AGRI­CUL­TURAL ECON­OMY

Finweek English Edition - - Economic Trends & Analysis - JO­HANN VAN ZYL jo­hannv@fin­week.co.za

SOUTH AFRICA’S agri­cul­tural in­dus­try has it­self be­gan in­ves­ti­gat­ing the ef­fects of the ex­ces­sively high pro­duc­tion costs on re­tail food prices and farm­ers’ prof­itabil­ity. Lower pro­duc­tion costs will ob­vi­ously also be wel­comed by con­sumers.

Though SA’s av­er­age food inflation of 16,7% was one of the high­est in the world last year, farm­ers are leav­ing es­pe­cially the grain in­dus­try be­cause pro­duc­tion costs out­strip their in­comes. The in­dus­try says wheat farm­ers in the east­ern Free State op­er­ated at a loss of more than R1 000/ha over the past sea­son – the fourth year of loss since 2000.

One of the ac­cu­sa­tions made by agri­cul­tural cir­cles is that lower prices are sel­dom passed on to farm­ers. An in­ves­ti­ga­tion into fer­tiliser prices – which have in­creased by more than 80% in some cases and now ac­count for an av­er­age of 46% of a maize farmer’s to­tal ex­penses – was an­nounced last week. Farm­ing or­gan­i­sa­tion TAU SA, which ap­proached foren­sic ac­coun­tants Foren­sies.com to con­duct the in­ves­ti­ga­tion, says that’s nec­es­sary be­cause the fi­nan­cial re­sults of some raw ma­te­rial sup­pli­ers and fer­tiliser man­u­fac­tur­ers, un­like those of farm­ers, showed ex­cep­tion­ally high profit lev­els.

Louis Mein­t­jes, chair­man of TAU SA’s eco­nomic af­fairs com­mit­tee, says that kind of in­quiry is long over­due. “The re­sults will not only be to the ad­van­tage of agri­cul­ture but will also be of spe­cial ben­e­fit to con­sumers of farm­ers’ prod­ucts.”

An­other sur­vey of food prices by the Na­tional Mar­ket­ing Board found that not all food prices fol­lowed the ex­am­ple of sun­flower (61% higher in a sin­gle year) and that con­sumers have even had the ad­van­tage of a few price re­duc­tions (such as pota­toes) and lim­ited in­creases, such as those of dairy prod­ucts, which rose by only 7,85% over a year.

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