Soaring food prices a concern for farmers
15 April 2008, 16:52
Farmers have on Tuesday expressed concern about rising food costs and the effect it had on the poor.
Grain SA said it was also concerned about accusations that producers were "deliberately co-responsible" for high food prices.
Chairperson Neels Ferreira said: "In the primary sector, in agriculture price fixing cannot take place. Prices are determined on the opened market by the Johannesburg Stock Exchange (JSE) and how that price is determined takes different factors into account."
The difference between what a producer receives for his product and what the consumer eventually pays was controlled by intermediates in the value-chain, Grain SA said.
Ferreira said Grain SA intended to hold discussions with interest groups such as Cosatu on the reasons for the current high food costs and its consequences for the poor.
Cosatu began nationwide protests on Sunday to draw attention to rising food prices. The protests will also focus on companies which had been found guilty of price-fixing in Competition Commission rulings and demands will be issued that implicated company directors be prosecuted, not the companies themselves.
This was because such fines were ultimately paid by the consumer.
The trade union federation was demanding a reduction in the price of bread as a refund to customers for being overcharged and would ask for a zero value added tax rating on basic foods, as well as subsidies for the poor.
Ferreira agreed that one way of easing the burden of rising food costs for the poor was for government to provide food subsidies. A long-term solution would be to speed up the country's economic growth and deal effectively with unemployment through job creation.
He attributed the current crisis to soaring commodity prices internationally due to economic growth in countries such as India and China and because of changing eating habits which had led to shortages in the market.
"In South Africa more people are eating meat and therefore more grain is needed to feed livestock to meet the rise in demand," he said.
He predicted that the current crisis would not be short lived due to rising fertiliser and fuel costs.
"According to calculations made by Grain SA, the year-on-year increase in the variable input cost component for winter grains amounts to between 60 percent and 70 percent, and it is expected that production costs for summer grains could increase by as much as 40 percent."
These increases exerted pressure on the profitability of producers. "The current price levels for grains are indeed higher than a year ago, but there is great concern about the ability of producers to produce at a profit.
"The profit margin at producer level is seriously eroded by input inflation, which, at present, is exceeding consumer inflation by far.
Meanwhile, Unesco has released a report which said farming practices had to change to confront the soaring food prices threatening to drive millions of poor people around the world into even deeper poverty.
The Unesco study urged agricultural sciences to pay greater attention to safeguarding natural resources and to promoting "agro-ecological" practices, such as the use of natural fertilisers and traditional seeds. - Sapa
Grain SA said it was also concerned about accusations that producers were "deliberately co-responsible" for high food prices.
Chairperson Neels Ferreira said: "In the primary sector, in agriculture price fixing cannot take place. Prices are determined on the opened market by the Johannesburg Stock Exchange (JSE) and how that price is determined takes different factors into account."
The difference between what a producer receives for his product and what the consumer eventually pays was controlled by intermediates in the value-chain, Grain SA said.
Ferreira said Grain SA intended to hold discussions with interest groups such as Cosatu on the reasons for the current high food costs and its consequences for the poor.
Cosatu began nationwide protests on Sunday to draw attention to rising food prices. The protests will also focus on companies which had been found guilty of price-fixing in Competition Commission rulings and demands will be issued that implicated company directors be prosecuted, not the companies themselves.
This was because such fines were ultimately paid by the consumer.
The trade union federation was demanding a reduction in the price of bread as a refund to customers for being overcharged and would ask for a zero value added tax rating on basic foods, as well as subsidies for the poor.
Ferreira agreed that one way of easing the burden of rising food costs for the poor was for government to provide food subsidies. A long-term solution would be to speed up the country's economic growth and deal effectively with unemployment through job creation.
He attributed the current crisis to soaring commodity prices internationally due to economic growth in countries such as India and China and because of changing eating habits which had led to shortages in the market.
"In South Africa more people are eating meat and therefore more grain is needed to feed livestock to meet the rise in demand," he said.
He predicted that the current crisis would not be short lived due to rising fertiliser and fuel costs.
"According to calculations made by Grain SA, the year-on-year increase in the variable input cost component for winter grains amounts to between 60 percent and 70 percent, and it is expected that production costs for summer grains could increase by as much as 40 percent."
These increases exerted pressure on the profitability of producers. "The current price levels for grains are indeed higher than a year ago, but there is great concern about the ability of producers to produce at a profit.
"The profit margin at producer level is seriously eroded by input inflation, which, at present, is exceeding consumer inflation by far.
Meanwhile, Unesco has released a report which said farming practices had to change to confront the soaring food prices threatening to drive millions of poor people around the world into even deeper poverty.
The Unesco study urged agricultural sciences to pay greater attention to safeguarding natural resources and to promoting "agro-ecological" practices, such as the use of natural fertilisers and traditional seeds. - Sapa
- This article was originally published on page 2 of The Pretoria News on April 15, 2008
Pretoria
