by Wandile Sihlobo | May 21, 2025 | Food Security
Food prices have been in the headlines globally, but in South Africa, the situation is clear; we are food secure at the national level, but struggle with food insecurity at the household level. The primary challenge in our assessment is income poverty, not the lack of availability or expensive products. But that is not what I want to explore further now (you can read more here).
I want to comment briefly on consumer food price inflation data. However, one clarification is essential before we do so: we must never forget that relatively lower inflation does not equate to lower prices. Inflation is the pace of price increases.
Now that we have that out of the way, the data released today by Statistics South Africa shows that consumer food price inflation accelerated to 3.3% in April from 2.2% in the previous month.
This increase was underpinned by the rise in price inflation of most food basket products, most notably cereal products, meat, oils and fats, and vegetables. This is unsurprising and reflects the pass-through of the higher agricultural commodity prices we observed at the end of last year and into the start of 2025, particularly with grains.
In the case of meat, price increases are expected as a response to the slight recovery in consumer demand, which we have been highlighting over recent months. In the case of vegetables, we see the increases as a reflection of disruptions in field work caused by the excessive rains in recent weeks, which should be a temporary blip.
Looking ahead, we suspect that the current mild quickening of food price inflation will prevail for much of the year’s second and third quarters as the increases in the farm level of some of the key products, such as grains, continue to pass through to the retail level.
While grain prices have softened recently, they were elevated for much of the last quarter of 2024 and into the start of this year because of the tight maize stocks. There is generally a lag of three to five months before the increases at the farmgate begin to show at retail levels.
Thus, while grain prices have now softened in anticipation of an ample harvest in the 2024-25 season, we will continue to see a different price direction in the food inflation basket for months. Still, we don’t anticipate that the increases will be as sharp as the wheat and rice prices, which are other key cereals that have generally seen prices softening in the past few months.
Regarding vegetables, the recent price increases partly reflect some regions’ challenges with harvesting because of extra wet conditions. As such, we expect the prices to normalize in the coming months. Importantly, vegetables and fruits don’t have a longer price lag than grains.
In the case of meat products, the price direction may soon change because of the potential increase in domestic supplies. A foot-and-mouth disease outbreak is temporarily closing some key export markets and likely raising domestic red meat supplies.
The counter factor to this possible moderating trend could be poultry prices. South Africa imports roughly 20% of its annual poultry consumption, and over two-thirds of imports from Brazil. There is now an outbreak of avian flu in Brazil, which could limit their poultry exports.
Under such a scenario, the key determinant will be whether South Africa can boost domestic supplies or source additional imports from other regions. We suspect this may have slight upside pressures. Still, we think meat price inflation may be sideways to slowing.
South Africa’s headline CPI was 2,8% in April 2025, down from 2,7% in March.
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by Wandile Sihlobo | Feb 26, 2025 | Food Security
Statistics South Africa has just completed one of its regular reweighting and updating of the Consumer Price Index (CPI). The basket component I watch closely –food – now has a higher weighting of 16,84 (from 15,30 out of 100,00).
Notably, the reweighting of the CPI basket has not shifted the trend of moderating food price inflation we have been observing in recent months.
Statistics South Africa recently released data showing that consumer food price inflation slowed to 1.5% in January 2025 from 1.7% in December 2024.
An important clarification is necessary here: we must remember that lower food inflation does not equate to lower prices. Inflation is the pace of price increases. So, while that pace has slowed to 1.5% in January 2025, some food item prices are still rising.
Now, back to the data: This deceleration was underpinned by most products in the food basket, particularly “meat,” “fish and other seafood,” “milk, other dairy and eggs,” and “fruit and nuts.”
Essentially, the base effects and the recovery in supplies of various products continue to be the primary drivers of the slowing rate of food price increases.
At the start of 2024, the challenges of lower vegetable supplies following the impact of load-shedding on irrigation the previous year and the tail-end effects of avian influenza on poultry were the topical issues underpinning food price inflation. We are far from that scenario now, and supplies have recovered.
The outlook for 2025 remains promising that consumer food price inflation could be relatively comfortable.
