Food Price Inflation Reaches Four-Year High in SA

Tridge interviewed Basize Magagula, a Quality Assurance Inspector from the Joburg Market, to gain insight into the country’s rising food prices. Joburg Market is South Africa’s premium food hub and is currently the largest fresh produce market in Africa by volume and value.

“Since we moved to level 3 lockdown, prices of garlic and ginger have sky-rocketed. Prices of lemons and oranges have been slightly high, but they are still reasonably priced as they are in season. The only affordable produce is that which is in high supply, like spinach and all the other mrogo’s (green leafy vegetables). The average price of a simple 6kg round tomato box is usually ZAR 50 (USD 3.53), but currently, the cost is around ZAR 120 (USD 8.48),” explains Magagula.

Edible oil prices rise

According to Stats SA, In May 2021, food and non-alcoholic beverages inflation increased by 6,7% year on year (y/y). This rise is a 46-month high, contributing 1.2 percentage points to the increase in CPI. According to a food inflation brief by the Bureau for Food and Agricultural Policy (BFAP), its BFAP Thrifty Healthy Food Basket, a representative sample of a balanced food basket for a family of four in the country, increased to ZAR 3,007 (USD 212.46) per month. The cost of the food basket rose by ZAR 150 (USD 10.60), 5,35% y/y, and ZAR 66 (USD 4.66), 2,2% month-on-month. Prices of key consumer products such as sunflower (cooking) oil continued to rise, increasing by 30.3% from May 2020 and 8.5% from April 2021. The average price of a bottle of sunflower oil (750ml) rose from ZAR 20.99 (USD 1.48) a year ago to ZAR2 9.39 (USD 2.08) in May 2021.

According to BFAP, surging cooking oil prices were the main driver of inflation in the oils and fats category, recording an annual rate of 20% in May, up from 16,7% in April. The main contributing factor to the rise in oil prices is that SA is a net importer of vegetable and seed oils. The Baltic Sea region, the top seed, and vegetable producing region globally, suffered from low harvests this season due to dry weather conditions, limiting the supply of vegetable and seed oil such as sunflower and canola oil. These limited stocks caused prices to rise globally.

Droughts lead to high meat prices

Meat inflation has remained above 6% since October 2020, rising to 8.5% in May 2021. According to the Red Meat Producers’ Organisation, high red meat prices can be attributed to droughts suffered in many regions in the country. As a result, many livestock farmers are currently in a herd rebuilding phase, and not many animals are being slaughtered. According to BFAP, rising meat prices in the country can be attributed to higher international prices, increasing input cost, and limited supplies due to lower imports from Namibia and lower local livestock slaughter numbers. Slaughtering is expected to increase as the year progresses, but prices could remain firm due to high global food prices.

Market Outlook

Prices are expected to remain high for the rest of the year, given the continued surge in global food prices.

“Food scarcity is playing a significant role in pricing as emerging farmers in the country are struggling. due to the Joburg market being Africa's biggest market, many commercial farmers depend on it for moving their produce locally and internationally. The wholesale and retail industries have also been heavily affected, with supermarkets closing down. Likely, food prices will not be dropping fairly low anytime soon due to limited food supply locally and globally,” concluded Magagula.

Sources:

• Farmers Weekly. “South Africa’s food inflation at four-year high.”
  
• USDA. “Rising Food Price Inflation in South Africa Causes Concern For Consumers.”
  
• Stats SA. “Consumer price inflation hits a 14-month high.”
  
• Joburg Market. “Joburg Market - South Africa's premier food hub.”