Farmers, consumers suffer as food supplies run low

Shortages in commodities such as maize, milk and meat are pushing up food prices. Agricultural experts said that although even more price increases are imminent at retail level, it is a concern that farmers are not reaping the rewards of higher food prices at farm level. Dr Ferdi Meyer, programme leader of the Bureau for Agricultural Policy at the University of Pretoria, said unlike the maize shortage caused by the drought, the milk shortage in the country could have been prevented, but added that this situation will not improve in the foreseeable future. He said only a drastic change in the structure of the dairy industry would ease the crisis. “If the structure of the industry does not change, consumer prices will increase even more,” he said.
Meyer said many farmers have left the dairy industry as it is no longer profitable. According to statistics from the Milk Producers’ Organisation (MPO), the number of producers has dropped from about 7 000 in 1997 to 4 100 last year. Although consumer prices are increasing, farmers are not getting more for their product. Dr Koos Coetzee, an economist at the MPO, said farmers are paid between R2 and R2,10 for each litre of milk. The cost to the farmer to produce a litre of milk is R1,70.
Experts agreed that although the ­country is facing a maize shortage, a “Joseph’s policy,” whereby maize is stockpiled, is dangerous. “Stockpiling is not a good idea,” said Tobias Doyer, CEO of the Agricultural Business Chamber, adding that a ­responsible food policy was needed. Doyer said the less South Africa produces, the more it becomes susceptible to international shortages.
Meyer said that as South Africa operates in an inelastic market, a small shift in the ­quantities of maize on the market will have a large impact on the price. With stockpiling, he said, farmers will not be compensated with higher prices for the smaller crop. According to recent media reports, increases in red meat prices are also forcing consumers to buy more affordable meat such as chicken and pork. However, Ernst Janovsky, an economist with First National Bank, said he doesn’t expect changes in the demand for red meat in the long term as poultry and pork prices have also increased. Doyer said an increase in the cost of basic food stuffs will have a knock-on effect on the entire economy. It means the consumer will have less to spend on luxury items. He said 26% of household income in South Africa is spent on food. Last week Farmer’s Weekly also reported on the looming potato crisis. ­Information manager for Potatoes SA Pieter van Zyl said that between March and April there were between 10% and 12% fewer ­potatoes on the market. In May and June he expects 20% fewer potatoes than in March, as the drought had influenced production. The knock-on effect was that prices have increased, with the cost of a 10kg bag rising by about R7 since March. Experts fear that increases in the price of honey are also looming. The price of South African honey may rise as an indirect result of the deaths of millions of honey bees in the United States over the past six months after the outbreak of colony collapse disorder. According to media reports, major honey-producing nations were diverting exports to the US after the outbreak of the disorder. Some local bee-keepers said that if other honey-producing nations diverted their exports to the US, local prices could rise by up to 25%. – Wilma den Hartigh