by Wandile Sihlobo | Apr 3, 2024 | Food Security
Since the reports of El Niño-induced drought and crop losses emerged, there has been rising concerns about a potential surge in South Africa’s consumer food price inflation. This will be after months of moderation (at 6,0% in February 2024).
There have also been calls for the government to intervene and cushion households from potential food price surges. It remains unclear, however, if such assistance should be through policy instruments or household support in a form of food packages for the indigent.
There may even be a temptation to ask whether the government should limit agricultural commodity exports or policy options for price interventions. Such suggestions, while sympathetic to households, would be policy mistakes.
The appropriate policy action for the South African government should be a dose of do‐nothingism. Any intervention would potentially have negative unintended consequences in the next production season and leave the country with long-term food security issues.
We should also appreciate that the current drought will likely not result in a broad increase in food products. The risks currently lie in white maize. There are notable crop failures in the western regions of South Africa, which are primarily white maize-producing regions. It is unclear what the white maize harvest will be as the weather conditions remain challenging. At the end of March, the estimates from the Crop Estimates Committee placed South Africa’s 2023/24 white maize harvest at 6,3 million tonnes, down 25% year-on-year. This will still be sufficient to meet the domestic needs if it materializes.
While some may argue that ample maize supplies in the global market could cushion South Africa, the challenge with white maize is that it is not as widely traded. The bulk of global maize supplies is yellow maize. Indeed, there is a lot of maize in the world, with the International Grains Council (IGC) forecasting the 2023/24 global maize harvest at 1,2 billion tonnes, up 6% year-on-year. However, this will primarily be yellow maize, and the demand for white maize will likely increase.
In addition, the demand for white maize will be a South African challenge and a Southern African regional challenge. Therefore, there could be a disconnect between the domestic white maize prices and the general global maize prices, which are likely to continue softening due to improved supplies. For example, a large spread exists between South Africa’s futures prices of yellow and white maize following reports of bad crop conditions. South Africa’s white maize spot price is trading around R5 200 per tonne, while yellow maize is hovering at R4 200 per tonne. This signifies the challenge with white maize supplies.
The products that play favourably for South Africa are wheat and rice, which South Africa remains a significant importer of. There are ample supplies of these products in the global market. The IGC forecasts the 2023/24 global wheat harvest at 789 million tonnes, well above the long-term average. There is a lot of rice globally, with the 2023/24 global harvest forecast at 511 million tonnes, well above the long-term average.
The stocks of these commodities are at comfortable levels; thus, the international grain prices have continued to moderate. For example, the Food and Agriculture Organization of the United Nations (FAO)’s Food Price Index, which measures the monthly change in international prices of agricultural commodities, averaged 117.3 points in February 2024, down 1% from its revised January level and 11% from last year’s corresponding period. The broad decline in grains and oilseed prices underpinned this moderation, again underscoring the importance of improved supplies in the 2023/24 season.
The exchange rate will also matter much, as South Africa imports roughly half of its annual wheat and rice consumption.
Another major factor driving South Africa’s food inflation this past year was the increase in prices of vegetable and poultry products. The poor harvest caused the vegetable price increases after load-shedding at the start of the year, undermining crop quality. Things have changed this year. While it has been quite dry across the country since the beginning of February 2024, vegetable production has not taken a strain because all commercial production in South Africa is under irrigation, and load-shedding has not been intense.
Moreover, meat prices rose at the end of 2023 due to supply constraints of poultry products on the back of avian influenza. But there is now anecdotal evidence that the restocking process is underway and there is improvement in the poultry products supplies. Therefore, the risks of further price increases have subsided somewhat.
Overall, there is increased uncertainty about South Africa’s consumer food inflation path for 2024. However, the underlying factors are not all one-sided, and one has to reflect on the price movements and weighting of various products when considering their food price forecast for the year.
From a policy perspective, the best approach should be to do nothing. If fiscal space permits, support to the farmers, especially in the hardest hit areas would be appropriate.
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
by Wandile Sihlobo | Mar 29, 2024 | Food Security
South Africa’s consumer food inflation slowed to 6,0% in February 2024, from 7,0% in the previous month. This was underpinned by the deceleration across most food products, except for “sugar, sweets and desserts”, which remained roughly unchanged from the last months.
We expect this broad moderation path to continue for most of the products within the food basket over the near-to-medium term. However, there are significant upside risks for the “bread and cereal products” in the food basket because of the potentially poor white maize harvest on the back of the current heatwave and dryness.
