e-Newsletter
28/2022
28 July 2022
Global economic growth slows amid gloomy and more uncertain outlook
The global economy, still reeling from the pandemic and Russia’s invasion of Ukraine, is facing an increasingly gloomy and uncertain outlook. Many of the downside risks flagged in the International Monetary Fund's (IMF) April World Economic Outlook have begun to materialise. Higher-than-expected inflation, especially in the United States and major European economies, is triggering a tightening of global financial conditions. China’s slowdown has been worse than anticipated amid Covid-19 outbreaks and lockdowns, and there have been further negative spillovers from the war in Ukraine. As a result, global output contracted in the second quarter of this year. Read more in the linked IMF blog post.
UN report: Reducing trade costs can help drive sustainable development
A robust and well-integrated global agrifood system can help all countries withstand unprecedented challenges, as evidenced during the Covid-19 pandemic in early 2020 when global agrifood markets proved to be remarkably resilient. “Efficient trade can promote world food security and better nutrition,” said QU Dongyu, director-general of the Food and Agriculture Organization of the United Nations (FAO) at an event to launch The State of Agricultural Commodity Markets 2022 (SOCO 2022), an FAO flagship report. The SOCO report, in its new edition, examines how mutually reinforcing multilateral and regional efforts can address the sustainable development challenges of today and those of the future. It does so with an eye to the global agrifood markets, agrifood systems resilience, economic growth, and environmental outcomes, cognizant that trade policies cannot be expected to fully address all the entailed trade-offs and require complementary measures. Please click here to access the full report.
AGRIBUSINESS RESEARCH
South Africa’s consumer food price inflation hit the highest level since February 2017
South Africa’s consumer food price inflation accelerated to 9,0% y/y in June 2022, from 7,8% in the previous month. This was the fastest pace since February 2017. There was an overall increase across the food basket, except for fruit which moderated somewhat. This broader uptick in the consumer food price inflation largely mirrors the increase we have seen in the global agricultural commodity prices, and indeed the domestic market.
As we previously stated, we are also seeing the spillover the Russia-Ukraine war had on agricultural commodity prices transmitted into retail food prices. In fact, for the grain-related and vegetable oils products, we will likely see a continuous mild uptick persistent in the coming month or two, which could maintain the headline food consumer price inflation number at higher levels. Agbiz chief economist Wandile Sihlobo discusses the latest food inflation data in the linked article.
Russia/Ukraine grain export deal promises major benefits for poor countries. If it holds
If Russia keeps to the deal it has signed with Ukraine allowing for the resumption of grain exports, much-needed relief will be provided to importing countries, including many in Africa. The relief would be significant as Ukraine has roughly 22 million tonnes of grain (wheat, maize, sunflower seed and other grains) in silos. It has not been able to ship these to export markets because of Russia’s invasion, which disrupted infrastructure and the attacks on vessels transporting goods. Ukraine is a notable player in the global grain and oilseeds export market. And thus, the blockage of exports has contributed to the notable increase in agricultural commodity prices observed since the war started. Read more in the linked article by Wandile Sihlobo, first published on The Conversation. You can also watch Wandile's interview with Newzroom Africa on this topic here.
OTHER NEWS
Business set to reject social compact blueprint as it frets over hiring targets, job cut limits 
Fin24 reports that contrary to assertions by President Cyril Ramaphosa in his newsletter on Monday that talks for a social compact are on track, business is gearing up to reject the framework his ministers have proposed, claiming that its position has been repeatedly ignored. The social partners were due to provide feedback on the social compact framework document to Nedlac on Tuesday. The framework document, drafted by the government, sets out the commitments each social partner will make in broad terms. But Business Unity SA (BUSA), which represents business in Nedlac, has sought a mandate from its members over the past week to oppose both the proposed framework and the social compact methodology entirely, in which partners make "trade-offs" ostensibly for the greater good. Business has tried to persuade Ramaphosa since January that a better approach would be to configure a joint programme of work on a limited number of priority issues facing the economy, such as the energy crisis, bulk water, transport and law and order. This should be done through bilateral arrangements with government and not in a multilateral forum. Please click here to peruse.
BLSA welcomes the president’s energy plan and applauds its bold approach
Electricity
Business Leadership South Africa (BLSA) welcomes the announcement of the plan of action by President Cyril Ramaphosa to bring an end to load-shedding. "We applaud the president’s bold new plan in terms of its immediately actionable steps to:
Fix Eskom and improve the performance of our existing fleet of power stations;
Accelerate the procurement of new capacity from renewables, gas and battery storage;
