Fears that the conflict in the Middle East will trigger a steep surge in South Africa’s food prices may be overstated, with new insights suggesting the impact could be more contained than initially expected.

The closure of the Strait of Hormuz has driven up fuel and fertiliser costs, raising concerns about knock-on effects for food prices on supermarket shelves. Higher input costs for farmers, combined with more expensive transport due to rising diesel prices, are expected to place upward pressure on prices.

Despite these risks, Wandile Sihlobo, chief economist at the Agricultural Business Chamber, has indicated that the situation may not escalate as sharply as some fear.

In an interview with BusinessDayTV, Sihlobo noted that several mitigating factors are at play. He contrasted the current situation with the early stages of the Russia-Ukraine war, when global grain markets were immediately disrupted.

According to Sihlobo, the Middle East does not play the same role in global grain production. While the region is heavily reliant on agricultural imports, it is more significant as a supplier of inputs such as fertiliser rather than as a producer of staple crops.

He added that South Africa’s strong domestic supply of grains, fruits, and vegetables should help limit the extent of food price increases, keeping them within manageable bounds.

This view aligns with recent data from the Food and Agriculture Organization (FAO), which released its latest Food Price Index for March. The index rose by 2.4% to 128.5 points, reflecting global price movements across a basket of food commodities.

Notably, this level remains more than 30 points below the peak of 159.3 points recorded in March 2022, when the Russia-Ukraine conflict disrupted global markets.

FAO chief economist Máximo Torero said that price increases since the onset of the Middle East conflict have been relatively modest. He attributed this to higher oil prices, while highlighting that abundant global grain supplies have helped offset more severe increases.

Price pressures still unavoidable

Even with these cushioning factors, some upward movement in food prices is expected to be inevitable.

Sihlobo pointed out that South Africa’s food distribution system relies heavily on road transport, with around 80% of grain-related goods and roughly 90% of fruit transported by truck. Because production and processing often occur in different locations, goods must travel long distances before reaching retailers.

As a result, producers and distributors may need to raise prices to absorb higher fuel and input costs. However, the overall increase is expected to remain relatively moderate due to stable supply levels.

Fertiliser costs present another area of concern. The FAO estimates that roughly 30% of globally traded fertiliser passes through the Strait of Hormuz, making the supply chain vulnerable to prolonged disruptions.

Sihlobo warned that if the conflict continues beyond June, it could begin to affect planting decisions for the next agricultural season, which typically starts in October. However, consumers would only feel the impact later, due to the time lag between planting and harvest.

He explained that farmers are unlikely to pass on fertiliser cost increases directly. Instead, they may adjust planting areas, which could eventually influence production volumes.

For now, South Africa’s recent strong harvests are expected to provide a buffer, offering some short-term stability in food prices.

Torero echoed concerns about the longer-term outlook, cautioning that an extended conflict could force farmers worldwide to make difficult choices. These may include reducing input use, scaling back planting, or switching to less fertiliser-intensive crops—decisions that could ultimately affect yields and shape global food supply and prices into next year.

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