The recent rains across South Africa have benefitted agricultural production, and farmers planted a decent area of crops. For example, the preliminary plantings data released by the Crop Estimates Committee last month showed that South African farmers likely planted 4,45 million hectares of summer grains and oilseeds in the 2024-25 season, up mildly by 0,3% from the previous season.
We see similar and better production conditions for fruits and vegetables.
That said, for the first half of 2025, grain-related products remain the upside risk to consumer inflation following a surge in white maize prices in recent months due to the poor crop harvest caused by the drought.
Moreover, we suspect that poultry products and other red meat prices could increase moderately in the coming months because of higher feed costs, mainly soybeans and yellow maize prices, which are elevated as the country awaits a new crop season.
Still, these product price increases are unlikely to be notable as the consumer is also broadly under pressure, and the demand may still be relatively weak.
The headline CPI was 3,2% in January 2025, up from 3,0% in December 2024.
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by Wandile Sihlobo | Feb 12, 2025 | Food Security
I noticed some headlines about “falling world food prices” and thought I should comment. These articles do not necessarily refer to “retail food prices”; they are primarily about agricultural commodity prices, measured in the FAO’s “global food price index.”
So why do I care about all of this? I care because when people read about “falling global food prices” and do not see them at their local retailers, they start thinking someone is taking chances and blame retailers.
So, we must stress that these are global agricultural commodity prices. These commodities must first be processed and distributed, among other things, which adds costs.
Also, we don’t all shop at one big global retail, so things differ from country to country, region by region, and so on.
So this is what happened — last week, the FAO released its global Food Price Index, a measure of the monthly change in international prices of a basket of food commodities, for January 2025.
The index was at 125 points, down 2% from the previous month and 22% below its peak in March 2022. This peak occurred after Russia invaded Ukraine, and there was heightened uncertainty in the grain markets.
The mild monthly easing in prices was not widespread but only in a few commodities: sugar, vegetable oils, and meat. This is broadly due to slowing demand after the festive season and promising production prospects for vegetable oils.
For fellow South Africans, we must continuously monitor these global developments as we are interlinked to the world agricultural markets.
However, our key import commodities are wheat, rice, and some vegetable oils. Due to ample supplies, the prices of these commodities are moderating, which benefits importers like South Africa. This is a welcome development and bodes well with the generally moderate food price inflation in South Africa.
As a reminder, South Africa ended 2024 with lower consumer food price inflation, at 1,7% in December 2024.
Again, this broad post isn’t about inflation per se, but an emphasis that this “global food price” story mainly refers to agricultural commodity prices, which have a leg before they show at the retail level.
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by Wandile Sihlobo | Dec 11, 2024 | Food Security
Well, the price surge is not only in “orange juice”. Coffee prices also continue to increase and hit a record high this week. The underpinning problem is the same for both “orange juice” and “coffee” – and that is bad weather in South America (Brazil), the major orange juice and coffee producer and Vietnam (in the case of coffee).
These problems may last for some time. In 2025-26, Brazil’s coffee harvest may again be poor, leading to another lower global stock. I read that “Volcafe also projects a global 2025/26 arabica coffee deficit of 8.5 million bags, wider than the 5.5 million bag deficit for 2024/25 and the fifth consecutive year of deficits.”
The orange juice may have similar challenges. Brazil, the leading producer, faced drought and pest infestation, and recovery will take some time. The various analysts who look closely at this matter, more than me, are generally bullish that we may see prices at these levels for some time.
If the prices remain at these levels, as we expect, the coming year may again be reasonably good for South African citrus farmers. We need a few good years of better prices (for growers. Sorry, consumers – me included).
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by Wandile Sihlobo | Dec 11, 2024 | Food Security
I know people often forget what they paid for groceries a few months ago, let alone last year. Things seem to be getting expensive every day, especially with our tough economic conditions in South Africa.
Still, I think it is essential to highlight welcome data developments when we see some. We are ending this year with food price inflation – the rate at which prices increase – cooling off the levels we have not seen in years.
For example, after slowing to 2,8% in October 2024, South Africa’s consumer food price inflation decelerated notably to 1,6% in November, the lowest since October 2010.
The slowing down was broad-based, except for “oils and fats” and “fruit”, which lifted slightly. As with the previous month, the slowdown was partly driven by base effects, as food price inflation was elevated this time last year. For example, this time last year, vegetable prices were elevated because of supply constraints due to load-shedding-related disruptions in some fields.
