were characterised by adverse weather conditions, frequent equipment breakdowns and shortages, load-shedding causing system challenges, and congestion. Cape Town experienced adverse weather conditions with strong south-easterly winds throughout the week and the most significant part of the weekend, ensuring delays. In addition, Durban and GCT experienced equipment breakdowns as several cranes were out of commission during the week. Furthermore, persistent cable theft and overhead power failures on the railways ensured operational difficulties and delays throughout the week. In the global maritime economy, the containerised market has almost fully normalised after the roller-coaster rides of the last three years. Significant factors, such as the aftermath (and continuation of, in some parts) of the pandemic, the war, and major global inflation, are still playing a role, although less so than when we reviewed the outlook for the sector at this time last year. Read more in the latest edition of the BUSA Covid-19 Cargo Movement Update.

Northern Cape irrigation farmers are appealing for all differences to be cast aside and for the nation to unite to combat the electricity crisis. The farmers arranged for a media conference to be held at 11:00 on Friday 20 January 2023 in Douglas in the Northern Cape regarding the crisis. Farmers in several other districts, such as Hopetown, Prieska and Vaalharts, will also raise awareness about the electricity crisis during this time as a positive gesture showing that the agricultural sector wants to be part of the solution to a national challenge that can push South Africa over the edge. The current electricity crisis spares no one. While crops under irrigation wither, lightbulbs flicker faintly due to the energy crisis, television sets stand silent, and factories are closed during load-shedding like the doors of small businesses and stores. Unemployment compounds while the economy languishes with every flick of the switch. Read more in the linked media statement.

In announcing the results of the 2022 season, Justin Chadwick, CEO of the South African Citrus Growers’ Association (CGA), said the smaller increase in fruit shipped this season was a particular concern in light of the 10-year forecast. “This forecast indicates that our exports should grow on average by 10 million cartons per year for the next decade, reaching 200 million cartons in the next five years and growing up to 260 million cartons in the next 10 years,” Chadwick explained. The steep growth expected in South African citrus production over the next decade could be problematic if the past year’s pattern of lower shipments continues. Read more in the linked article, first published on fruitnet.com.

The Citrus Growers' Association of Southern Africa, shares the latest news in the citrus industry in its weekly update - From the desk of the CEO. Please click here to peruse.