High food prices here to stay

The National Agricultural Marketing Council (NAMC) told parliament this month that it expects maize, wheat, beef and lamb prices to remain high in the short term. Dairy prices would stay “relatively high”.
The council tabled its latest Food Price Review report and was instructed to set up a committee to investigate the wheat-to-bread value chain and develop a turnaround strategy for that industry.
The NAMC said it would also contribute to the Competition Commission’s investigation into price manipulation by retailers in the dairy industry.
The council found that retail food prices increased on average by 14% between July 2006 and July 2007.
White bread went up by 13%, brown bread by 8%, maize meal by between 20% and 22%, fresh milk by 26%, long-life milk by 29%, bacon by 14%, pork chops by 47%, lamb chops by 15%, beef mince by 14%, frozen chicken by 30% and fresh, whole chicken by 24%.
Seasonal fluctuations caused a drop in some prices, 4% for eggs and tomatoes and 20% for bananas.
Global factors influencing food-price hikes included grain shortages due to drought in major production areas, a switch to biofuels, high input costs and a shift towards a protein-rich diet, particularly in China and India. Domestically, supply is constrained by SA’s land reform programme, which transfers farms to farmers who often lack the skill, technology, extension support and infrastructure to farm commercially. Such farmers are also saddled with complicated tenure arrangements, making it difficult to access affordable finance and credit. Increased domestic demand due to population growth, a rise in the basic income grant, urban migration and a change in eating habits are also contributing to SA’s high food prices. Supermarket chains cushioning consumers from dairy-price increases harm the agricultural and food industry in the long run. “This might be beneficial to the consumer, but the long-term effects filter down in the form of food shortages and a greater concentration of suppliers, which would push up basic food prices,” the NAMC said.
overnment needs to invest in research, infrastructure and new production areas. High input costs need to be addressed and new markets need to be developed, to encourage increased production. Smaller production needs to be incentivised. – Stephan Hofstätter.