There are notable crop failures in the western regions of South Africa, which are primarily white maize-producing regions. It is unclear what the white maize harvest will be as the weather conditions remain challenging. At the end of February, the estimates from the Crop Estimates Committee placed South Africa’s 2023/24 white maize harvest at 7,0 million tonnes, down 17% year-on-year. This estimate will likely be lowered over the coming months. We have gone through March with virtually no rains in the white maize regions.
While some may argue that ample maize supplies in the global market could cushion South Africa, the challenge with white maize is that it is not as widely traded. The bulk of global maize supplies is yellow maize. Indeed, there is a lot of maize in the world, with the International Grains Council (IGC) forecasting the 2023/24 global maize harvest at 1,2 billion tonnes, up 6% year-on-year. However, this will primarily be yellow maize, and the demand for white maize will likely increase.
In addition, the demand for white maize will be a South African challenge and a Southern African regional challenge. Therefore, there could be a disconnect between the domestic white maize prices and the general global maize prices, which are likely to continue softening due to improved supplies. For example, a large spread exists between South Africa’s futures prices of yellow and white maize following reports of bad crop conditions. At the end of the week of March 22, South Africa’s white maize spot price closed at R5 159 per tonne, while yellow maize was R4 258 per tonne. This signifies the challenge with white maize supplies.
The products that play favourably for South Africa are wheat and rice, which South Africa remains a significant importer of. There are large supplies of these products in the global market. The IGC forecasts the 2023/24 global wheat harvest at 789 million tonnes, well above the long-term average. There is a lot of rice globally, with the 2023/24 global harvest forecast at 511 million tonnes, well above the long-term average.
The stocks of these commodities are at comfortable levels; thus, the international grain prices have continued to moderate. For example, the Food and Agriculture Organization of the United Nations (FAO)’s Food Price Index, which measures the monthly change in international prices of agricultural commodities, averaged 117.3 points in February 2024, down 1% from its revised January level and 11% from last year’s corresponding period. The broad decline in grains and oilseed prices underpinned this moderation, again underscoring the importance of improved supplies in the 2023/24 season.
The exchange rate will also matter much, as South Africa imports roughly half of its annual wheat and rice consumption.
Another major factor driving South Africa’s food inflation this past year was the increase in prices of vegetable and poultry products. The poor harvest caused the vegetable price increases after load-shedding at the start of the year, undermining crop quality. Things have changed this year. While it has been quite dry across the country since the beginning of February 2024, vegetable production has not taken a strain because all commercial production in South Africa is under irrigation, and load-shedding has not been intense.
Moreover, meat prices rose at the end of 2023 due to supply constraints of poultry products on the back of avian influenza. But there is now anecdotal evidence that the restocking process is underway and there is improvement in the poultry products supplies. Therefore, the risks of further price increases have subsided somewhat.
Overall, there is increased uncertainty about South Africa’s consumer food inflation path for 2024. However, the underlying factors are not all one-sided, and one has to reflect on the price movements and weighting of various products when considering their food price forecast for the year.
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
by Wandile Sihlobo | Mar 17, 2024 | Food Security
The damaging effects of persistent dryness and heatwave in South Africa’s summer crop-growing regions have raised concerns about a possible rise in consumer food inflation in the coming months. With South Africa’s food price inflation averaging 11% in 2023 (from 9,5% in 2022, 6,5% in 2021, and 4,8% in 2020)[1], which was relatively high compared with recent periods, talk of further upside pressure in inflation comes as an unwelcome development.
However, the underlying drivers of the increase in food inflation in the past two years were mainly the international agricultural commodity prices and, to a much lesser extent, idiosyncratic domestic factors. Still, towards the latter part of 2023, local factors such as animal diseases, weaker domestic currency, and load-shedding-related costs were some of the key drivers of food inflation.
The drought in South America, China’s strong demand for grains and oilseed, rising shipping costs, higher energy prices, and the Russia-Ukraine war were some of the factors that were behind the higher global agricultural producer prices, which, in turn, boosted the domestic prices, and thus leading to relatively elevated consumer food price inflation in 2022 and 2023.
Also worth noting is that South African food manufacturers had to absorb some of the increases and did not pass on the full increases to consumers who were already under pressure because of weak economic conditions and higher unemployment in the country.