Moreover, the avian influenza outbreak constrained egg supplies, exacerbating price risks. This was also the case with meat. Thus, this time around, the supply has improved, and the challenges we faced last year have eased. It is for this reason that both vegetables and meat were in deflation in November 2024.
Also worth noting is that grain prices faced upward pressure last year following India’s rice export ban. This year, India resumed rice exports, and prices slowed generally. We suspect the lower wheat prices have also added to the moderation of grain-related product prices.
While having eased remarkably in November 2024, grain-related products remain the upside risk to consumer inflation following a poor crop harvest due to the drought.
Still, we don’t expect the potential grain-related product price increase to be substantial as their forecasts point to the ample global wheat and rice harvest in 2024-25, which may cushion the region as substitutes.
While we highlight these risks, the outlook is somewhat comforting. The potential recovery of agriculture in 2025 because of the expected La Niña rains will help to keep food inflation contained.
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by Wandile Sihlobo | Dec 6, 2024 | Food Security
There will probably be a few headlines today about “rising world food prices”. However, those articles will primarily be about agricultural commodity prices, which are measured in the FAO’s “global food price index”, not necessarily retail food prices.
The increase in the recent month is not widespread but in a few commodities – dairy and vegetable oils. We see declines in meat, cereals, and sugar prices. But these were overshadowed by the dairy and vegetable oils. Thus, the overall headline of the index is up slightly in November compared to the previous month.
The FAO’s global Food Price Index, a measure of the monthly change in international prices of a basket of food commodities, increased by 0,5% in November 2024 from the previous month to 127 points. This is its highest value since April 2023. Dairy products and vegetable oils mainly underpinned this increase. The FAO’s Food Price Index is now 6% up from November 2023.
Still, the current reading of the Food Price Index is 20% below its peak of 160.2 points reached in March 2022.
As South Africans, it is always essential that we monitor these global developments. However, our key import commodities are wheat, rice, and some vegetable oils. The prices of wheat and rice are moderating due to ample supplies, which benefits importers like South Africa.
As I stated, vegetable oils are increasing. Still, these aren’t aspects to worry about for now as we consider domestic food price dynamics.
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by Wandile Sihlobo | Dec 3, 2024 | Food Security
We are ending this year with food price inflation – the rate at which prices are increasing – cooling off the levels we have not seen in years. For example, having stabilized at 4,1% in September 2024, South Africa’s consumer food price inflation slowed notably to 2,8% in October. This is the lowest level since May 2019. The deceleration was broad-based, except for “sugar, sweets and desserts”, which lifted somewhat.
The slowdown was largely driven by base effects, as food price inflation was elevated this time last year. For example, this time last year, grain prices faced upward pressure following India’s rice export ban, while an avian influenza outbreak constrained egg supplies, exacerbating price risks.
We are far from that worrying reality, as India has resumed rice exports, and prices have slowed generally. Moreover, South Africa’s poultry product supplies have normalized. This time last year, there were risks of higher poultry product prices as avian influenza spread in various regions of the country, leading to constraints on egg supplies.
Also worth noting is that the recovery in vegetable supplies across various fresh produce markets in the country also added to the softening of prices. We had a brief period of elevated vegetable prices following the black frost in Limpopo, which damaged some potato fields. Fortunately, the supplies are now recovering.
We suspect that the generally lower wheat prices have also added to this moderation of prices. There are ample global wheat supplies, which have kept prices generally under pressure.
Upside risks to prices
While having eased notably in October 2024, grain-related products remain the upside risk to consumer inflation following a poor crop harvest due to the drought. For example, South Africa’s 2023-24 maize harvest is estimated at 12,72 million tonnes, down 23% year-year.
This sharp decline in harvest signifies the harsh impact of the 2024 mid-summer drought, and the regions most affected were the white maize growing areas, a staple crop that is also scarce in the world market. Thus, white maize prices have rallied in recent months. The additional challenge is the continuous demand for white maize from the Southern African region through the first quarter of 2025.
That said, we don’t expect the potential grain-related product price increase to be substantial as the forecasts from the International Grains Council signal the possible ample global wheat and rice harvest in 2024-25, which could cushion the region as substitutes.
