Russia’s war ‘costing SA billions’

Prices of fuel and wheat-based commodities the biggest concerns

Cargo bottlenecks, payment delays and weapon scans of exports to Russia have cost SA billions and have prompted urgent diplomatic talks.

Trade officials this week confirmed ongoing and costly disruption caused by the war. The crisis has also caused a delay in delivery of critical equipment needed to stabilise ships at the port of Cape Town.

Further widespread disruptions to SA’s economy are likely, with the prices of fuel and wheat-based commodities the biggest concerns. Price hikes affect inflation and interest rates, with implications for the entire economy.

SA’s trade with Russia alone was worth about R8bn in 2020, and the country accounts for 7%-10% of SA’s citrus exports — mainly from the Western Cape.

About 11.2-million cartons of fruit were exported to Russia in 2021, but that figure has plummeted this year because of the war.

The crisis prompted a meeting last week between Western Cape agriculture MEC Ivan Meyer and the Cape Chamber of Commerce and Industry at which Meyer outlined some of the key concerns and interventions stemming from the conflict. Officials have already met the Ukraine ambassador and the Dutch embassy to address priority issues.

The crisis has cost SA about R77bn so far, according to an estimate mentioned in parliament in March.

Jannie Venter, business development/trade-lane manager at ISS — Global Forwarding SA and vice-chair of the Western Cape Exporters Club, said SA imports from Ukraine included wheat, meslin, cereals, barley, maize and oats. “It goes without saying that rising fuel prices and the price of wheat-based commodities like bread will continue to rise if this is not nipped in the bud soon,” said Venter.

The disruptions and concerns highlighted last week at Meyer’s chamber of commerce presentation included disclosures that:

● The scanning for explosives and weapons in Russia-bound containers had increased transit time to St Petersburg from 23 days to 90;

● Moscow’s suspension from the Swift (Society for Worldwide Interbank Financial Telecommunication) global payments system was delaying payment for fruit exported to Russia;

● The price of fuel may rise to R40 a litre; and

● Wheat farmers were reporting a 100% increase in fertiliser prices.

Cape Town port authorities said the conflict has delayed the arrival of two shore tension units, which are used to stabilise berthing ships.

“The delivery of the second set of units, originating from Rotterdam in the Netherlands, has been delayed as various components of the equipment are being held up abroad,” Transnet National Ports Authority confirmed in response to queries.

“Ukraine is also one of the largest suppliers of agricultural products such as wheat and grain into SA and other African countries, which has disrupted the consistent supply of import volumes.”

Cape Town port captain Rajesh Dana described the impact as “significantly visible”, with much cargo locked in Crimean ports.

“It is not as busy as it used to be due to that downturn of cargo that has to come to Africa, and to SA ports,” Dana told an online port forum meeting this week.

Jacques du Preez, market and trade general manager of South African deciduous fruit umbrella body Hortgro, said apple and pear shipments to Russia were down by 54% and 30% respectively.

“Fresh produce is reaching Russia, though a large part of the marketing window has been missed and the risk is still high,” Du Preez said. “Shipping and logistical costs have skyrocketed. Packaging, plant protection products, electricity, labour — basically all input costs — are up dramatically. And prices received for products are not [increasing]. This is a major concern and threatens the sustainability of the sector.”

● The Brics nations — Brazil, Russia, India, China and SA — said at the end of a two-day virtual summit hosted by Beijing this week that they back talks between Moscow and Kyiv. China, India and SA abstained from voting on a UN resolution condemning Russia’s invasion of Ukraine, and the five countries said in a declaration late on Thursday that they “support talks between Russia and Ukraine”.

The Brics bloc accounts for more than 40% of the global population and nearly a quarter of the world’s GDP.