Worries over food price-fixing in South Africa

Speaking at a conference in Cape Town on Wednesday Competition Commissioner Tembinkosi Bonakele said the Commission is concerned businesses in the food sector are going to abuse drought-related rising prices. He hopes that such prices will go down when the drought fully abates.

Viccy Baker of the consumer price comparison website Retail Price Watch believes that certain prices are in fact being manipulated by retailers and producers as the commissioner fears, and warns that consumers should shop with caution.

“The average price of 12.5kg White Star Super maize meal has increased by 86.6% since October last year, from R67 to R125,” she said. “The average price of 2.5kg White Star has increased by 33%, from R22.40 to R29.80.

“One would have expected bulk prices to be better per kg but this is clearly not the case.”

Average Price
October 2015
Average Price per kg
October 2015
Average Price
October 2016
Average Price per kg
October 2016
Lipton Rooibos Premium Blend 160g R25.75 R161.00 R53.49 R334.00
Producer Price per kg R17.50 R35.00
Cost of beneficiation (packaging, transport, etc) R143.50 R299.00

“A look at the table above is revealing. The average price of Lipton 160g Rooibos Tea has increased by 108% in a year, from R25.75 to R53.49, in line with rooibos price increases countrywide.

“Yet rooibos is a wholly local product, with the South African market taking up about one third of the local crop in a non-drought year.

“The producer price of rooibos was R17.50/kg in 2015, according to the Department of Agriculture, Forestries and Fisheries. The producer price was expected to increase by 90% in 2016 according to the Rooibos Council. Even if it increased by 100% as estimated in the table above, beneficiation would still amount to about R300 a kilo as opposed to R143 a kilo in 2015.

“In contrast, South Africa is a net importer of ordinary black tea. Yet the average price of Five Roses 62.5g has increased by 16% from R11.04 to R12.88.

“We can all halve our tea consumption by sharing teabags but it’s not so easy with other staple products.

“Lentils have also shown steeply rising prices. A packet of Imbo brown lentils 500g has increased in price from an average R11.84 to an average of R21.52, an 82% increase. The packet says that Imbo lentils are imported from ‘Canada, Turkey and Australia.’ Yet the rand in September 2016 was almost on a par with its dollar price in October 2015.”

In addition, Baker said individual stores are hugely increasing the prices of many personal items (Vaseline petroleum jelly doubling over the last month in some stores). She urged consumers where possible to vote with their feet and their purses.

“Don’t take these price increases lying down” she said. “Complain to the store manager and write to the producer.

“Ordinary South Africans have managed to influence the price of university fees and toll fees – why not food prices?”

Viccy Baker is founder of Red Gekko’s Retail Price Watch, a consumer website dedicated to providing the latest up-to-date information on consumer good prices across South Africa. You can view and compare products on various prices here.

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Worries over food price-fixing in South Africa