Food price inflation to gain pace

Johannesburg – South Africa should brace itself for a rapid rise in staple food prices as the worst drought in 23 years leaves farm land barren.

Although food inflation in the country has remained relatively low, the drought and the weak rand could change the equation as the country has to rely on imports to augment the shortage in the local market.

The latest statistics show maize, wheat, soya beans, sunflower and ground nut harvests have fallen by almost 30 percent year on year.

In the meantime, sugar cane production came down by almost 23 percent. In some sugar cane areas of KwaZulu-Natal, production fell by as much as 53 percent.

Agricultural experts this week warned that the people who would feel the biggest impact of the drought would be the poorest of the poor, who depend on staple foods such as maize, bread, cereal and beans.

Costly imports

Farmer representative body Grain SA this week warned of tough times ahead for consumers as living costs would rise and disposable income drop.

Grain SA economist Wandile Sihlobo said poor people would have to dig deeper into their disposable income to buy maize, which at the current exchange rate cost almost double the normal price.

“The cost of importing maize has increased by at least 80 percent in the past days alone,” Sihlobo said.

“The drought has had quite a significant impact that it has caused but what I think what is closer to our tables is maize where the harvest has actually decreased by 31 percent on a year-on-year basis so the impact is quite significant.”

During a good harvest, South Africa is able to provide enough maize for its own consumption, netting the agricultural industry at least R6.5 billion in revenue.

But this week, with the rand dipping to R14, its weakest level yet against the dollar, Grain SA forecast that South Africa would import 700 000 tons of yellow maize and 50 000 tons of white maize in the coming maize marketing year.

The provinces hardest hit by the drought are KwaZulu-Natal, North West, Free State and Mpumalanga.

Lasting damage

In KwaZulu-Natal, the sugar cane industry warned that it would take at least 10 years to recover the billions of rands it has lost through the drought.

South African Cane Growers Association managing director Nhlanhla Gumede said the industry faced a “double whammy” because farmers made a return on their investments over a time period of eight to 10 years and a break in the cycle could push them into further despair.

“If the good conditions prevail then the crop will be able to recover relatively quickly – not enough for this year but certainly for next year,” Gumede said.

“Our focus at present is to work with as many stakeholders as possible to provide a basket of solutions for farmers and workers.”

Agri SA agricultural economist Thabi Nkosi said farmers were scaling back on production, which could leave millions without jobs as the industry was labour intensive.

Nkosi said the drought could cost farmers R10bn as input costs surpassed profits, raising worries about the short-term sustainability of the industry.

“Farmers are holding back and do not want to invest in an industry that is looking bleak,” Nkosi said.

“Some of them are already talking insolvency so they will not be looking at employing more people instead they would retrench those already in employment to lower their costs,” Nkosi added.

Source: iol

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