For example, in 2022, while consumer food inflation averaged 9,5%, the producer price inflation for agricultural products was 15,0%, and the food manufacturers inflation was 12,3%. This means manufacturers did not pass on the total costs to consumers, contrary to what some regulators have argued.
Drivers of consumer food inflation in 2024
The factors that underpinned higher consumer food inflation in 2022 and 2023 have somewhat subsided. There are ample grain supplies in the global market, with the 2023/24 global maize harvest forecast at 1,2 billion tonnes, up 6% y/y, according to data from the International Grains Council (IGC).
The IGC forecasts that the 2023/24 global wheat harvest will reach 788 million tonnes, which is well above the long-term average levels (albeit down 1% y/y). There is also a lot of rice globally, with the 2023/24 global harvest forecast at 511 million tonnes, well above the long-term average (but down 0,6 y/y). The 2023/24 global soybean harvest is estimated at 391 million tonnes, up 5% y/y.[2]
These global production forecasts also imply a general improvement in the stocks of these major commodities and a moderation in prices. For example, the Food and Agriculture Organization of the United Nations (FAO) recently released its Food Price Index for February 2024. This index measures the monthly change in international prices of agricultural commodities, not final food products. The FAO Food Price Index averaged 117.3 points in February 2024, down 1% from its revised January level and 11% from last year’s corresponding period. The broad decline in grains and oilseed prices underpinned this moderation, again underscoring the importance of improved supplies in the 2023/24 season.
Aside from the international factors, other major factors driving South Africa’s food inflation this past year was the increase in vegetable and poultry products prices. The poor harvest caused the vegetable price increases after load-shedding at the start of the year, undermining crop quality.
Things have changed this year. While it has been quite dry across the country since the beginning of February 2024, vegetable production has not taken a strain because all commercial production in South Africa is under irrigation and load-shedding, while risk has not been hard since the start of 2023. Some farmers are better prepared this year for possible regular power cuts.
Moreover, meat prices rose at the end of 2023 due to supply constraints of poultry products on the back of avian influenza. Data from the Bureau for Food and Agricultural Policy (BFAP) shows that around 9,5 million birds had to be culled in 2023, leading to a decline in the commercial layers and broilers and an increase in eggs and meat prices.
But there is now anecdotal evidence that the restocking process is underway and there is improvement in the poultry products supplies. Therefore, the risks of further price increases have subsided somewhat.
Risks to consumer food inflation
Considering the above developments, the major risks to consumer food inflation in South Africa in 2024 will primarily be white maize products, while other products within the food basket may moderate or show sideways movement in prices.[3]
Indeed, for wheat and rice, the exchange rate also matters as South Africa imports roughly half of its annual wheat consumption and all of its rice consumption. Still, the challenge presented by persistent dryness domestically, at least over the near-to-medium term, is white maize supplies and the potential price reaction to reduced supplies. It is unclear what the white maize harvest will be this year.
The figures released by the Crop Estimates Committee at the end of February are not as dependable this time. The weather has remained scorching since releasing these figures, so the crop conditions have worsened. At the time, the Crop Estimates Committee stated that white and yellow maize harvest could be 7,0 million tonnes (down 17% y/y) and 7,3 million tonnes (down 8% y/y), thus placing the overall maize production estimate at 14,3 million tonnes (down 13% y/y).[4]
The challenge for maize is the possible poor yield in some regions as the area plantings are higher than the 2022/23 season. While this expected harvest is significantly lower than the previous season, if it materializes, it would still meet South Africa’s annual maize consumption of roughly 12,00 million tonnes, and the country would remain a net exporter of maize, although a much lower volume than the previous years.
However, this may not materialize, given the ongoing heatwave and lack of rainfall. Therefore, we see upside risks in maize prices and grain products in the consumer food inflation basket.
Concluding remarks
In essence, there is increased uncertainty about South Africa’s consumer food inflation path for 2024. However, the underlying factors are not all one-sided, and one has to reflect on the price movements and weighting of various products when considering their food price forecast for the year.
The significant risks and favourable drivers are outlined in this note for consideration when thinking about the path ahead and where the current dryness would hit the most within the South African consumer food basket.
An extract of this piece first appeared on Business Day.
