Relief for meat lovers in South Africa – but there are major red flags for veggies
Food price inflation remains exceptionally high, but the Bureau for Food and Agricultural Policy’s (BFAP’s) latest data shows that pricing pressure on meat is starting to ease.
Price pressure on vegetables, meanwhile, is still really high.
The BFAP’s latest food inflation brief expands on the consumer price inflation data published by Stats SA last week (24 May). According to Stats SA, CPI eased to 6.8% in April, with food price inflation easing marginally from 14% recorded in March to 13.9% in April.
Food price inflation in South Africa is sticky at higher levels despite international indices showing a drop in global food inflation.
The FAO Food Price Index (FPI), based on the prices of an international basket of food commodities, was 19.7% lower in April 2023 compared to April 2022. Following a 12-month index value decline from March 2022 to March 2023, the FAO FPI increased by 0.6% from March 2023 to April 2023.
While South Africa has seen some overall benefits in crop production and lower global costs, local issues like load shedding and the weaker rand have chipped away at these.
This is being felt even in the most positive sectors, like maize and soybean, the BFAP said.
“With the latest crop estimate of 16.1 million tons and local demand estimated at 11.5 million tons, South Africa will have ample surplus of exportable maize for the coming marketing season and exports are already commencing,” the group noted.
“Furthermore, we anticipate that maize meal prices will decline over the coming three to four months as cheaper maize moves into the supply chain.”
However, the higher costs of transportation, processing and retailing due to load shedding and crumbling road infrastructure will absorb some of the potential reduction in maize meal prices and we expect the farm-to-retail margin to increase over time, it said.
Meat and veg
Among the different food segments, vegetables are driving food inflation, up year on year 23.1%. The BFAP noted that this is the highest year on year and month on month inflation among all categories, with an upward trend in inflation in 2023 so far.
Meat, meanwhile, is showing a declining trend. Inflation is still at 9.5%, but this is coming down. Month on month, inflation was flat.
The BFAP noted that beef carcass prices have declined by around 8% since January and in May 2023 were more than 10% below May 2022 levels.
“Prices are expected to dip further in the next 3 months – mid-May to mid-July – due to seasonality, coupled with additional meat available in the market. This trend in lower prices will mainly impact cheaper cuts in the Northern parts of the country, where approximately 40% of consumption is situated,” it said.
Beef prices are expected to be dampened further by weak demand, with disposable incomes under increasing pressure.
Pork prices have come down rapidly over the first five months of the year, falling by around 18% since January, but are still higher than May 2022.
The big red flag is for poultry, the group warned.
“The price of individual quick freezing (IQF) mixed portions (R/Kg) was higher on average by 20% in April 2023 compared to the same month in 2022. IQF prices have increased by 3% month-on-month following a marginal decline in the first two months of 2023.
“Owing to the prominence of imported products in total consumption, IQF prices are strongly influenced by international markets and exchange rate dynamics, with the sharp depreciation in the value of the Rand particularly influential in current price levels. The continued spread of Avian Influenza globally could bring additional price risks going forward,” it said.
Vegetables have fared far worse, with prices remaining higher than in 2020, during the Covid-19 pandemic. This is backed by high-cost factors, specifically for potatoes, the BFAP said.
“Onion prices in particular increased sharply, due to availability constraints following reduced area planted. Vegetable supplies in general have been tight through the first quarter of 2022 and with a significant share of production reliant on irrigation, persistent high levels of load shedding could impact further on availability,” it warned.
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