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World pandemic reconfirms
the need for effective value chains

In the case of COVID-19, it is not merely an isolated incident or a specific

sector that is experiencing a temporary crisis; it has escalated into a full
blown global pandemic, the impact of which can be felt far and wide.
This year will go down in history as one of the world’s worst human health
crises with a global infection rate that, at the time of writing this article,
stood at almost 8,5 million people and half a million lives lost.
The coronavirus has effectively forced the world into an economic
meltdown; while some economies ground to a halt, others have only been
partially affected.
Where economies were only partially closed, it was carefully planned and
executed in order to save lives and keep people healthy.
The production of essential goods (food and feed) and rendering of services
(medical and emergency, as well as trade in food- and feedstuffs) remained
in place to ensure food security and protect people’s livelihoods.
From a food and feed perspective (grains and oilseeds), in which the Animal
Feed Manufacturers’ Association (AFMA) plays a pivotal role, the definition
of food security became tangible with key food and feed value chains
continuing to produce optimally to deliver safe food to the consumer, in the
correct format, within a reasonable timeframe (while maintaining the cold
chain), and at a reasonable and market-related price.
In the South African scenario, the agricultural sector and some subsectors
were very fortunate in terms of timing.
When the COVID-19 lockdown and the relevant regulations that would come
into force under the Disaster Management Act, 2002 (Act 57 of 2002) were
announced, producers of summer grain and oilseed crops, as well as fruit
producers were preparing to start harvesting record crops - fruit farmers
benefited even further from the rand/dollar devaluation, which put this
subsector in a much better position than previously anticipated.
Well organised, robust agro-processing value chains and industry structures
developed after the deregulation of the Agricultural Commodity Boards in
1997, in a bid to move to a market-driven economy.
These value chains and structures have proven their worth by ensuring that
role-players were well represented as government’s partners in all forums
and structures that dealt with the planning and execution of COVID-19
strategies.
However, long hours of negotiations and critical interventions between
government and the industry, to either correct or introduce some of the
regulations needed to ensure production and availability of goods and
services, were needed to help these value chains function optimally.
While the effective functioning of the agro-processing value chains ensured
food security on the supply side of the economy during Levels 5 and 4 of
lockdown, the closure of non-essential businesses and value chains, such as
restaurants, the catering, confectionary and hospitality sectors and the
tourism industry, had a negative economic impact on the demand side.
This led to an oversupply of certain produce, caused by a lack of demand
from individual consumers and non-essential industries as listed above.
However, the situation was alleviated to a certain extent with the reopening
of quick service restaurants (QSRs) when South Africa moved from Levels 4 to
3 of lockdown (after a mammoth input from the industry to government
through the National Economic Development and Labour Council, or Nedlac).
The further reopening of the economy under Level 3, which will see sit-down
restaurants, hotels, conference venues and the catering sector returning to
business, will contribute to balancing supply and demand.
Nevertheless, the threat of COVID-19 remains, and it is therefore impossible
to estimate exactly when this balance will be fully restored.