'Canned food prices to rocket'

Johannesburg - The rise in the price of tinplate posed a severe threat to the future of the canning industry, the SA Fruit and Vegetable Canners' Association said on Tuesday.

ArcelorMittal would increase the price of tinplate by around 70% from April 2009, the association said in a statement.

"ArcelorMittal also makes reference to the fact that this increase is based on a formula comprised of a basket of prices from a number of international markets to which the current rand-dollar exchange rate is applied.

"Irrespective of any formula which has been used to determine these price increases, the impact will see double-digit increases across all canned foods," the association warned.

This had resulted in an increase of between 45% and 55% in the price of cans by the association's can suppliers.

"This will lead to significant increases in the retail prices of canned foods and this will be especially tough for consumers in the lower income bracket," said Rudi Richards, chairperson of the association.

He added that the increase came at a time when there was considerable debate about the targeted single digit inflation rate required in South Africa, as well as the urgent need to reduce basic food prices.

"We would like to express our grave concern regarding the magnitude of these increases during a period of global economic slowdown and financial crisis."

Richards said that in the short term he was concerned about the immediate impact on consumers - especially those dependent on basic, convenient and nutritional canned foods.

He said that in the longer term, he was worried the association's products would become uncompetitive, which would essentially lead to lower demand both domestically and overseas.

This would result in a reduced demand for raw materials and loss of jobs.

The export market, for which around 85% of the canned fruit products were destined, would also be adversely affected as it would be impossible to pass on the increase to volatile global markets - given the fierce competition, the strength of retailers and the current economic crisis, Richards said.

"It goes without saying that this increase will have a profound impact on the future of the canning industry and may severely limit its potential to support those many farmers, suppliers, labour and communities dependant on the industry."

He called on all parties and government to find ways to reduce this negative impact on canned food prices, employment and economic growth.

- Sapa