New report reveals food price burden on households

By Alan Winde, Minister of Economic Affairs:

A new sector report shows that focusing on growing the production of agri-processed goods is necessary to decrease South Africa’s R21 billion trade deficit in this area.

Alan Winde, Minister of Economic Opportunities, said the figures contained in the 2015 Bureau for Food and Agricultural Policy (BFAP) Baseline emphasized the need to prioritise the agri-processing sector.

The BFAP Baseline was released on Friday, 31 July 2015 at the Lord Charles Hotel in Somerset West.

“When researchers studied the National Department of Agriculture, Forestry and Fisheries figures of the average import versus export values between 2006 and 2010, they noted a major deficit. South Africa traditionally uses foreign suppliers to process our own produce, which adds a cost to the final product for local consumers.

“Part of our strategy to grow the size of the agri-processing sector is looking at how we can reduce imports, where possible, by promoting local products. With the cost of healthy eating increasing, opting for local produce will give consumers welcome relief,” said Minister Winde.

The Western Cape Department of Agriculture has developed an agri-processing index, which ranks the best products in terms of employment potential and performance in local and global markets.

“Project Khulisa has identified agri-processing as a key growth sector, presenting a significant opportunity to increase jobs in rural areas. Under a high-growth scenario, this sector could add up to 100 000 jobs to the local economy over the next five years.”

Minister Winde said the BFAP Baseline 2015 was an excellent tool for both the private and public sector.

“The report clearly shows the importance of trade with the rest of Africa. In 2014, South Africa’s exports of agricultural products were worth R104 billion. African markets are a key driver of this growth. Over the past 13 years, our exports to Africa grew by 14%, compared to the EU which saw an 8% increase.”

“This study allows us to map patterns like these and assess whether our programmes are responsive to global trends. I would like to encourage the private sector to consider this report in making their own plans.”

This year, the report also illustrated the impact of the hike in electricity costs on households’ food choices.

“Researchers looked at the results of focus groups held by the Pietermaritzburg Agency for Community Social Action, which revealed that electricity cost increases were changing the eating habits of residents in lower income households. More consumers were moving away from maize meal to rice, because rice has a shorter cooking time. Maize meal is fortified and has greater nutritional value compared to rice. In addition, the price of rice is likely to increase as the rand depreciates, which will put additional pressure on lower income families,” said Minister Winde.

The BFAP Baseline 2015 provides projections for key sectors, including meat, milk and dairy products, wine, sugar and grains.

Trends in the report include:

  • The cost of healthy eating is climbing faster than inflation in South Africa. Between January 2011 and April 2015, the cost of a healthy eating plan for a family of four rose by 36%;
  • Household income is rising, but so are debt levels. The average household income increased from R6 928 in 2009 to R10 525 in 2014;
  • The highest ever real net farm income was recorded in 2014;
  • The number of credit accounts increased by 18.5% over the same period. At the same time, the number of rejected credit applications rose to 53.5% in 2014, compared to 43.9% in 2009;
  • Keeping in line with global trends, urbanization is on the rise. The rural population size increased by 9% between 2007 and 2014, while the urban population grew by 29% over the same time.

Please see the full report: