Johannesburg - Food production in SA is struggling to keep up with demand, notes the latest edition of the SA Food
Cost Review: 2007.
The report, compiled by The National Agricultural Marketing Council and the Department of Agriculture, shows that total agricultural production increased by only 10% between 1991 and 2007. At the same time population growth from 1991 to 2007 was 32% - not taking into account illegal immigrants in the country.
"In other words, population growth has outstripped agricultural production, in particular field crop production, by far. In addition, increasing per capita incomes contributed to the increasing demand for food," says the report.
The report highlights rising input costs, price collusion and lack of investment in agriculture, e.g. on farm investment and research and development.
It adds that due to SA's liberal trade policies, commodity prices are closely linked to international commodity price movements.
"Movements in the exchange rate also affect price transmission from the international market to the domestic market," say the researchers.
"Increasing and high food prices have an impact at both the country and household level. Net food importing countries will be hardest hit. This is of particular concern for almost all countries in Africa. Households that are net buyers of food, which represent the large majority of the world's
poor, will be harmed most," they add.
They say a recent survey emphasised that the deterioration of infrastructure and the cost of transport is heavily constraining the agricultural sector's competitiveness.
"The National Treasury identified that 36% of the bread price in South Africa is comprised of the cost of transport and distribution. Noteworthy is that since 2000 there is a clear correlation between the Brent crude oil price and the global food price index, meaning the higher oil prices are transmitted to food prices via the distribution of food that mainly uses
diesel as energy source," says the report.
However, the researchers say it appears as if the rate of increase in food prices started to slow and in some cases certain food products actually experienced a decline in prices, e.g. maize meal if one compares changes in prices from July 2007 to December 2007.
The report notes that government already has selected
programmes in place to deal with the short-term effects of increasing and high food prices on the poor, e.g. the social grant scheme and the school feeding programme.
"Notwithstanding the aforementioned, it is vitally important that an environment is created where producers, small and big, can optimally make use of scarce natural resources to produce affordable food for household, regional and national food security.
This also implies that serious consideration should given to specific targeted interventions to address the needs of different groups, rather than a blanket approach that
eventually becomes diluted to the extent that interventions culminates in scarce state and private sector resources to be wasted," conclude the researchers.
- I-Net Bridge