Agribusiness supply chains are, by their very nature, among the most disruption-prone in the world. Unlike industrial manufacturing, where companies can stockpile parts or reconfigure production lines to adapt to shortages, agriculture operates on biological and seasonal timetables. A missed planting window cannot be recovered by simply 'working overtime'. This biological rigidity, combined with exposure to natural events, market volatility, and political decision-making, means that any contract governing agricultural supply must account for a wider set of potential shocks than those in most other industries.
The vulnerabilities in agribusiness extend across the entire supply chain.
Physical risks
At the production end, climatic events such as drought, unseasonal frost, or excessive rainfall can devastate yields. Livestock producers face the threat of disease outbreaks, from avian influenza to foot-and-mouth disease, which can lead to mass culling orders and months-long quarantines. Post-harvest, exporters must contend with contamination scares, such as listeria outbreaks in fruit or E. coli in leafy greens, which can trigger border rejections and brand-damaging recalls. Even when the produce is healthy, the infrastructure needed to move it may falter - port strikes, truck shortages, or rail corridor closures can bring exports to a standstill.
Regulatory and market risks
Layered on top of these physical risks are the ever-present dangers of regulatory change and market volatility. Governments can impose export bans or modify subsidies with little warning. Commodity markets can swing violently in response to geopolitical events, causing sudden imbalances between contract prices and market realities. In this volatile environment, a supply chain agreement that merely recites generic boilerplate clauses is insufficient. Instead, the contract must be structured as a deliberate, risk-managed instrument – one that anticipates sector-specific threats and allocates their burdens explicitly.
A framework for action
To manage these risks, contracts must move beyond boilerplate. The following decision-making framework guides you through the critical steps to build resilient agribusiness supply chain agreements in South Africa.
Step 1: Risk identification and mapping - Identify all sector-specific risks tied to your particular commodity and region.
Step 2: Force majeure tailoring - Adapt your force majeure clause to address the identified agricultural risks.
Step 3: Economic protection - Consider whether material adverse change clauses are needed to protect your business from sudden economic impracticability.
Step 4: Performance stabilisation - Decide if 'take or pay' or 'grow or pay' commitments will give your supply chain more certainty or predictability.
Step 5: Risk allocation - Determine how financial and operational risks will be divided between parties.
Step 6: Operational flexibility - Introduce mechanisms to allow your contract to adapt during disruptions, reducing the risk of total failure.
Step 7: Dispute resolution - Choose dispute resolution methods that ensure quick, effective outcome in time-sensitive agricultural contexts.
Identifying the disruption risks before drafting
The first and most foundational decision is whether you have identified the risks that matter for the specific transaction. Inexperienced parties sometimes assume that the risks in one agricultural contract are the same as in another. However, the reality is that each commodity, production region, and logistics chain has its own profile of vulnerabilities. A citrus exporter operating out of the Eastern Cape faces different hazards from a grain trader shipping sorghum from the Free State or a livestock exporter moving cattle to the Middle East. In the South African context, additional considerations include the impact of load-shedding on cold storage facilities, the vulnerability of specific transport corridors to social unrest, and the particular phytosanitary requirements of key export markets such as the European Union and China.
A proper risk-mapping exercise begins with climatic risks, because weather is the single most common cause of agricultural underperformance. It is not enough to note drought as a general possibility – the parties must consider whether the crop or livestock in question is vulnerable to water stress during growth phases, whether irrigation infrastructure is robust, and whether local meteorological patterns indicate an increased probability of drought in the coming season. Similarly, risks from excess rainfall, flooding, or frost must be assessed not in the abstract but in light of the crop’s particular sensitivities. In South Africa, this analysis must account for regional variations: the Western Cape's Mediterranean climate creates different drought patterns than the summer rainfall regions of KwaZulu-Natal or Mpumalanga. The South African Weather Service's seasonal forecasts and the Agricultural Research Council's crop monitoring reports provide essential data for this assessment.
The second category is biological risk. Livestock producers must anticipate diseases endemic to their species and region, as well as emerging threats. For crop producers, this might include fungal infestations such as rusts or blights, insect pests, and viral plant diseases. Importantly, in an interconnected global trade environment, the risk is not limited to the farmer’s own fields: outbreaks elsewhere in the country can lead to export bans or domestic quarantines impacting even unaffected producers. South African producers must be particularly aware of diseases such as African swine fever in pigs, Newcastle disease in poultry, and citrus black spot in citrus exports. The Department of Agriculture, Land Reform and Rural Development's disease surveillance systems and the Plant Health (Phytosanitary) Act 35 of 2024 requirements create additional compliance layers that must be factored into risk assessments.
Infrastructure risks also demand attention. Agricultural supply chains often rely on specific ports, rail lines, or border crossings. If these choke points are disrupted by labour strikes, maintenance failures, or political blockades, the flow of goods stops. This is particularly destructive for perishable goods with short shelf lives, such as berries or leafy greens, which cannot be stored for long periods awaiting alternative transport. In South Africa, key infrastructure vulnerabilities include the ports of Durban, Cape Town, and Port Elizabeth, which handle the majority of agricultural exports. The reliability of Transnet's rail network, particularly the coal and iron ore lines that compete with agricultural freight, must be assessed. Road transport faces risks from truck driver strikes, fuel shortages, and deteriorating road infrastructure in rural areas.
The final categories are regulatory and market risks. As seen in various jurisdictions, including recent policy shifts in major agricultural exporters, governments may impose export restrictions to control domestic food prices, modify subsidies that underpin the cost structure of production, or introduce new sanitary or phytosanitary standards that require sudden investment in compliance measures. Commodity market volatility, meanwhile, can cause a price agreed months earlier to become commercially ruinous by the time of delivery. In South Africa, regulatory risks include changes to the Marketing of Agricultural Products Act 47 of 1996, amendments to export permit requirements, shifts in land reform policies that affect production continuity, and modifications to the Broad-Based Black Economic Empowerment codes that impact supply chain partnerships. The rand's volatility against major trading currencies adds another layer of market risk for export contracts.
Once the parties have mapped these risks with specificity, the question becomes how to translate that awareness into contractual protection.
In part 2 of this series, we unpack how to draft contractual provisions that protect the realities of South African agribusiness supply chains.
