President MBeki recently announced the formation of a national food control agency. This was a result of government’s concern about high food prices and their effect on the consumer. A government press release quoted the president as saying, “We thought it was necessary to have some institutionalised way to respond to high and rising food prices on a continuous basis, rather than on an ad hoc basis.” T he new agency will study all the issues that impact on food prices and will recommend to government, specific, focused action that will produce the necessary results.
Going back in time
This is not the first time the current government decided to do something about high food prices. In 2002, food price inflation had reached double-digits. From September 2001 to 2002, the retail price of maize meal increased by 116% and the price of milk by 21%. In July 2002 the Integrated Food Security Strategy was endorsed and was based on five pillars:
- Food production and trade
- Food safety and nutrition
- Community asset development
- Social safety net
Food insecurity and vulnerability information and mapping system.
Government decided to establish the Food Price Monitoring Committee under the chairpersonship of Prof Johann Kirsten, with the specific goal of monitoring and reporting on food prices and the factors that result in high food prices. The committee published a 400-plus page report and recommended monitoring food prices on a continuous basis. This was accepted by government and we have now grown accustomed to the National Agricultural Marketing Council (NAMC’s) quarterly food price monitoring reports. And to an extent “Big Brother” has limited some extreme food price increases.
The 2002 to 2004 food price crisis was largely driven by the sudden devaluation of the rand to below R12 to the US dollar. Food inflation moved from a relatively stable and low value to a high of 20% in October 2002. When the rand regained its former value, the problem of high food prices was something of the past and by the time the commission reported its findings, food inflation was back to the acceptable level of below 3%. The commission’s report and recommendations were accepted without much fanfare and, with the single exception of food price monitoring, they were largely forgotten as the agriculture department got back onto its main hobby-horse of land reform without agricultural development.
What did the committee recommend? I t emphasised that it is the duty of government to act so that all its citizens have access to basic food – a fundamental human right that’s also enshrined in our constitution. It investigated the establishment of a strategic grain reserve, but because of the many problems and unintended effects of such a reserve, did not recommend it. t looked at various direct government interventions like price control and rationing, food-for-work, school feeding schemes, food parcels, agricultural starter packs, social grants to needy families and even comprehensive social security packages such as food stamps and income grant schemes. It also investigated the competitive structure of the food value chain in SA. O ther recommendations were:
- Food price monitoring and the publication of an annual food cost review.
- Detailed information about food retail prices and margins to be made publically available.
- The crop estimate and reporting systems had to be improved to increase the accuracy of crop estimates and crop statistics.
- The expansion of school feeding schemes.
- A poverty alleviation grant based on a means test.
With the exception of the first recommendation and some aspects of the crop estimate system, little was done to follow through with the implementation of all the points. Lower food prices from 2003 removed the urgency and political will. he 2007/08 food price crisis is distinctly different from the 2002 crisis. The former was a temporary problem, while the current crisis is a permanent one.
World food supply can’t keep up with world demand. Heavy energy demand increases the problem. While one can understand the president’s urgency, the appointment of yet another body will do little in the way of solutions. Instead, Prof Kirsten should be asked to resurrect his committee, look at the recommendations in light of the changing conditions and come up with modified recommendations.
It’s not enough to implement action that will lessen the effect of high food prices on the population. The only real hope lies in the hands of commercial farmers. Government should stop messing them about with ill-advised legislation and serious incompetence. Dr Koos Coetzee is an agricultural economist at the MPO. All opinions expressed are his own and do not reflect MPO policy.fw