Favourable weather prospects bode well for food prices
Also worth noting is that South Africa is approaching a generally favourable agricultural season on the back of expected La Niña rains. Various regions have already started planting and have received a fair amount of rain that improved soil moisture.
The farmers are also optimistic and plan to plant a slightly bigger area for summer grains and oilseed. For example, the data released by the Crop Estimates Committee last month showed that South African farmers intend to plant 4,47 million hectares of summer grains and oilseeds in the 2024-25 season. This is up mildly by 1% from the previous season.
Overall, South Africa’s food price inflation has slowed notably, and the forecasts for 2025 are generally favourable. The only main risk in the near term is the higher grain prices, specifically white maize, due to tight supplies following a poor 2023-24 harvest. Still, this will be short-lived, and the new 2024-25 production season looks promising and will help slow the food price inflation in the later months of 2025.
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by Wandile Sihlobo | Nov 30, 2024 | Food Security
Maize is essential for Southern Africa’s food security. Its widespread production across this region is somewhat of a barometer of the status of the agricultural output. The past 2023-24 maize production season was challenging following a mid-summer drought that led to poor harvest across the region. Zambia lost half of its maize crop, Zimbabwe lost nearly two-thirds of its maize, and other countries such as Malawi and Lesotho experienced significant losses.
South Africa was a slight exception because the impact was less severe than the region. The country’s maize harvest fell by 23% to 12,7 million tonnes. The differences in seed cultivars and fertilizer usage partly explain the mild crop losses compared with the wider Southern Africa region. The harvest of 12,70 million tonnes is slightly above South Africa’s annual maize consumption of 11,80 million tonnes.
The 2023-24 season’s maize harvest and large carryover stock from the last season have made South Africa comfortable with maize supplies. Thus, the country remains a net exporter of maize even in such a challenging season.
Considering the near-term export activity, South Africa exported 42k tonnes of maize last week (November 8). Of this volume, 64% was exported to Zimbabwe, 15% to Namibia, 12% to Botswana, and the balance to the neighbouring African countries.
These exports put South Africa’s total maize exports in the 2024-25 marketing year at 1,20 million tonnes out of the expected 1,90 million tonnes (down from 3,44 million tonnes in the 2023-24 marketing year because of the mid-summer drought).
Moreover, while South Africa will likely remain the net exporter of maize in the 2024-25 marketing year, the coastal regions will import small volumes of yellow maize for animal feed because of price advantage. We have recently seen the imports of yellow maize from Argentina through Cape Town. South Africa’s 2024-25 maize imports currently stand at 288k tonnes.
With all this export activity underway, I must stress that South Africa’s white maize supplies are tight. Thus, the prices have surged in recent months, and more so over the past few days.
Still, it is worth emphasizing that the price surge is likely a near-term challenge. The outlook for the new 2024-25 production season is positive and may offer relief. We are leaning on the expected La Nina rains in this optimistic view. We have started receiving nice showers in some regions of the country, allowing farmers to begin planting.
The early planting of maize has primarily been in the eastern regions of South Africa. We hope more rain improves soil moisture in the coming weeks and months. In the coming weeks, the maize planting activity will also gain momentum in the western regions of South Africa.
South African farmers are also optimistic about the 2024-25 maize production season. The farmers intend to plant white maize on 1,58 million hectares (up 1% y/y) and yellow maize on 1,06 million hectares (down 2% y/y). The overall maize planting intentions are at 2,64 million hectares (up 0,2% y/y), which aligns with the five-year average area.
The favourable weather outlook, higher commodity prices, and lower fertilizer and agrochemical prices have incentivized farmers to increase their maize plantings. It will be some time before we have a good feel of the area farmers will ultimately plant. Still, these intentions to plant data provide sufficient reason to be optimistic about the path ahead.
While we are unsure of the actual intentions in the broader Southern Africa region, we suspect that the farmers are probably also eager to plant for the new season.
In some poor areas, the farmers may struggle with inputs such as seeds and fertilizers. In such places, the local government and multinationals such as the World Food Programme should consider supporting farmers to bounce back from the harsh season of 2023-24.
A recovery in Southern Africa’s maize production will be valuable for regional food security improvement.
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