Govt food price plan 'no good'

Cape Town - The Agricultural Business Chamber has reacted cautiously to President Thabo Mbeki's plans to set up a national food control agency, saying that any form of direct price intervention by government could distort the market and impede food production.

The chamber's CEO, Dr John Purchase, said in an interview that government would need to shed more light on the mandate of the planned agency.

"I don't want to be alarmist, but we are somewhat concerned about direct market interference," he said.

Mbeki said at the weekend that SA needed a food price control agency as an "institutionalised way" to advise government on how best to respond to rising food prices.

He said the current food price hike situation was a global phenomenon that required a permanent agency to look at the country's entire food system.

Reacting, Purchase said on Monday that in the short term, government needed to create a support system for the poorest of the poor to survive the crises and in the longer term, tariff adjustments would offer some relief.

"There has been agreement on this for some time, but it has not yet been implemented," he said.

But agricultural economics professor at Stellenbosch University, Nick Vink, was more upbeat about government's plans provided it did not involve any direct government tampering to set prices.

Speaking in an interview, Vink said if the planned agency remained under the auspices of the National Agricultural Marketing Council (NAMC) and did not turn out to be a carbon copy of the existing body that investigates food prices from time to time, the agency was likely to carry out an important monitoring and information service on food prices and production patterns.

About six years ago, government set up a body known as the Food Price Monitoring Committee under the auspices of the National Agricultural Marketing Council, an advisory body to the agriculture minister.

Vink called for "more resources" to boost this committee rather than create a new structure.

Meanwhile, sentiment against price controls was also echoed last month when National Treasury director-general, Lesetja Kganyago, addressed a World Bank conference in Cape Town.

Speaking on the issue of spiralling global food prices, Kganyago told delegates at the Annual Banks Conference that farmers needed to get a greater share of the profits while the agriculture department's failure to spend its budget each year, needed government's urgent attention.

"This money is meant to train emerging farmers and increase food production," Kganyago told delegates.

Purchase confirmed that members of the Agricultural Business Chamber had already received Cabinet's draft framework on the planned food price control agency that is currently being circulated for consultation.

- Fin24.com