LETTER: The Russian economy’s destruction will hurt SA and poorer countries
SA may continue to benefit from high commodity prices but this must be offset against rising energy costs
08 March 2022 - 17:38
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The headquarters of Bank Rossii, Russia's central bank, in Moscow, Russia, February 23 2022. Picture: ANDREY RUDAKOY/BLOOMBERG
Vladimir Putin is described as a bloodthirsty dictator. A US senator has called for his assassination. His waxen image has been removed from global display.
While extreme, such sentiments are understandable given the Ukrainian invasion. But when a Californian friend phoned to see if he could prevent his Cape Town flat from being rented to Russians, and another expressed a moral dilemma at the prospect of giving an online course to Russian students, clearly anti-Russian sentiment has gone too far.
The Russian economy may be dismissed as being similar in size to Spain’s, but its demolition is going to hurt, especially in poorer countries like SA. Even if SA deciduous fruit exports, already containerised and en route to Russia, could get there, little would be bought given the devaluation of the rouble. Citrus exports to Russia won’t happen this year, removing at least 15% of the current market.
SA imported between 1-million and 2-million tonnes of wheat per year from Ukraine and Russia. It will now be sourced from Canada or Australia at more than double the price of July 2021. As Egypt found in 2011, high bread prices can contribute to revolutions.
Even if SA’s 2022 maize crop is of above average tonnage, increased global prices thanks to the Russian-Ukrainian war will still inflate the cost of pork, beef and especially chicken. 2023 will be worse for farmers as energy, fertiliser and seed input costs will have gone through the roof.
The SA economy may continue to benefit from high commodity prices, but these must be offset against rising energy costs. This commodity windfall has not so far created more jobs. If anything, higher fuel prices mean increased unemployment, which already stands at 46% on the expanded definition.
A day before the war started, the SA government’s R350 Covid-19 relief of distress grant was extended to March 2023, so that the poor could eat. As UK commentators have already raised the grim prospect of food rationing in Europe, how much worse could the situation get here?
Unless war comes to an immediate stop in Ukraine, we need to prepare for 2023. It won’t be a good year. But if you want to look “on the bright side,” at least we aren’t living in Afghanistan.
James Cunningham Camps Bay
JOIN THE DISCUSSION: Send us an email with your comments to letters@businesslive.co.za. Letters of more than 300 words will be edited for length. Anonymous correspondence will not be published. Writers should include a daytime telephone number.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
LETTER: The Russian economy’s destruction will hurt SA and poorer countries
SA may continue to benefit from high commodity prices but this must be offset against rising energy costs
Vladimir Putin is described as a bloodthirsty dictator. A US senator has called for his assassination. His waxen image has been removed from global display.
While extreme, such sentiments are understandable given the Ukrainian invasion. But when a Californian friend phoned to see if he could prevent his Cape Town flat from being rented to Russians, and another expressed a moral dilemma at the prospect of giving an online course to Russian students, clearly anti-Russian sentiment has gone too far.
The Russian economy may be dismissed as being similar in size to Spain’s, but its demolition is going to hurt, especially in poorer countries like SA. Even if SA deciduous fruit exports, already containerised and en route to Russia, could get there, little would be bought given the devaluation of the rouble. Citrus exports to Russia won’t happen this year, removing at least 15% of the current market.
SA imported between 1-million and 2-million tonnes of wheat per year from Ukraine and Russia. It will now be sourced from Canada or Australia at more than double the price of July 2021. As Egypt found in 2011, high bread prices can contribute to revolutions.
Even if SA’s 2022 maize crop is of above average tonnage, increased global prices thanks to the Russian-Ukrainian war will still inflate the cost of pork, beef and especially chicken. 2023 will be worse for farmers as energy, fertiliser and seed input costs will have gone through the roof.
The SA economy may continue to benefit from high commodity prices, but these must be offset against rising energy costs. This commodity windfall has not so far created more jobs. If anything, higher fuel prices mean increased unemployment, which already stands at 46% on the expanded definition.
A day before the war started, the SA government’s R350 Covid-19 relief of distress grant was extended to March 2023, so that the poor could eat. As UK commentators have already raised the grim prospect of food rationing in Europe, how much worse could the situation get here?
Unless war comes to an immediate stop in Ukraine, we need to prepare for 2023. It won’t be a good year. But if you want to look “on the bright side,” at least we aren’t living in Afghanistan.
James Cunningham
Camps Bay
JOIN THE DISCUSSION: Send us an email with your comments to letters@businesslive.co.za. Letters of more than 300 words will be edited for length. Anonymous correspondence will not be published. Writers should include a daytime telephone number.
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