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2021-09-08

Food commodity and meat prices are ticking up, Competition Commission report shows

The Covid-19 third wave has not affected major vegetable produce prices, but there has been high price inflation for certain food commodities over the past year, the Competition Commission said in its latest essential food pricing monitoring report yesterday.


Edward West | IOL

The commission said an example of one such commodity was cooking oil.

A clear retail price spike in cooking oil price in the first wave had continued to creep upward – both in wholesale and retail cooking oil prices – since May/June last year.

The commission said, however, that there had been oil-producing crop shortages internationally, including sunflower, palm, soya and canola oil, which could be attributed to the increases seen in the local market prices for cooking oil.

Reasons cited for the recent surge in global prices include slow production and supply shortages in large oil crop production regions such as Malaysia and Indonesia, driven by bad weather and pandemic-led worker shortages.

There had also been stronger than expected consumption by the main oil seed product consumer nations such as China and India.

These factors had added to global supply strains.

These price increases were feeding into domestic markets, as South Africa, for example, imports a large portion of its oil seed requirements.

Meat markets also showed steady increases in retail prices since the first wave of the pandemic.

“While wholesale producer price inflation (PPI), beef prices have remained relatively constant over the period, with a slight increasing trend since November 2020, retail beef products have shown considerable price movements, especially seen with stewing beef, which has increased by almost R15 per kilomgram,” the commission said.

Beef chuck price rose from around R80/kg in April 2020 to around R100/kg in June 2021.

These price movements had also been observed in mutton/lamb, chicken and fish, where wholesale prices had remained fairly stable, while retail prices had increased overall.

The commission’s July and August report showed meat prices continued to be high.

The Pietermaritzburg Economic Justice and Dignity Group’s Household Affordability Index found that over 12 months, the average cost of the national Household Food Basket increased by 10 percent to R4 241.11 in August from September last year.

However, this report did not capture any large retail price increases between May and June at the start of the third wave.

The commission’s previous food report had noted complaints about exceptionally higher retail ginger and garlic prices in the second wave, but continued monitoring showed that despite the third wave outbreak from June, wholesale prices for garlic and ginger had fallen.

Ginger prices returned to a level slightly lower than pre-second wave prices. Garlic wholesale prices fell after the second wave, increased again in July, albeit shorter than the previous wave, the commission said.

On tomato prices, a large price increase was seen between the second and third wave.

In April, there had been reports of swift and large price increases of tomatoes, with some shoppers paying around R40 per kilogram in April 2021, whereas the retail price was around R10/kg in December 2020.

The commission said the wholesale price rose from around R5/kg in January to R19 in March, and further upwards to almost R23/kg in April before decreasing to around R7.37/kg on June 25.

This had been linked to supply shortages due to heavy rainfall in January and February that damaged tomato crops, while prices had also moved to higher off-season levels.

A significant rise in potato prices from around mid-June had followed cold weather conditions in the northern parts of the country as well as heavy rains at the start of the year during planting season, which led to weaker potato harvests. Wholesale onion, tomato and potato prices across the pandemic waves were not consistent with the waves of infections.

The commission’s report also revealed a clear drop in farmer numbers and an increase in concentration across the value chain. For instance, while there were around 3 899 dairy farmers in January 2007, there were just 1 053 in January this year.

“There are concerns with market power across the value chain, with farmers, especially small farmers, facing low margins … there remain concerns with the functioning of South Africa’s food markets and commercial value chains within the industry.”

Some of these concerns included wide farm-to-retail spread in prices, large price differences between regions and growing margins at the processor and retailer level.

 


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