By: Justicia Shipena
Trade restrictions on key food-producing commodities could keep food production costs high as well as food prices for Namibia. This is according to a Simonis Storm agri-monthly report for November.
This comes as the World Trade Organisation (WTO) has warned about the effects of de-globalisation, as trade restrictions have increased, especially for food and commodities used in food products such as biochemicals and feed.
“This could keep local inflation rates high (above 6%) for some time still albeit that inflation is likely to trend lower going forward after having peaked at 7.3% in August 2022,” the report stated.
According to the WTO, out of 78 export restrictive measures on food, feed and fertilisers introduced since the start of the Ukraine-Russia conflict in late February, 57 are still in place, covering roughly $56.6 billion of trade.
While this has led to major food insecurity issues for Northern African and Middle Eastern countries in recent months, Namibia has largely avoided significant food shortages.
Local consumers have not seen numerous empty shelves such as consumers in Australia or the United States, said Simonis Storm.
“This indicates some resilience in Namibia’s food supply chain and that there are minimal vulnerabilities.”
The report stated that food insecurity challenges in Namibia might rather come about from higher inflation weighing on the incomes of low-income earners in an environment of elevated unemployment rates.
According to the firm, signs of price easing and a strengthening Rand/USD exchange rate could mean that local farmers see a slight ease in production costs.
However, diesel prices remain elevated and they said they expect additional price hikes due to global shortages of diesel.
“This could still weigh on farmers’ margins going forward.”
The report revealed that the agriculture, forestry and fishing sector accounted for 6.4% of GDP in the third quarter of 2022.
The growth during the same period was supported by cereal production increasing by 35.2% year on year, milk production with an increase of 4.8% whereas fish landings downed by 33.0%, and grains milled dropped by 45.0%.
“After expanding by 7.8% y/y and 2.0% year on year in 1Q2022 and 2Q2022 respectively, the sector recorded a contraction of 14.2% year on year in 3Q2022.”
Meanwhile, the report said local livestock slaughtering remains fairly muted, where cattle slaughtering increased by 1.0% month on month.
“Sheep (↓ 1.3% m/m), pigs (↑ 13.7% m/m), and goats (↓ 15.1% m/m) in November 2022 (Figure 2). Regarding exports, cattle live exports decreased by 17.6% m/m, sheep (↑ 83.2% m/m) and goats (↓ 33.1% m/m) in November 2022,” the report pointed out.
On an annual basis, the economists found that live exports also decreased for cattle but increased for sheep and goats.
“Main export destination remains the usual markets, namely the EU (45.4% of total exports), South Africa (21.0%) and Norway (12.8%).”
In addition, marketing activities in the sheep sector improved in November 2022 due to pent-up demand following the ban on animal movements to South Africa.
The report also stated that total livestock marketing activity has recorded higher levels throughout most of 2022 YTD. In this light, the best performing sub-sector during 2022 thus far has been the sheep sector.
Furthermore, the report reads that after spiking in August 2022, fish exports declined for a second consecutive month in October 2022.
“The value of fish exports is marginally above the value of exports recorded in the same period last year (January to November), being only 1.7% higher in 2022 than in 2021.”
Fish exports account for 12.5% of total exports on average, making this a crucial export earner for Namibia.
With local fishing companies already operating at Total Allowable Catch (TAC), the report said that the quantity of fish exports remains limited and will be limited for the foreseeable future, adding that pricing is the only way to increase the value of fish exports
