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.