Agriculture

[1]    [a] The WCDoA, based on research and monitoring; updates quarterly and monthly reports on food inflation and Weekly Price Tracker relying on the official Stats SA’s food retail prices as the mechanism to measure inflation. These reports provide explanations of the food price changes and to then advise the WCDoA on actions should WC household food security be threatened.  Food inflation briefs are prominent for typical households’ healthy eating and welfare planning in the WC and gives a general overview on what consumers are confronted with and the potential influence on their buying power. Recently, the Weekly Price Tracker is conducted by the WCDoA [Macro and Resource sub-programme] on the ongoing impact of the Covid-19 pandemic, global shocks impact such as the potential ripple effects associated with the geo-political tensions between Russia and Ukraine. This is significant to WC consumers and farming community in terms of decisions they have to make and informs policymakers for planning and budgetary interventions when there are global shocks affecting the Province’s economy.

Moreover, there is work done by WCDoA’s major partners such as Bureau for Food and Agricultural Policy [BFAP] on inflation briefs on monthly bases as well incinerated on the BFAP Baseline launched every year in August. The BFAP’s food inflation Brief provides an overview of food inflation dynamics, its associated causes and the cost of basic healthy eating. Regularly, National Agricultural Market Council [NAMC] track and report quarterly [monthly Food Basket Price] food prices through collecting retail price data monthly as mandated by the DAFF’s Food Price Monitoring Committee [FPMC] to publish Food Cost Review which documents the margins between farm-gate and retails prices of selected food products. Agbiz also produces weekly and monthly inflation reports to guide investment in agriculture, policymakers, and factors driving food prices margins. The above entities work closely with the WCDoA, and the Macro & Resource Economics sub-programme reference their data and publication to populate quarterly and monthly reports. To discuss WC food inflation in more detail, the following section presents trends on national and provincial food inflation, as well as a highlight specific food product   price changes and provide some policy interventions to mitigate food inflation in the Western Cape Province.

 [b]    An increase in food prices reduces the buying power of average household static incomes and limits economic access to basic food items. WC household consumers, like in any other province in the country, are affected by rising food prices as this threatens their household level food security and their healthy eating. There are further risks associated with this e.g., unrests, increased crime as the wellbeing of people gets affected. The impact of increasing food prices also means that disposable income is decreasing and therefore less money available for discretionary spending over time and this has negative implications for economy in general.

 [2.]    [a] Figure 1 shows the y-on-y change [%] in the prices of all and food items consumed by a general household in SA and WC since 2020. The WC food price trends showed instability with significant declines in March 2020 [the dip in All items trends], and this drop is attributed Covid-19 and its country’s lockdown restrictions. In April in 2021, the SA and WC food prices started to pick-up as the country and world economy gradually opens after months of hard-lockdown restrictions

 

Figure 1: South Africa and Western Cape: Year-on-Year Headline Inflation

Source: [StatsSA, 2022]

The country’s average food prices recorded 6.6 % in March 2022, higher than 6.0% in March 2021. WC recorded a headline y-on-y inflation rate of 5.6% in March 2022, slightly lower than the national headline inflation rate [5.9%]. The country’s weaker trading exchange rate during the recent years [BFAP, 2021], higher global commidity prices, agricultural input[feed] costs, global food-supply disruptions, and domestic unending lockdown restrictions were drivers of food prices increase during 2020 up to  2022 March. 

[b]  The food price change [%] was underpinned by an uptick in the price of bread and cereals, sugar, sweets and desserts, meat, fish, dairy and eggs including oils and fats between 2020 April to 2022 March. Comparing February 2022 to March 2022 food prices changes [see Table 1]; sugar, sweets and desserts [2.3%], bread and cereals [1.3%], Fish [0.6%], milk, eggs and cheese [0.6%] and other food [0.9%], were the underpinning products of food price increase in the WC’s general household food basket, and substitutes of these products need to be considered. This will put pressure on household’s wages and the WC’s social support systems. Therefore, good rainfall, low input costs, control of diseases outbreaks to good production [supply] are important to meet domestic demand at affordable food prices.

[3]    The WCDoA has initiated initiatives to mitigate the risks associated with the increase in food prices.  These include:

[a]  To monitor the trends in food prices and to understand the impacts of these.  A more detailed description of the various reports and the linkages to other organisations [e.g. BFAP] was provided above.

[b]  Improve the efficiency of farming in the Western Cape which will lead to international competitiveness and subsequently to lower food prices.  It is important to note that the price of food double the moment South Africa moves from being a net exporter of a product to becoming a net importer.  To this end interventions such as our research portfolio, extension services, training offerings, animal health services, export support and sustainable resource interventions make a structured contribution to mitigate the risks associated with increases in food prices.

[c]  The purpose of the third leg of initiatives is to enable the citizens of the province to produce their own food for own consumption.  To this end the Department has supported 5 626 [target: 800] households in 2020/21 and 2 612 [target: 1 800] in 2021/22 to establish their own food garden.  At the same time 43 [target: 14] in 2020/21 and 26 [target: 14] in 2021/22 school food gardens were supported.  In 2020/21 132 [target: 62] and in 2021/22 142 [target: 56] community food gardens were supported.