The government has called on South Africans to be a little more patient before they see a decrease in food prices.
It says high-level meetings are ongoing to try to figure out why a decrease in food inflation, no load-shedding and lower fuel prices for months now have not yet resulted in a decrease in on-shelf prices at retailers.
“Farmers generally do not produce food but commodities. The commodities must be processed and distributed across various consumption points.
“This involves transport costs, labour costs, processing costs and admin costs, among others. It explains why we would generally see a difference and a lag in price movement between farm gate and retail level,” said agriculture minister John Steenhuisen in an interview with Business Day.
His statement comes after trade & industry minister Parks Tau said in an earlier interview with Business Day that food prices were high on the agenda going into the new year.
“We have been engaging with the sectors on areas of intervention, especially on retail, as a matter of urgency. We have heard the plight of South Africans,” Tau said.
The matter is of serious consequence to the lived experience of South Africans who forced a change of guard in the country in the 2024 general elections and are assessing which party represents their best interests ahead of the next ballot.
Steenhuisen said it must be noted that the industry was also still recovering from years of power outages and high-cost logistics, including transport and climate change.
“We have to consider, too, that the farmers also come under stresses such as higher feed costs in the case of dairy and poultry farmers during droughts as in 2023-24. Under such times, we also see retailers absorbing some costs and not passing them on fully to consumers. This is a broad context,” Steenhuisen said.
However, social justice experts have for some time now been calling for more transparency in the food value chain, saying that especially products like milk, eggs and cheese should have seen a sharp decrease in prices by now.
“We need a proper exploration or commission of inquiry into the food value chain. Farmers say they have recovered from load-shedding and avian flu outbreak.
The retail sector has to explain to us why prices keep increasing and then we can take it from there. We need to see the profit margins of all those in the value chain.
— Mervyn Abrahams, Pietermaritzburg Economic Justice Institute
“Fruit and vegetables may be the exception due to late rains and because they are seasonal, but the system is not transparent,” said Mervyn Abrahams of Pietermaritzburg Economic Justice Institute.
He said that the problem might not necessarily be the farmers or retailers making a huge profit.
“From the farm gate to the retail end there's also manufacturing, handling, packaging and logistics. We also need to identify costs versus profits in the entire value chain to see if food prices are justified or not,” said Abrahams.
He argued that the lack of transparency in food pricing is where the problem lies.
“Family-owned farms are not benefiting. The retail sector has to explain to us why prices keep increasing and then we can take it from there. We need to see the profit margins of all those in the value chain,” Abrahams said.
“The poor and middle class are getting poorer and poorer even though food inflation has decreased in recent months. We are still seeing slight increases in food prices on the shelves, when we should be seeing drastic decreases, at least in some goods, by now,” Abrahams said.
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