According to the Bureau for Food and Agricultural Policy’s (BFAP) most recent food inflation brief, food prices in South Africa continue to be high and consumers should anticipate increased prices in the coming year. The BFAP food basket was 12% higher than its previous report due to the increased levels of food inflation seen in October 2022, with the frugal health food basket coming in at R3,298 per month, up R10 from September and up R367 from October 2021. With an inflation rate of 25.7%, oils and fats saw the largest price rises year over year, followed by bread and cereals (19.5%), meat, milk, cheese, and eggs (10.5%), and fish (10.3%).
BFAP is an annual presentation of a 10-year projection for South African agriculture, agro-processing production, consumption, prices, and trade is known as the BFAP Baseline. It takes into account the performance of South African agriculture and agro-processing as well as their contribution to the country’s economy’s inclusive growth and prosperity.
The 2022 edition, produced by BFAP’s integrated modeling system, provides a forecast for the South African agricultural industry for the years 2022 to 2031 and will also analyze the relationship between short-term tactical responses and long-term development objectives to help guide investment and policy decisions.
In November 2022, prices for food and non-alcoholic beverages in South Africa increased by 12.5% year over year, up from a 12% increase in October. It was the highest figure since at least April 2009, mostly due to the sharp increases in the costs of bread and cereals (19.9%) and oils and fats (24.8%). Prices for meat (10.5%), fish (10.5%), sugar, sweets, and desserts (8.6%), milk, eggs, and cheese (10.9%), as well as hot beverages (13.9%), remained high.
Fruits, meanwhile, showed the highest increase month over month at 4.1%. According to the BFAP, changes within each category helped to moderate some price increases. Low inflation on some vegetables (broccoli, pumpkin, cucumber, and carrots), low inflation on some vegetables (broccoli, pumpkin, and carrots), and deflation on some vegetables all helped to temper excessive inflation on foods made from maize and wheat (sweet potatoes and cauliflower). Significant deflation in the pricing of bananas, avocados, and papaya helped to temper high inflation on some crops. Low inflation on soft beverages and mineral water helped to offset high inflation on coffee, tea, and fruit juice. Looking more broadly, the organization claimed that food inflation in South Africa was higher than in Brazil, the USA, and China, but lower than in the EU, Kenya, and Zambia.
Food price pressure
According to Stats SA’s earlier this October released inflation figures, the country’s food price inflation increased to 11.9% in September. Bread and cereals (3.6 percentage points) and meat (3.1 percentage points) were the major contributors to inflation, followed by milk, eggs, and cheese (1.3 percentage points).The BFAP stated that the spikes in grain and oilseed prices around the world, which are made worse locally by a depreciating currency, are the main cause of South Africa’s double-digit food inflation.
“As (previously noted), surges in commodity prices take between two to three months to show up in associated retail food prices; hence the Bread and Cereal inflation of 19.3% in September is the result of high grain commodity prices in July. This was 34% higher than the corresponding period in the previous year.
“Although local maize price increases lost some momentum during August due to easing global maize prices, they gained renewed momentum in September on concerns regarding the size of the maize harvest in the Northern hemisphere,” it said.
Due to this, food inflation in general as well as bread and cereal inflation are projected to remain high for the remainder of 2023. The first half of 2023 may see persistently high food inflation as a result of high grain prices, which are also anticipated to have cost-push inflationary impacts in the animal industries. Between August and September 2022, the BFAP healthy food basket’s total increased by R18, reaching R3, 288 an increase of R432 from the same period the previous year.
The ten food items that saw the biggest price increases between December and January were:
Oranges — 39.6%
Tomatoes — 27.1%
Bananas — 10.7%
Stock cubes — 10.2%
Carrots — 10.2%
Apples — 7.8%
Butternut — 7.5%
Wors — 6.9%
Onions — 6.8%
Green pepper — 6.1%
It should be emphasized that even though orange prices rose significantly, they were still 10% less expensive than in January of the previous year. Green pepper prices have decreased by 4.7% year over year. Tomatoes, bananas, apples, butternut squash, and wheat, however, are substantially more expensive now than they were at this time last year. At the bottom of the table is a table that summarizes the increases. Since January 2022, the cost of other necessities has also significantly soared. According to Abrahams, the price of 60 eggs has climbed by R5.39, while the cost of chicken parts has increased by 17%.
