By Sifiso Ntombela
SOUTH Africa’s agriculture uses roughly 2.2 million tons of fertiliser per annum to produce a variety of crops and pastures. On average, about two-thirds of the fertiliser is used to grow grains and oilseeds like maize, wheat, soya beans and sunflower, among others.
Fruit and vegetable production use nearly 18% of total fertiliser, and the rest is utilised to cultivate sugar cane and pastures. More than 95% of the country’s fertiliser consumption is imported, implying that South Africa is directly impacted by global market dynamics such as global conflicts, trade distortion policies and economic meltdowns.
Impact of global conflicts on agricultural inputs
The world price for fertiliser has not recovered from the shocks caused by the Covid-19 pandemic, which constrained the supply of fertiliser. This was exacerbated by the conflict between Russia and Ukraine, which compounded the rise of fertiliser prices worldwide.
Between 2021 and 2023, global fertiliser prices increased tremendously, reaching a peak in April 2022. Because South Africa’s food and inputs prices are directly connected with world prices, the country also experienced a sharp rise in local fertiliser prices during this period. South Africa’s fertiliser price recorded the highest level of R23 718 per ton in May 2022 for products like monoammonium phosphate (MAP).
The bulk of South Africa’s fertiliser is imported from countries like Saudi Arabia, Russia, China, Oman and Qatar. Russia had a market share of 16.9% in South Africa’s fertiliser imports, meaning a significant amount of the country’s fertiliser needs were impacted when Russia invaded Ukraine and, consequently, attracted economic and financial sanctions from the US and the EU.
South Africa, like other developing countries that depended on fertiliser from Russia and Belarus, had to act quickly to find alternative sources for its fertiliser needs.
The sanctions that were imposed by Canada, the EU and the US against Russia deterred the appetite of importers wanting to do business with Russian companies.
Despite ‘carve-out’ exemptions for agricultural products, importers may have chosen not to purchase from Russia and Belarus given the risk of secondary sanctions if they did business with Russian companies.
Economic sanctions against Russia’s exports disrupted the global fertiliser supply, causing a spike in world fertiliser prices. The trade distortion caused by countries like Vietnam and China, which introduced export bans on fertiliser, compounded the shortage problem in the global market, further driving the spike in global fertiliser prices.
The International Food Policy Research Institute (IFPRI) estimated that such export restrictions affected about 20% of global fertiliser trade. This equates to about 32 countries in the world, mostly underdeveloped and developing countries, having at least one-third of their fertiliser use at risk because of the instituted export bans and economic and financial sanctions imposed on Russia.
South Africa’s non-alignment foreign policy
South Africa can increase domestic production of fertiliser provided appropriate incentives and finance solutions are put in place to attract private investments in fertiliser manufacturing.
Localisation of fertiliser production could be a short- to medium-term strategy that will not only help farmers afford inputs, but will also create jobs and drive the food security agenda in the country.
Currently, what is concerning is the growth of global conflicts that impede trade flows and affect relations among countries.
South Africa holds a non-alignment foreign policy that promotes dialogue to achieve peace and stability in the world.
The country has consistently upheld the non-alignment policy ranging from its view on the Russia-Ukraine conflict, the Israel-Palestine war and the multiple battles in Africa.
Some trade partners perceive South Africa’s non-alignment foreign policy as not supporting them, which could erode the trading relations. If such sentiments persist, South Africa’s access to imported commodities like fertiliser could be a challenge in the future, thus posing a risk to domestic food security.
To mitigate this risk, the country must upscale its efforts to invest in domestic capacity to produce fertiliser.
Sifiso Ntombela (PhD) is an agricultural economist. He serves as the special adviser to Minister Thoko Didiza in the Department of Agriculture, Land Reform and Rural Development. He is also an elected president of the Agricultural Economics Association of Southern Africa.
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