Accelerate greater private investment in generation capacity;
Enable businesses and households to invest in rooftop solar; and
Transform the electricity sector and position it for future sustainability.
BCG Climate and Just Transition in Africa
Last week, BCG launched its Centre for Climate & Just Transition in Africa, dedicated to supporting African businesses and governments in driving climate action and enabling a Just Transition across the continent. Please click here to watch the event that included a panel discussion on green hydrogen opportunities. A CEO roundtable, co-facilitated by NBI and BCG, was also held before the launch event for the release of BCG's new integrated energy report from the Climate Pathways and Just Transition study. Please click here to watch the event. The report can be accessed here.
Statement by the Monetary Policy Committee
In the wake of the Covid-19 pandemic and aggravated geopolitical tensions, the global economy has entered a period of persistently high inflation and weaker economic growth. Many developing economies have yet to recover fully from the pandemic. Global economic conditions remain fragile. Russia’s war in Ukraine will continue to impair production and trade of a wide range of energy, food and other commodities. The supply of energy to the Euro Area is limited as winter approaches and is likely to reduce growth this year and next. With rapid inflation and withdrawal of policy stimulus, the United States will also experience slower economic growth. China’s recovery from the Covid-19 outbreak and resultant lockdowns remains uncertain. The much-needed resumption of international travel and tourism will take time to generate large benefits. Read more in the full statement issued by Lesetja Kganyago, Governor of the South African Reserve Bank.
Transnet ports authority looks to renewables for stable power supply
Renew_energy
Transnet subsidiary Transnet National Ports Authority (TNPA), has published a Request for Information (RFI) process, whereby private sector players would submit project proposals to supply renewable energy at eight of South Africa’s main commercial seaports, as part of its Renewable Energy Programme. The programme seeks to procure between 50 MW and 80 MW of renewable energy and flows from an internal audit which indicated a need to secure its energy supply, costs and reduce greenhouse gas emissions. The ports comprise Cape Town, Durban, East London, Mossel Bay, Ngqura, Gqeberha (Port Elizabeth), Richards Bay and Saldanha Bay. This is a very necessary step towards energy stability for the national logistics infrastructure which serves South African exports and imports and will benefit the agricultural sector. When load-shedding occurs, ports are generally not exempt and ship loading and offloading are impacted as various systems at terminals and berths stop functioning. This is especially problematic for the cold chain and perishable goods such as fruit and animal products which must enjoy an uninterrupted cold chain at the terminals in order to maintain their phytosanitary status. Currently, industry spends millions on generators to ensure the cold treatment remains unaffected, but this is not sustainable. In addition, delays to ship loading and offloading incur fees and penalties, shorten the life of the product, lead to reputational loss with clients in destination markets, and can even impact international shipping line decisions on port visit frequency. Responses to the Request for Information must be submitted by 6 September 2022. TNPA will then release a Request for Proposals (RFP) provided that sufficient information is gathered from RFI submissions. Read more in the linked Transnet media statement.
BUSA Covid-19 cargo movement update
Port operations this past week were mainly characterised by issues relating to equipment breakdowns leading to shortages, congestions, and operational stoppages. Our commercial ports, besides Durban, were not generally busy or congested; however, equipment availability remains an issue, while the Durban port experienced some congestion due to the ongoing Bayhead Road bottleneck and labour-related stoppages. In addition, the Eastern Cape ports are still making alternative plans to soften the blow of load-shedding, having little or no generator backup.
The fuel supply issue regarding the helicopter at the Durban port was resolved with the supplier earlier this week. However, during the latter stages of the week, it was reported that the helicopter was out of commission due to component repairs that needed to be executed. In addition, weather conditions were relatively mild this week, with no delays being reported directly due to the weather. Read more in the linked BUSA Covid-19 Cargo Movement Update.
MEMBERS' NEWS
Weekly newsletter from CGA
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.
UPCOMING EVENTS
TIPS Forum 2022
1-2 August 2022 | Hybrid event | Sheraton Hotel | Pretoria | Online via Zoom

SACTA Annual Virtual Information Session
2 August 2022 | 10:00-13:00

Bewaringslandbou
3 August 2022 | Nooitgedacht | Stellenbosch

Launch of BFAP Agricultural Outlook 2022 - 2023
17 August 2022 | 14:00 | Virtual

International Fresh Produce Association (IFPA) Southern Africa Conference
17-18 August 2022 | Century City Conference Centre | Cape Town
For more information: membershipsa@freshproduce.com or visit the website

Africa Agri Tech Conference and Exhibition
29 August-2 September 2022 | Menlyn Maine | Pretoria

Nampo Cape
14-17 September 2022 | Bredasdorp Park
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