Will Russia’s grain deliveries to Africa ease prices?

Russia has announced plans to start delivering its grain to several African countries within the next month to six weeks. The countries set to receive the grain include Burkina Faso, Zimbabwe, Mali, Somalia, Central African Republic, and Eritrea. This move comes at a crucial time as international maize prices have been on the rise, increasing by 7% in September after seven consecutive months of declines. Tedd George, Chief Narrative Officer at Kleos Advisory, discussed the implications of these developments and the outlook for food commodities in the final quarter of the year. George expressed skepticism about the impact of Russia's grain donations, noting that while the gesture is significant for countries facing food shortages in Africa, the quantities being offered are small compared to the overall grain needs of these nations. He highlighted that despite a decrease from the peak prices seen after Russia's invasion of Ukraine, grain prices have been creeping up following the expiration of a special deal allowing Ukraine to export grain without interference from Russia. The discussion also touched on the challenges faced by Ukraine in trying to get grain to market through various routes, including over land and via humanitarian corridors. George emphasized the importance of Africa producing more of its own food rather than relying heavily on imports to mitigate the impact of high global grain prices. In addressing the trends in food commodity prices, George highlighted that while prices have reduced from earlier peaks, the decreases have not necessarily translated to lower food prices at the consumer level in countries like Ghana, Nigeria, and Cote d'Ivoire. He attributed this to the high dependence on imported food and deals made at higher price points when global prices were elevated. Climate change was identified as a contributing factor to disruptions in agricultural production, leading to concerns about potential further price increases as demand for food remains high. The need for African nations to bolster food production domestically was emphasized to reduce reliance on imports and mitigate the impact of volatile global prices. The discussion also delved into the challenges faced by rice and cocoa farmers in the region. George highlighted the vulnerability of rice farmers in Nigeria to flooding, which could necessitate increased rice imports and drive prices higher. In the cocoa sector, while elevated cocoa prices present an opportunity for exporters, the risk of crop damage from climate-related issues like increased rains and diseases like black pod remains a significant concern. The conversation shifted to the issue of rising fertiliser prices and their impact on agricultural yields. George explained how disruptions in the global fertiliser market, driven by supply chain disruptions and increased input costs, have resulted in reduced fertiliser use and lower crop yields in West Africa. The need for more local fertiliser production was stressed to address the current challenges and reduce reliance on costly imports. George also addressed the importance of value addition in the agricultural sector to maximize the potential of crops like cocoa and tomatoes. While investments in cocoa processing have been made across West Africa, there is still untapped potential in value addition for crops like tomatoes in Nigeria. The lack of infrastructure and coordination in the sector has led to significant post-harvest losses, highlighting the need for improved infrastructure and better industry coordination to capitalize on value addition opportunities. In conclusion, the discussion underscored the importance of addressing key challenges such as climate change, infrastructure deficiencies, and global market volatility to enhance food security and economic stability in Africa amidst the evolving landscape of food commodities.