Report: South Africa’s grim agricultural outlook
South African consumers are urged to buckle up for rising food prices.
original source: The South African
A recent report released by the Bureau for Food and Agricultural Policy (BFAP), points to current and future production difficulties within South Africa’s agricultural sector.
BFAP recently published an objective report regarding the agricultural output for 2018-2027. The speculative analysis is based around food production, inflation and it’s effect in the South African consumer.
The research organisation points out that an extremely volatile local agricultural sector makes baseline estimates and forecasts a possibility, rather than a certainty.
Variables affecting production include volatility relating to the climate and uncertainty regarding governmental policy, particularly the issue of land expropriation without compensation, which has already impacted negatively on investor confidence.
Agricultural trade: The exchange rate
BRAP report that while a depreciating exchange rate will assist South Africa’s agricultural trade in the global market, dollar-based imports will become more unaffordable.
Rising fuel prices coupled with a weakening currency pose huge threats to the agricultural sector, which relies heavily on machinery and transport vehicles as a foundation for sustainable production. Farmers will be forced to maximise efficiency in the coming years in order to remain profitable.
By far the biggest and most worrying cloud currently looming over the agricultural sector; uncertainty regarding government policy on the issue of land expropriation without compensation, which has already halted private investment in farming.
While agricultural role-players anxiously await the inevitable implementation and subsequent effects of land reform, they’re avoiding further financial investments as a safeguarding method.
This is due to have a hugely negative impact on production – a ripple effect which will rattle food security, and raise the nation’s unemployment. Cost inflation relating to products will put further pressure on ordinary South African consumers.
Rising food prices
Compounding local and global issue have already led to a steep rise in food prices An increase in VAT, coupled with soaring petrol prices put further burden on the shoulders of consumers.
Problems facing the agricultural sector have also had a knock-on effect on food prices – an effect which is due to worsen over the next 10 years.
Business Tech reported on the issue of rising food prices, relative to the BFAP report. Using the Balanced Food Basket as a standard indicator based on ordinary consumption, the non-profit organisation says:
“In reality, consumer food expenditure is more complex than 29 food items and will include additional items not considered, which will represent an additional expense to these figures. Furthermore, consumers could also switch between food items adding further complexity to the analysis of food affordability.”
The BFAP Balanced Food Basket includes the following 29 food items:
Starch-rich staple foods: Maize meal, brown bread, white bread, rice, potatoes and wheat flour;
Animal protein foods: Beef mince, chicken pieces, canned pilchards, eggs, polony and beef sausage;
Vegetables: Tomatoes, onions, carrots, cabbage and pumpkin;
Fruit: Apples, bananas and oranges;
Dairy: Full cream milk, sour milk / maas and cheddar cheese;
Fats & oils: Sunflower oil, margarine and peanut butter;
Sugary foods: White sugar
Legumes: Dried beans and baked beans in tomato sauce.
In April 2018, the cost of the BFAP thrifty basket amounted to R751 for an adult male and R2 738 for a family of four per month.
The projected cost of the BFAP thrifty balanced food basket in 2019, for a family of four, is R2 928 per month (5.1% higher than the projected 2018 value).
This effectively means that a four-member household requires a monthly income of about R7 823, if they are to afford a healthy, balanced diet.
More worrying is the fact that this increase in food price will restrict 54% of South Africa’s total adult population from having a balanced eating plan unless they manage to cut-back spending on non-food items.