“We’ve also seen a constant increase in the price of maize, rice, and cooking oil,” Abrahams said.“When those things increase and spike, it means that other things have to be thrown out of the basket, and more often than not, it is the nutritious stuff [that gets thrown out].”
The Department of Mineral Resources and Energy recently announced a 53-cent increase per litre in the retail price of unleaded 95 and 93. The price of 500ppm will increase by 79.84 cents per litre, while 50ppm will climb by 78.84 cents per litre, hurting farmers and drivers of diesel vehicles the most. Eskom has requested a 20.5% pricing hike for the fiscal year 2023, which has enraged many South Africans and organizations.
South African consumer inflation
Analysts predict that even as overall inflation slows, food costs will continue to rise in the lead-up to the Christmas season. Consumer inflation in South Africa decreased somewhat in August from 7.8% to 7.6%. In September, it decreased for a second month, falling to 7.5%. According to Stats SA, decreasing fuel prices were a major factor in the consumer price inflation slowdown. Fuel costs decreased, but food inflation increased instead, continuing to be the main driver of overall inflation.
According to him, high grain prices would probably have a cost-push inflationary impact on the animal industries as well, leading to persistently high food inflation into the first half of the next year. Even though the market is now oversupplied, Dawie Maree, head of FNB Information and Marketing, predicts that prices for necessities will gradually rise. Foods derived from grains, such as bread, cereal, and maize, will be more vulnerable to price hikes as long as there are geopolitical conflicts and questions about grain supplies.
“Local prices are expected to ride on the back of increasing global corn prices as well as the weakening rand. This is concerning as approximately 50% of South African households allocate approximately 35% of their food budget to starch-rich foods,” Van der Rheede said.
“The outloo Although the top five vegetables consumed in South Africa have seen some price decreases, vegetable costs will be influenced by the weather because they are a transient good, according to Maree. k for vegetables depends on the weather conditions and the control of pests,” said Van der Rheede.Maree said meat prices can, however, slow, “following the opening up of the markets again with the auctions and the movement of cattle, that would ease some pressure on the meat market”.“We have seen in the past that if we have excessive rains during November and early December, there is definitely problems in the vegetable market with harvesting and the quality,” said Maree.
Famers thrive through difficult economic times
Infrastructural issues with roads, trains, ports, water, and electricity, issues with municipal service delivery, disease outbreaks, and even unfavorable weather conditions have been challenges for farmers. Farmers in Mzansi have undoubtedly experienced everything this year and more. However, despite the numerous difficulties the industry faced in 2022, farmers remained persistent.Kaweng, who has been farming since 2013, understands how challenging the Mzansi agricultural industry can be. She has endured far worse as a farmer than what 2022 will bring.
“It’s been a difficult year indeed, with production input costs, load shedding, and natural disasters like floods, veld fires, and outbreaks like a foot-and-mouth disease.However, with every disaster there is an opportunity. We have shown resilience and have risen above it all. I hope to utilize opportunities presented to us such as Land Bank blended finance,” she says with her husband and three boys by her side, she is ready to face the future.
According to Free State grain farmer Phaladi Matsole, the majority of 2022 has been a difficult uphill battle for farmers and customers. Consumers weren’t the only ones affected by price increases that came and went; producers also struggled with soaring costs for fertilizer and seed.
“It was a season with local and global disasters like Covid-19 and the Russia-Ukraine war, which hurt agriculture in our own country.”But while 2022 offered many lessons some more expensive than others the sector has much to look forward to, says Matsole. One of my lessons was to strike balance between production and agro-processing so as to eliminate the middleman and add more value to my own produce.”