Categories: Vegetables

Ensuring realistic prices

The debate over food prices continues to hold centre stage. This is understandable, given that poor families in South Africa spend roughly a third of their household incomes on food, according to Statistics SA.

In her 6 May editorial, Farmer’s Weekly editor, Denene Erasmus, writes that food should not be cheap but affordable.

‘Cheap’ implies undesirables such as exploitative production practices, while ‘affordable’ takes into account the real value of food produced with care and at great expense from scarce resources.

Denene quotes agriculture minister Senzeni Zokwana as saying that the “situation should not be unduly exploited for maximum profits”. We all agree, I’m sure.

This is where the fresh produce commission markets come into their own, because they reflect the daily price of fruit and veg based on supply and demand. Regardless of whether the price is high or low, the market for that day gives a realistic price.

Price taker vs price maker
Excessively high prices on the market attract much negative publicity and farmers are often unfairly blamed for them. But these prices don’t last forever. In fact, prices sometimes even dip below farmer’s production costs. In both cases, they are realistic as they reflect the supply and demand situation for that day.

The key for a farmer is to look at the average at the end of a given period; that will be his realistic income. Of course, a farmer can become a ‘price maker’ on a fresh produce commission market at any time if his quality is the best and supply is consistent. We see this happening every day.

Keep prices realistic – let the market decide
The challenge for the consumer is another matter entirely. Will the retailer adapt prices so that the consumer can also benefit when the prices are down? No doubt some will, but others will charge exorbitant prices to maximise profits.

The last thing anybody wants is for food to become so expensive that it instigates public unrest.

This can be avoided by following the minister’s plea and allowing the market to keep prices realistic.

Share
Published by
Tags: food prices fresh produce statistics

Recent Posts

  • Featured Home Image
  • Managing for Profit

Yield and quality determine profits, nothing else!

Costs under your control such as yield and product quality are what determine farming success. Don’t waste time on costs…

5 hours ago
  • Caxton
  • South Africa
  • Use only text

Mixed reaction expected from agri sector to repo rate reduction

The decision by the South African Reserve Bank Monetary Policy Committee to lower the repo rate to 6,5%, down from…

23 hours ago
  • Recipes

Carrot cake loaf with dates

This carrot cake loaf, with its delicious, zesty cream-cheese icing and chopped walnuts, is soft and full of flavours.

1 day ago
  • Caxton
  • South Africa
  • Use only text

Jobs and safety to take centre stage in the Western Cape

Western Cape Premier, Alan Winde, delivered his maiden State of the Province address on Thursday, focusing on job creation and…

1 day ago
  • Caxton
  • Use only text
  • World

Australian table grape exports reach half-a-billion mark

As the Australian grape export season nears an end, it is estimated that volumes amounting to half a billion Australian…

1 day ago
  • Featured Home Image
  • How to Crop

Fertilisation: basic principles that every farmer should know

Achieving optimal yields is greatly dependent on providing crops with the right nutrition at the right time. Understanding the role…

1 day ago