Botswana vulnerable as food prices soar in SA
Brian Benza | Thursday January 28, 2016 18:00
The country, which imports over 70 percent of its food requirements from its neighbour, is likely to record similar price increases, although the depreciating Rand might temper the rate of increase for Botswana imports.
Local inflation rose from 2.9 percent to 3.1 percent in December while the one for South Africa rose to a one-year high of 5.2 percent from 4.8 percent in November on the back of a weaker Rand and food price pressures.
Over 80 percent of Botswana’s fresh produce is imported from South Africa while local millers import 95 percent of their maize requirements from the southern neighbours.
According to The Independent, the secretary of the South Africa’s Early Morning Market Traders Association, Romila Chetty said the prices of fresh produce had escalated and, in some cases, almost doubled.
“We cater for lower income groups, so we have to keep that in mind when setting prices. We can’t make our stuff unaffordable, but we also have to ask ourselves how long we will last if the prices continue to soar like this.”
They get their products from all over KwaZulu-Natal, including Richmond and Mooi River.
She said a bag of eight heads of cabbage now cost R100, whereas six months ago the price was just R45. One cabbage was R4, but had increased to R15.
Tomatoes used to cost R80 a crate, but now go for R150. The price of potatoes had jumped from R60 to R100 for 10kg.
More alarming findings are outlined in the Pietermaritzburg Agency for Community Social Action’s most recent monthly food price barometer report (for December).
It looks at a “food basket” of 36 basic items, put together based on information from women in poorer communities. The supplies, bought every month, can feed seven.
Facilitator and research and advocacy coordinator, Julie Smith told The Mercury that month-on-month (November to December), they saw a 4.01 percent increase (R66.08) moving the total value of the basket from R1 648.10 to R1 714.18.
“This is a massive increase, the highest we have seen in the last year. The year-on-year increase (December 2014 to December 2015) is 8.24%. These are substantial increases.”
Using the lowest prices from six different shops – including Checkout, Supersave and Boxer, which also have branches in Durban – which service the lower-income market, a 10kg bag of onions cost R27.33 in November. In December, it was priced at R33.16.
A 3kg bag of tomatoes would set a customer back R39.50. A month later, a similar bag cost R48.16. Potatoes (10kg) increased from R35 to R49.71 in the same month.
Prices at larger shops were also high.
Tomatoes (3kg) and onions (7kg) at Pick n Pay cost R37.50 and R39.99 respectively.
At 3.1 percent, Botswana’s inflation is currently at the lower end of the Bank of Botswana’s (BoB) 3-6 percent objective, although the food basket contributes a significant share to overall inflation. A statement released after the December Monetary Policy Committee (MPC) meeting said Botswana’s low domestic demand pressures and subdued foreign price developments contribute to the positive inflation outlook in the medium term.
The BoB, however, said this outlook is subject to downside risks arising from sluggish global economic activity and the resultant weakening commodity prices.
“The inflation outlook could, however, be adversely affected by any unanticipated large increase in administered prices and government levies as well as international oil and food prices beyond current forecasts,” the Bank said.
Local millers have issued a warning of increases in maize meal of between 25 and 30 percent from this week, due to increases in white maize prices in South Africa.