Agriculture in an era of global and climate disruption
South Africa’s agricultural sector is entering a more demanding phase, defined by rising global uncertainty and intensifying structural pressures. While the industry has demonstrated resilience in recent years, the outlook is being reshaped by a convergence of geopolitical tensions, higher energy costs and climate risks that are increasingly interconnected.
At the heart of this evolving landscape is the growing influence of global events on local agriculture. Aroni Chaudhuri, Chief Africa Economist at Coface, emphasises that “international developments are progressively filtering through to the agricultural sector, with pressures expected to intensify towards the end of 2026 and into 2027.” This signals not just a continuation of volatility, but a deepening of systemic risk that the sector will need to actively manage.
A critical insight from Chaudhuri’s analysis is that agriculture, while not always the first sector to feel geopolitical shocks, is inevitably affected through secondary channels. “Although agriculture is not the first sector to feel the immediate effects… the current crisis is creating conditions that will eventually weigh on global agri-food systems,” he explains. These indirect effects are particularly important because they tend to build over time, making them harder to anticipate and mitigate.
Energy markets are the most immediate transmission channel. Disruptions to oil flows have created “an imbalance between global supply and demand, pushing prices higher and keeping them there.” Chaudhuri draws a crucial distinction between current conditions and previous shocks: unlike past volatility driven by sentiment, the current environment reflects “actual physical shortages in oil markets.” This makes the risk more persistent and less likely to ease quickly.
For agriculture, the implications are significant. As Chaudhuri notes, “higher oil prices raise farming costs directly through mechanisation and logistics, and indirectly through inflation across the broader economy.” This dual impact, operational and macroeconomic, places sustained pressure on margins, particularly in an emerging market context where cost sensitivity is high.
Fertiliser markets reinforce this cost dynamic. Supply chains are becoming more complex, with prices already trending upward. The real challenge, Chaudhuri highlights, lies in timing and access: risks are “less about immediate shortages and more about future accessibility and affordability, particularly once large importing nations return to the market to rebuild stocks.” This forward-looking risk introduces uncertainty into planning cycles, especially for producers managing tight cash flows.
Another key insight is the nature of South Africa’s vulnerability. Chaudhuri points out that exposure is primarily price-driven rather than linked to outright supply failure. Coface notes that “South Africa remains vulnerable mainly through higher prices rather than supply shortages,” underscoring that the country’s integration into global markets ensures access, but at a cost. This distinction matters because it shifts the focus from availability to affordability, with inflation and tighter financial conditions becoming central challenges.
Climate risk further complicates the outlook. The likely return of El Niño later in 2026 introduces downside risks to agricultural output into 2027, adding another layer of uncertainty to an already pressured system. In combination with economic shocks, weather variability amplifies volatility and increases the difficulty of long-term planning.
From a commercial perspective, these dynamics are already reshaping risk across the agricultural value chain. Christo Bekker, Chief Commercial Officer at Coface South Africa, highlights how volatility translates into financial strain, noting that price fluctuations can quickly lead to pressure on cash flow, delayed payments and increased default risk. In this context, managing credit exposure and strengthening financial resilience become critical priorities.
Taken together, Coface identifies rising fuel and fertiliser costs as “the main pressure points, squeezing farm margins and increasing uncertainty for producers and agribusinesses.” This encapsulates the current challenge: a sector that remains fundamentally strong but is increasingly constrained by external pressures beyond its control.
The path forward will require a shift in mindset. Resilience is no longer defined solely by production output, but by the ability to anticipate risk, manage volatility and adapt to an evolving global landscape. As Chaudhuri’s insights make clear, the pressures facing South African agriculture are not temporary, they are structural, and they demand a more strategic, forward-looking response.
In this environment, those who can combine operational efficiency with robust risk management will be best positioned to navigate uncertainty and sustain growth. 
HARVEST SA
