A report in the Sunday Times reveals how much more South Africans are now paying for food from leading retailers.
Professor Carel van Aardt, head of household wealth research at Unisa’s Bureau of Market Research, told the paper that food prices have increased 12.5% in the past year – well above the 6.3% inflation rate.
Between May 2015 and May this year, van Aardt said that the biggest price increases were for vegetables (22.8%), oils and fats (21.5%), breads and cereals (21.5%), fruits (13%), dairy (6.5%) and meat (6.3%).
Food prices in the country have been adversely affected by the weakening economy, a volatile rand, and a well documented drought.
Standard Bank said in May that food price inflation is expected to hit an average of 10.2% in 2016, peaking at 12% – however, economists are more pessimistic, expecting food inflation to peak at 16.%%
A Sunday Times shopping survey compared current prices at four leading supermarkets for a basket of basic foodstuffs with the cost from two years ago.
It found that at three of the supermarkets, the basket now costs between 22% and 26% more. Spar, the paper said, was an exception, keeping its basket increase to just under 10%.
Retailers respond
Woolworths said in a statement: ”Circumstances outside our control have an impact on prices. We will only accept price adjustments as a last resort after exploring all avenues to prevent one. We are focused on ensuring that we provide value for our customers, especially in tough economic times.”
Pick n Pay said: “Where prices have gone up, it has usually been as a result of the drought and its impact on food production. For example, the poor wheat harvest, combined with a weak rand and higher tariffs on imports, has unfortunately meant increases in the price of maize and flour.”
The Shoprite Group told the Sunday Times that it took a tough stance in negotiations with suppliers.
Shoprite CEO Whitey Basson recently said that that retailers should not use the drought as an excuse to unnecessarily raise prices.
Many consumers and consumer groups however, have raised concern over rising food prices.
The South African Food Sovereignty Campaign and the Consumer Action Network recently accused food manufacturers and retailers of artificially inflating the price of bread in the country.
According to the groups, food manufacturers are using the drought and subsequent imports of wheat to raise the price of bread – despite farmer association, Grain SA, saying that the price should not be affected by these things.
Over the past year, the price of bread across several brands has increased substantially – but Grain SA noted that there was no price decrease when international wheat prices were lower.
Read: Watch out for inflated “rogue pricing” at supermarkets in SA
Viccy Baker from the independent consumer price comparison website, Retail Price Watch, said that pricing of household goods in supermarkets needs to be subject to closer scrutiny.
Baker believes that consumers are being conditioned in advance to accept higher prices because of the drought, transport costs and electricity prices, for example.
“While price increases are inevitable, certain stores are taking advantage of consumers by pricing goods at over 50% more than they were a few months ago, pricing which surely cannot be justified under any conditions,” Baker said.
Food should not be cheap. It should be valued and appreciated because of the scarce resources used during the production process, and because of the effort and risk taken to produce it.
Cheap food implies cheap labour, environmentally exploitative production practices and a poor return on investment for farmers.
Yes, food should be affordable, but the price of food items is only one of many factors that determines the affordability of food.
One in four people in South Africa is unemployed, and this figure does not take into account the discouraged who have given up searching for a job. Without the ability to earn an income, the price of food almost becomes irrelevant – any price would be too high.
We should also consider the purchasing power of the rand, especially in the current drought scenario where we will have to import large volumes of food staples.
Even our dietary preferences can determine how affordable we perceive our food basket to be. But to blame farmers for the recent rise in food prices is completely misguided.
In his budget vote speech, agriculture minister Senzeni Zokwana bemoaned the impact of the drought on the price of a basic food basket. (According to Stats SA, the price of a basic food basket increased nearly 10% year-on-year from March 2015 to March 2016.)
The minister rightly said that these high food prices had a negative impact on poor households. But then he appealed to producers and retailers, saying that the “situation shouldn’t be unduly exploited for maximising profits”.
Implying that farmers would use the drought as an excuse to inflate food prices is far-fetched and insensitive. Many farmers are struggling to keep their businesses afloat because of the impact of the drought, and the response from government to support these farmers has been lukewarm at best. Farmers are price-takers and at the mercy of the market forces of supply and demand.
In this week’s issue of Farmer’s Weekly, Dr André Jooste, CEO of Potatoes SA, exposes the myth that farmers “make huge profits”. According to Jooste, farmers earn a return on investment of between 5% and 7% on average.
There is no doubt that the increase in food prices will have disastrous consequences for many South Africans, and if government really wants to address this looming crisis, it should reconsider the interventions it has taken to ease food price inflation.
Providing input cost support to farmers in the form of subsidised electricity or fuel, for example, would be one step in the right direction.
To find solutions to the long-term challenge of food affordability, South Africa needs to work its way out of the economic whirlpool it finds itself in, so that the economy can grow and create employment opportunities.
Johannesburg – South Africa’s livestock farmers are preparing for more losses after the driest year on record already cut herds and as the hemisphere’s winter nears, fueling food prices that are already climbing at the fastest pace in 18 months.
Scarce grazing and drought-stricken farmers’ inability to buy animal feed may trigger a second livestock selloff during winter after similar conditions caused an oversupply during most of the summer months, Gerhard Schutte, the chief executive officer of South Africa’s Red Meat Producers Organisation, said by phone on Monday.
A supply shortage is likely to occur from September and would be exacerbated should good rainfall occur from that period as farmers retain animals to rebuild their herds, Schutte said.
“If the new season is a good rainy season, prices will start going crazy,” Lardus van Zyl, chairperson of the meat producers’ body, said by phone. “Not only will the abattoirs be looking for animals, but so will farmers who seek proper breeding stock.”
The warning on meat prices comes as South Africa last year had the least rainfall since records started in 1904. The drought more than doubled corn prices and drove food inflation to 8.8% in February, the highest since August 2014. Meat-price growth was more subdued at 5.5% in the same period due to the selloff in animals.
