African governments take urgent steps to counter wheat shortage

Several African countries are grappling with wheat shortages as a result of the conflict between Russian and Ukraine. This has necessitated novel strategies to mitigate intense inflationary pressures, stem socio-economic grievances, and ensure food security.

Egypt is perhaps the most affected. The North African republic is the world’s largest wheat importer – spending as much as US$4.67bn in 2019 according to the Organisation for Economic Complexity – but 82% of these imports were sourced from Ukraine and Russia. As a result, it has had to weather two shocks: a direct shock to its ability to procure wheat, and a general uptick in the global price of wheat.

According to the Central Agency for Public Mobilization and Statistics (CAPMAS) Egypt’s annual consumer price inflation rose for a sixth consecutive month, to 15.3% in May. This is substantially higher than the Central Bank of Egypt’s target rate of 7% (+/- 2% ). At the heart of this are accelerating wheat and cereal prices. In preparation for the 2022/2023 budget, the government has raised its baseline wheat price from US$ 255 per ton to US$330 per ton.

Somalia and Benin, which import close to 100% of their wheat supply from Russia and Ukraine, have been similarly hit by the conflict, as have Sudan, Democratic Republic of Congo, Senegal,and Tanzania, which import between 60 and 75 percent of their wheat from these two European countries.

An array of interventions has emerged as African states navigate the wheat crunch. However, most centre around four phenomena – the release of strategic reserves, easing of import constraints, diversification of imports, and export bans.

The Egyptian government has doubled down strongly on the local market to ease wheat shortages. Farmers have been ordered to supply at least 60% of their harvest to the state, as opposed to 40% in 2021. As compensation, the government has offered to pay 20% more for its procurements; although, the final price of US$318.40 per tonne is lower than the current market price. In March, the government also put in place a three-month ban on the export of corn, lentils, beans, wheat, and wheat products, in addition to diversifying supply routes by issuing tenders to suppliers in France, Kazakhstan, the United States, and Romania. The government has also toyed with some unconventional measures such as a wheat-for-fertiliser deal with India in addition to appealing for funding from the World Bank and the IMF; progress on the deals is uncertain at present.

Meanwhile, Zambia – which enjoyed a bumper harvest in 2021 with a 7% rise from the previous year – has been able to inject excess produce into the market, at lesser cost to the state. Cote d’Ivoire suspended all imported duties on wheat and wheat products for a three-month period in May, in the attempt to counter imported inflation and the resultant pressure on businesses and consumers. Similarly, African countries have sought to vary their suppliers in a bid to reduce their dependence and exposure to Russia and Ukraine. Rwanda, for instance, noted in March that it was looking at France as a potential wheat supplier. Finally, some like Ghana have gone the more protectionist route, with the country extending a ban on wheat and grain exports until September 2022.

What has been curiously lacking in the discourse on Africa’s adaption to the global wheat crunch are measures aimed at promoting endogenous agricultural growth. Nevertheless, this has not been remiss to organisations like United Nations International Fund for Agricultural Development (IFAD) which have reiterated the fact that the crisis offers an opportunity to fundamentally transform Africa’s agricultural sector. As per IFAD, sound investment in seed, soil, harvesting and storage technology can bolster output, especially in so-called breadbasket countries such as Zambia, Malawi, and the Democratic Republic of Congo. Meanwhile, the African Continental Free Trade Agreement can serve to facilitate an expansive and sustainable market.

However, it falls on the lap of policymakers to facilitate an environment that is ripe for such investment and long-term transformation. Troublingly, it appears at the moment that they are more fixated on more immediate solutions.

 

References

Africa could feed itself with the right infrastructure, DW, 13 June 2022

Egypt looks to local farmers as grain market tightens, Financial Times, 07 June 2022

Import: Ivory Coast suspends duties on wheat, UkrAgroConsult, 02 June 2022

Russian and Ukrainian wheat dependence in African and least developed countries 2022, Statista, 20 April 2022

Ghana and Uganda Ban Grain and Food Exports, All Africa, 28 May 2022

Africa’s new harvest: To transform agriculture, we must speed up innovations and collaboration, United Nations Africa Renewal Magazine, 11 April 2022

Zambia to export over 1 mln tonnes maize after bumper harvest, Nasdaq, 01 October 2021