Impact of theOngoing Civil Unrestin South Africaon Food andthe AgriculturalSector

Certain areas within two South African provinces have been plunged into civil unrest following protests on the imprisonment of former President Jacob Zuma on July 8, 2021. The civilunrest began in the Kwa-Zulu Natal Province with the blocking of major roads, and abruptly turned violent with widespread looting of shops, and burning of trucks, shopping malls andbusinesses. Thereafter, this unrest spread quickly to some areas in the Gauteng Province. The local police force and enforcement authorities were overwhelmed and struggled to timelycontain the widespread looting and destruction of infrastructure. While the situation seems to be stabilizing since the deployment of the army and involvement of some communitymembers, the existing damage seems to be devastating already. In addition, there are still sporadic incidences in some areas concentrated in the Kwa-Zulu Natal Province, and there isuncertainty as to when the unrest will completely end. The specific costs and implications of the civil unrest to the food and agricultural sector are still to be accurately ascertained.Various contacts have publicly announced that the ongoing civil unrest is already affecting the sector and implications continue unfolding. Some analysts estimate the widespreadfinancial impact to be more than USD$1 Billion. Notably, there are growing calls for stability to be restored given the concerns of much severe consequences if the civil unrest continues.

Food Security CouldBecome a Concern

South Africa is generally a food secure country and a net exporter of agricultural and food products at a national level. However, the disruption of some supply chains (closure of ports,businesses, and roads) and destruction of infrastructure (particularly retail stores, warehouses, distribution centers and trucks) poses a risk to food accessibility, availability andaffordability in affected areas at this stage. In some areas, long queues in nearby shopping centers or retail stores that were not affected by the looting are starting to be evident. Inaddition, the closure of businesses is expected to result in job losses, further worsening the already high unemployment rate of 33 percent, and dampening the economic recoveryoutlook from the COVID-19 pandemic. As a result, food security and price inflation are becoming a major concern, especially if the civil unrests spreads to other areas.

On Thursday, July 15, the South African Minister of Agriculture, Land Reform, and Rural Development met with stakeholders in the food and agricultural sector to discuss the effects ofthe civil unrest on the country's food supply. Minister Angela Thokozile Didiza told media outlets that South Africa has sufficient food supplies and pleaded with consumers to stop panicbuying, which had caused localized shortages in some areas. She said that her ministry's focus was on addressing gaps in supply chain in Kwa - Zulu Natal Province, where haltedtransportation networks and looted and burned shops left some residents with few options. The CEO of the KwaZulu-Natal Agricultural Union, Sandy La Marque told media outlets thatthe situation could pose a long-term crisis if farmers are unable to get their products to market, saying that disruptions in the transportation and retail networks had the potential to derailthe value chain. "Feed for livestock, chickens, pigs and other animals is being depleted on farms. Milk producers are dumping their milk. Egg, fruit, and vegetable producers are unableto get their produce to the end users. And sugarcane and timber producers are not able to deliver to mills," Le Marque told news outlet Fin24. "The transportation of all produce has beenbrought to a standstill - it is a desperate situation," she said.

SustainabilityandViabilityofSomeFarmers andAgribusinessesAffected

Sugar

According to the South African Cane Growers Association, an estimated 353,000 MT of sugar cane has been burned to date in Kwazulu-Natal (the main sugar-growing area and one oftheprovinceshardest hitbythecivilunrest),andgrowersmayloseaboutR211million(US$15million)inrevenue in2021.Inaddition,allsugarmills inKwazulu-Natalwereclosed,whichis expected to result in further losses. The sugar industry is already in distress due to low global sugar prices, competition from imports and decline in demand because of the tax onsugar sweetened beverages (sugar tax).

Citrus

The Citrus Growers Association (CGA) indicated that some citrus exports had been halted, due to the trucks being unable to use the main roads and the closure of the Durban port,where more than half of the citrus is exported from South Africa. CGA reported that even if the civil unrest ends, growers would continue to feel the effects for some time. The suddenflow of produce will cause bottlenecks at the ports, and the sudden glut of citrus on the market would negatively affect prices and profits for growers.

Vegetables

AgriSA, the largest agricultural body that represents most commodity associations in South Africa, has highlighted that farmers especially of perishable products have already had majorlosses because their products cannot be delivered to some local markets and shops. Fresh produce farmers, such as tomatoes, green peppers and lettuce, cannot get their freshproduce to market for fear that trucks might be burned and their produce destroyed, impacting supplies to consumers.

SummerCrops

Currently, the agricultural sector (particularly the grains sector) is preparing for the summer rainfall planting season in three months, and agrochemical companies are in the process ofproducing or importing significant volumes of plant protection products. In KwaZulu-Natal, many agrochemical companies have reported significant losses of infrastructure, and theirinventories of plant protection products have been looted. Being this close to the start of the summer rainfall cropping season, shortages of plant protection products could be a reality asthere is not enough time to import replacement stocks of either active ingredients or formulated products. This might impact the ability of farmers all over South Africa to plant andsuccessfully produce staple food crops in the coming summer season.

Dairy

According to the South African Milk Producers' Organization (MPO), producers are dumping up to two million liters of milk a day in KwaZulu-Natal as milk cold storage trucks cannotaccess farms to collect, and they were unable to distribute. Some dairy processing plants in Kwazulu-Natal were also damaged by the protests and need repairs before they can acceptany milk again. In addition, some farmers could not receive feed deliveries and supplements which are crucial for animal conditioning, and once lost, it may take months to rebuildcommercial conditioning in dairy herds. As highlighted above, several agricultural commodity groups have been impacted by the unrest. While the exact figures are still to be accuratelydetermined, the losses continue adding up daily as the civil unrests continues. This is expected to have immediate, detrimental effects to the sustainability and viability of these sectors.

Question1 

Withreferencetotheabovearticle,criticallyexaminethestrategicroleofsupplier relationshipsinmanaging risk,promotingcostreduction,agility ande.business.

Question2 

Criticallydiscusshowareactive approachtoriskmanagementwouldworkinthecontext ofthearticleandelaborate whythisapproach isnotappropriateforsupply chainrisk.

Question3

You are newly employed as a Supply Chain Manager in the South African Milk Producers' Organization (MPO). In a detailed essay, discuss the different ways which can be used toclassify risks related to the civil unrest. Use the relevant examples from the article to justify your answer.

Question4

Withreferencetotheabovearticleandtherelevantliteraturecritically discusstheoptionsavailablefor managersintheFoodandAgriculturalSector tomanagesupplychainrelatedrisk.Make use of the relevant examples to illustrate your answers.

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Question 1 The strategic role of supplier relationships in managing risk promoting cost reduction agility and ebusiness in the context of the ongoing civil unrest in South Africas food and agricultura... View the full answer