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In less than two years South Africa’s agricultural sector has been dealt a few blows by countries who are seemingly weaponising trade policy instruments and banning exports during times of uncertainty to ensure adequate domestic supply.
However, according to Wandile Sihlobo, chief economist of the Agricultural Business Chamber of South Africa (Agbiz), countries should pull the plug on taking drastic self-interested policy measures. Instead they should focus on supporting farmers to increase production and fill the gap in supplies. Since last year, there’s been at least four bans impacting global agricultural trade. The war by Russia on Ukraine has also had a direct and more severe impact on the international market.
In 2020, the likes of Vietnam and Kazakhstan banned grain export. agriculture ministers from the G7 countries however criticised the move and the bans were subsequently reversed.
In July 2021, China went as far as banning exports of fertiliser in an attempt to ensure adequate domestic supply. According to Sihlobo, “Such inward-looking policy actions often have a notable disruption on the highly interconnected global agricultural market.”
Sihlobo explained that the first significant agricultural exporter to introduce restrictions this year was Indonesia at the end of April. Indonesia temporarily banned palm oil exports.
The impact of the Russia-Ukraine invasion has had a direct and severe impact on the agricultural market. This is because both countries contribute substantial volumes of grains, oilseeds and fertiliser exports.
The most recent country, India, has followed with similar steps announcing a ban on wheat exports.
“Overall, with heightened uncertainty, the ban on exports of essential commodities should not be a preferred policy instrument, especially by major agricultural producers such as India and Indonesia, among others,” said Sihlobo. Source (Tralac)