Pandemic, looting mean food price hikes, Competition Commission says
The recent violent looting in KwaZulu-Natal and Gauteng has resulted in high food prices, particularly on essential items such cooking oil, potatoes, meat and sugar.
This is according to a new report by the Competition Commission.
The latest “Essential Food Pricing Monitoring Report” - part of a series of quarterly reports that track the impact of the pandemic and the economic crisis on food markets - has also revealed that the number of farmers in SA had gone down drastically over the past decade from 3,899 in January 2007 to just 1,053 by January this year.
The report shows that while South Africans are learning to cope with Covid-19, and are no longer buying out of panic as was the case during the first wave, the pandemic has had a huge affect on livelihoods, which has made affordable pricing of essential foods more critical.
The commission noted that the general price inflation in essential food products is linked to global supply disruptions due climate change and adverse weather events that directly affects on food security and pricing.
According to the report the pandemic has also exposed the weaknesses of commercial farming market structure, which needs reform to make it more sustainable, inclusive, and provide greater livelihood opportunities and bring down the prices of agricultural products.
The current market structure not only led to high food prices for consumer, but it has disadvantaged small scale farmers who are often struggling with low operating margins, poor yields, lack of operational knowledge, low bargaining power, and lack of access to quality seeds and fertilisers — which in turn limit farmers’ ability to reach food safety levels accepted by retailers.
The latest report shows that the agricultural value chain in SA is highly industrialised and characterised by the super commercialisation of production via large-scale farming as well as concentrated upstream inputs and concentrated processing, all at the detriment of small scale farmers. The report considers the implications of this for small-scale farming and participation in South African agricultural markets.
“It may be necessary to build on changing the market structure and developing a model of agriculture that enables industrial agriculture while also supporting and including small-scale and local farming. This may also make the market more resilient to disruptions to global supply chains from climate change events,” read the report.
The commission said while there have been clear increases in pricing for products such as potatoes, tomatoes and cooking oil during the pandemic, “there is no apparent link to the progression of the pandemic and the Covid-19 third wave has not demonstrated any panic buying that has driven price changes”.
“Rather, it seems that the increased frequency of extreme weather events locally and internationally is resulting in high food price inflation over the past 18 months. The commission has received complaints of price gouging in KwaZulu-Natal involving essential food products such as cooking oil, meat, rice and sugar in areas that were affected by the unrest and looting.
“The pandemic and the recent rioting and looting have also shown that long food supply chains can be disrupted in the modern era. Globally there have also been questions around the structure of agriculture, particularly industrial agriculture, and the need to promote smaller, localised agriculture which also registers with the climate change agenda,” said the commission’s chief economist, James Hodge.
He added: “The localisation of farming and shorter supply chains can generate more opportunities for smaller farmers as shorter supply chains forgo the high transport and high intermediation costs involved in longer value chains. This has the potential to improve small farmer participation in the value chain and also contribute to addressing issues such as rural poverty and the lack of access to affordable and healthy food.”