Canned pilchards have experienced a resurgence in popularity as households switch to alternative sources of protein to meet their needs, and retail prices have increased while producer prices have been constant. File photo
Food security in South Africa remains a serious risk for consumers as price levels remain high relative to consumer income, although both overall inflation and food inflation have eased.
These are the conclusions of the September Essential Food Price Monitoring Report, which tracks essential food prices throughout the value chains of selected essential food items, and which was published by the Competition Commission on Friday.
The Commission’s continued essential food price monitoring efforts support transparency regarding the margins earned by producers and retailers of products that include sunflower oil, brown bread, canned pilchards, and individually quick frozen (IQF) chicken.
The report said there were several positive signs of easing food cost pressures throughout the economy including the relaxation of load shedding, the strengthening of the rand against the US dollar, and decreasing fuel prices.
These factors have been regularly cited as among the leading cost drivers that have kept food prices higher for longer.
The Commission said that if these factors continued to ease, their importance on food prices should also subside, resulting in the reduction of food prices.
However, the Commission said it has observed that prices remain high and were increasing at a rate that was unaffordable for low-income households.
In the report, the Commission warned that whilst there were indications of several positive signs of easing cost pressures, there were still several risks that may emerge in the coming months that could potentially push prices higher for some important foods.
“We observe an increasing but stable trend in retail prices for maize, brown bread and tinned fish and declining trend in retail prices for sunflower oil and eggs over the observed period,” read the report.
“There are areas where spreads are above historic levels which is cause for concern and may warrant further investigation (for example at the retail level for cooking oil and producer level for brown bread) if not corrected in the coming months. In other areas, the spreads are below historic levels which is benefiting poorer households for now.”
The Commission said that producer prices for eggs remained elevated in 2024 but fell slightly from their peak of R17.07 in November 2023 at the height of the Avial influenza outbreak, to R14.55 in March 2024. 0
However, it said retail prices did not fall to the same extent resulting in the spread widening from 20% to 23% over the same period, and producer prices for eggs have started increasing again and reached R15.27 in June 2024.
It said the lower producer price of sunflower oil since September 2023 has still not translated into lower retail prices as the average retail price of sunflower oil in the last six months has remained fairly stable while producer prices have declined.
The Commission warned there were concerning signs that maize meal was once again facing increasing prices as the effects of the drought have started trickling to prices further down the value chain.
There has also been a sharp increase in the producer price of maize meal, albeit to a lesser extent, with maize prices increasing from R36.70 in January 2024 to R38.34 in June 2024.
Poultry producers were severely affected by load shedding in 2023, which affected their entire operations from growing times to culling schedules and cold storage.
Canned pilchards have experienced a resurgence in popularity as households switch to alternative sources of protein to meet their needs, and retail prices have increased while producer prices have been constant.
The Commission said that as food markets have become increasingly financialised, there was a risk that the speculative actions of financial market actors may result in higher prices throughout the value chain.
“Notwithstanding this observation, South Africa is an open market economy and is a price-taker in the world market for many agricultural commodities – it is therefore exposed to the speculative actions of traders in global markets,” it said.
“This calls for vigilance and coordination on the part of policy makers, especially as global food markets continue to weather multiple and simultaneous disruptions. The Commission remains concerned about the high levels of food prices and will continue to monitor food prices so that consumers are not harmed by unjustifiable increases.”
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