[1] This is according to data from Stats SA that can be accessed in their website here: https://www.statssa.gov.za/#
[2] One has to pay to access this data, but for the sake of completeness, it is all available here: https://www.igc.int/en/default.aspx
[3] This is a challenge not only for South Africa, but the entire Southern Africa region. Lord knows where folks will get maize from, perhaps Mexico can help if we chat with them on time. Read more here: https://theconversation.com/dry-weather-hits-southern-africas-farmers-putting-key-maize-supplies-at-risk-how-to-blunt-the-impact-224974
[4] The data is available under the “2024” tab here: https://www.sagis.org.za/cec_reports.html
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
by Wandile Sihlobo | Feb 21, 2024 | Food Security
South Africa’s consumer food inflation slowed to 7,0% in January 2024, from 8,5% in the previous month. This was underpinned by the deceleration across most food products, except for the sugar, sweets and desserts.
We expect this broad moderation path to continue in 2024 for most of the products within the food basket, assuming that domestic agricultural conditions improve and South Africa gets a decent summer grain and oilseed harvest.
While the summer grain and oilseed 2023/24 production season started favourably, with farmers planting roughly 4,4 million hectares, up by 0,4%, the production conditions have increasingly become worrying.
Since the start of February, the rain has been scant across the summer crop-growing regions of South Africa, thus raising concerns about the potential yield loss of the crops. In various areas, significant summer grains such as maize, sunflower seed, and soybeans are in the pollination stages this month. The crop should ideally have higher moisture levels during this pollination stage to boost yields. However, the crop enters this growth stage with limited moisture across the major growing regions.
These current weather conditions have raised fears about the possible yield loss. The consensus in the sector is that the last two weeks of February and the first week of March are critical for the crop. This means South Africa must receive widespread rains this week or next week for the crop to recover from its current worrying state.
Regarding meat, a significant upside risk to food inflation in the past few months, the supplies seem to have recovered after the widespread avian influenza in 2023 that sparked concerns. The recovery in poultry production follows a range of interventions that the industry and the government embarked on at the end of last year.
These include importing fertilized eggs to rebuild the parental bird stock lost from avian influenza, importing table eggs, and improving biosecurity control measures. Another additional policy measure the government has is easing the poultry product imports in the event of supply constraints, which we do not anticipate over the foreseeable future.
The fruit and vegetable prices, which also increased notably at the end of 2023, will likely continue to slow in the coming months as the volume of products increases in various Fresh Produce Markets. Unlike field crops, the horticulture industry is under irrigation and thus benefits from improved dam levels in the current dry spell and high temperatures in various regions.
Also worth noting is that international agricultural commodity prices continue to decelerate from the higher levels we saw a year ago because of expected decent global grains and oilseed harvest. This deceleration further supports our optimism about the potential continuous slowing of domestic food inflation.
For example, the FAO Food Price Index, which measures the monthly price changes of agricultural commodities, fell by 1% in January 2024 from its December level and is 10% lower than a year ago.
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
by Wandile Sihlobo | Jan 30, 2024 | Food Security
Food prices were a significant discussion point worldwide in 2023. South Africa had a fair share of elevated food prices in the first half of 2023, and the pace of increases slowed somewhat towards the end of the year.
The December 2023 consumer food inflation data showed further deceleration to 8,5% in December 2023, from 9,0% in the previous month (and against market expectations of a slight uptick to 9,3%). The product prices underpinning this deceleration were primarily bread and cereals, oils and fats, and vegetables.
At the Agricultural Business Chamber of South Africa (Agbiz), we expect this moderation path to continue in 2024 for most of the products within the food basket.
The significant risk to meat supplies that animal diseases such as avian influenza presented in 2023 could ease this year. There will likely be a recovery in poultry production following a range of interventions that the industry and the government embarked on at the end of last year.
These include the importation of fertilized eggs to rebuild the parental bird stock lost from avian influenza, importing table eggs (powder and liquid eggs that would help in the baking process and free the whole eggs for human consumption), and the ongoing processes of the possible vaccinations to curb the spread of the disease (although there remain some delays with approvals of some vaccines by the authorities). Evidently, over the festive season, we did not notice any recorded shortages of poultry products.
Another additional policy measure the government has in addressing potential shocks on poultry meat supplies is enabling poultry product imports in the event of supply constraints, which we do not anticipate over the foreseeable future.
Moreover, the fruit and vegetable prices, which remained elevated towards the end of 2023, will likely slow notably in the coming months because of the estimated increase in the volume of products that are in season in the various Fresh Produce Markets across South Africa.
