Food price: Retailers v markets
The M&G’S basic food basket survey shows that supermarket prices don’t always drop when those at fresh produce markets do
South Africa’s food prices are rising — as is the difference between the cost of a basket of vegetables at the country’s fresh produce markets compared with the price in supermarkets.
Farmers and supermarket chains blame a variety of factors for the price differences, not least the cost of fuel, high retail rents and the expensive, labour-intensive task of packing and labelling vegetables into prepacks, but it seems supermarkets also price food according to what customers are prepared to pay.
This is according to the findings of the Mail & Guardian basic food basket price survey at the Durban, Johannesburg and Cape Town fresh produce markets as well as online at several supermarkets including Pick n Pay, Woolworths and Checkers. Makro does not stock fresh produce.
The survey continues to reflect big price differences in the cost of five basic vegetables — potatoes, onions, tomatoes, carrots and cabbage.
The aim of the survey is to track prices of a list of 12 staple food items over time, including these vegetables, and their increases on a monthly or quarterly basis, at both markets and supermarkets.
According to our January 2024 survey, the prices of some of the staple vegetables have declined significantly at the three city markets.
Onions dropped by almost 50%, to as low as R30 for a 10kg pocket in some cases, yet this is not reflected in the price at supermarket level.
Cabbage, potatoes and tomatoes are from half the price at markets to four times cheaper at these markets than they are at retailers.
Granted, retailers have additional costs because vegetables must be transported from the farm to prepackers, distribution centres and, finally, the supermarket, but there appears to be no oscillation in prices, which remain upwardly sticky even where these costs as well as supply and demand vary.
The price of potatoes ranged from R50 to R110 for a 10kg pocket, while onion prices were from R30 to R58 for 10kg (R3 to R5.80 a kilogramme) at the markets.
Carrots ranged from a low of R10 to a high of R55 for a 5kg bag at the three fresh produce markets.
As for tomatoes, the quality varies greatly, with prices of R30 to R84 for a 6kg carton.
Cabbage costs R12.99 a head at the Durban market and varies from R80 to R160 (20kg and 25kg bags) at the other two markets.
Supermarket prices told a different story, with prices remaining pretty much at higher levels.
Pick n Pay offered by far the cheapest potatoes at R92.99 for a 7kg bag (R13.28 a kilogramme), while a 3kg bag was R78.99 (R26.33 a kilogramme) at Checkers and R64.99 (R21.99 a kilogramme) at Woolworths.
Onions at R34.99 for a 3kg bag (R11.66 a kilogramme) were cheapest at Checkers, followed by Woolworths at R49.99 for a 3kg bag (R16.66 a kilogramme) and Pick n Pay at R19.99 for a 1kg bag.
Over the past year or two the price of tomatoes has soared to high levels at supermarkets, while market prices have only slightly increased.
As an aside, Super Spar in Durban — this chain has not been included in the survey — was recently selling tomatoes for a whopping R44.99 a kilogramme, and it has not been unusual in recent weeks to spot prices of about R39.99 at other supermarkets.
This week, consumers could be forgiven for not being relieved to find that tomatoes were R29.99 a kilogramme at Woolworths, Pick n Pay and Checkers, especially when market prices are considered high at the much lower R10 a kilogramme mark.
According to the National Agricultural Marketing Council’s latest Food Price Monitoring Report, an urban food basket of 28 items cost R1 221.52 in October last year, representing a 10.1% annual increase.
The council lists the top five most consumed foods in the country as maize porridge, tea, milk, brown bread and sugar, so these foods, as well as kitchen staples cooking oil and rice, were added to our survey. The prices gathered were the cheapest option of the chosen volume at each store.
The cheapest brown bread (Albany) was found at Makro for R14.97 but one must buy two loaves for R29.99 to get this price. This was followed by Checkers where it was R16.49 for a Sasko loaf.
Checkers also stocked the cheapest maize meal (2.5kg) for R54.95 and two litres of milk for R29.99, while its sunflower oil (two litres) was second-cheapest at R59.99 beaten only by Makro’s R51.99.
Both Potatoes South Africa and Korkom, which represents onion growers in the Ceres region of the Western Cape (there appears to be no national body representing all onion growers), shed some light on factors influencing the price of onions.
Dirk Uys, manager of research and innovation at Potatoes South Africa, which represents the country’s 550 commercial farmers, said understanding the potato’s value chain, from farm to fork, is crucial.
“Prices are ultimately determined by the various fresh produce markets, responding to market dynamics based on supply and demand, and are influenced by seasonal variations, product availability and grading. It is important to note that the farmer doesn’t receive the market price in full.
“After deducting market agent commissions and fees, the farmer ends up with a significantly lower amount. From there, potatoes are sold to pre-packers who incur additional costs for transport, comply with stringent safety regulations, and engage in labour-intensive prepacking processes. This introduces more handling and packing costs,” he said.
“When the pre-packed stock reaches retailer distribution centres, a third round of transportation costs is added. Retailers, aiming for profit, include their margin, resulting in the aforementioned price range. It must be noted that retailers, with various store classifications, tailor their procurement and pricing based on specific customer bases.”
Uys said the substantial rise in production costs is diminishing growers’ interest in cultivating potatoes.
Load-shedding experienced during 2023 had a significant effect on the irrigation scheduling, leading to a decrease in yields ranging from 10% to 20%.
“During the 2022-23 summer season there was a trend among farmers to plant fewer potatoes in favour of crops such as maize due to the lower input costs and favourable planting conditions,” he said.
Korkom’s chairperson, Catherine Smuts, said the price of onions in supermarkets was probably higher because the logistical chain — farm to distribution centre to supermarket versus farm to market — was more costly and they incur more expensive packaging costs and packing material. This includes one to two kilogramme prepacks and “socks” compared with mainly 7kg and 10kg pockets sold at national markets.
Smuts said supermarkets have more overheads than fresh produce markets do. They pay a high retail rental price and there is a “bigger workforce in DCS [distribution centres] and supermarkets versus national produce markets”.
She said load-shedding had a “big influence” on onion yields with regard to irrigation, while the weather — such as excessive rain and heatwaves — influenced growing potential.
Responding to questions, Pick n Pay said: “We closely follow market pricing and ensure our suppliers are aligned to this at all times so that we consistently deliver affordable pricing to our customers.
“At times, prices may vary at the fresh produce markets due to a difference in class, grade, size or quality as we have defined specifications for these products on our shelf. The price of the fresh produce will always reflect both the cost of acquiring the product and getting it on our shelf.”
Checkers and Woolworths had not responded to requests for comments at the time of publication, while Makro declined to do so.
The Tomato Producers Organisation and ZZ2, South Africa’s largest producer of tomatoes, also declined to comment, citing time constraints.