The supply constraints in some vegetables last year, mainly potatoes, were caused by the bad harvest. We expect improvement in 2024, regardless of the reports of pepper ringspot virus in a few potato farms in the northern regions of South Africa.
Notably, while we are in an El Niño period, the weather conditions have been quite favourable across South Africa. The agricultural conditions are excellent, and we believe that farmers planted the intended area of 4,5 million hectares for the 2023/24 season, up 2% y/y.
We expected favourable yields across the country, even in the North West, where rainfall has not been as high as in other regions of South Africa. This week, 30 January, South Africa’s Crop Estimates Committee will release the preliminary planting data to show whether farmers planted the area they intended to plant.
At the Agbiz, we are optimistic that farmers planted this area. Moreover, crop yields will likely be broadly excellent with favourable rainfall across the country since the season started. What is vital is for farmers to receive ideal rain in February, a pollination period that is key to yield development.
This potentially improved domestic agricultural supplies and a generally sizeable global harvest bodes well for continuously moderating consumer food price inflation in 2024.
At the international level, the figures from the Food and Agriculture Organization of the United Nations already show continuous moderation in agricultural commodity prices. For example, the FAO Food Price Index, a monthly agricultural commodity price index, eased at 118.5 points in December 2023, down 2% from its November level and 10% year-on-year.
This decline was underpinned by the easing price indices for sugar, vegetable oils and meat. This declining price trend could continue in the coming months if the positive global crop yield prospects hold.
Ultimately, food prices in 2024 may not be as major an issue as they were the previous year, assuming that risks such as energy prices and shipping routes are not majorly disrupted for a prolonged period by the ongoing geopolitical tensions. Domestically, the agricultural production conditions are promising and signal continuous moderation in prices.
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
by Wandile Sihlobo | Dec 18, 2023 | Food Security
I imagine most South Africans are already enjoying their well-deserved summer holiday. But I thought it would be helpful to take some time and reflect on the recent inflation data release, specifically the food category.
South Africa’s consumer food inflation quickened to 9.0% in November from 8.8% in the previous month. The product prices underpinning this increase were mainly milk, eggs, cheese, fruit, vegetables and sugar, sweets and desserts.
If we dive into details, avian influenza was the main cause of the egg supply constraints, which remain a problem although not as acute as we saw in September and October.
But with interventions underway in the poultry sector, such as importing fertilised eggs to rebuild the parental bird stock lost from avian influenza, importing table eggs (powder and liquid eggs that would help in the baking process and free the whole eggs for human consumption), and the ongoing processes about the possible vaccinations to curb the spread of the disease, it is hopeful that the prices will probably normalise in the coming months.
Furthermore, the eggs have a lower weight within the food inflation basket, at 0.4%, which means their effect may not be as pronounced in an overall inflation figure.
Regarding fruit, the slight price uptick was mainly because of supply moderation after the citrus season. There will soon be a recovery in the supply as deciduous fruit harvest gains momentum. Moreover, the constraints in the ports for exports could also mean that we will probably see a slight increase in domestic market volumes, thus slightly easing prices.
Regarding vegetables, which remain elevated, potatoes were the main culprit in the basket. The harvest was limited by quality problems related to irrigation disruptions in some fields because of load-shedding in much of the year’s first half.
A recovery in vegetables is expected in the coming months, which will help ease the current upside price pressures. Load-shedding has reduced somewhat, and farmers have invested in alternative energy sources, which is helpful for production conditions.
Overall, we remain optimistic that South Africa’s consumer food price inflation will moderate in 2024, although significant risks are worth monitoring, such as the recent increases in grain prices and uncertainty about the weather outlook.
Still, the weather forecasters continue to paint a comforting view that El Niño in the 2023-24 summer crop season will have a mild effect on the sector and thus keep production at decent levels and, by extension, bodes well for food prices. There are good soil moisture levels across South Africa following several rainy seasons. Furthermore, the weather forecast remains reasonably favourable for the year, with El Niño expected to intensify from March 2024.
The prices of most agricultural products are also influenced by global developments because South Africa is an open economy interlinked with the world markets. Therefore, monitoring global agricultural developments, geopolitics, and energy markets remains essential.
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
by Wandile Sihlobo | Nov 28, 2023 | Food Security
Food inflation has been topical over the past few months, and South Africa saw double-digit levels from mid-2022 to mid-2023.
This was not unique to South Africa but a global phenomenon underpinned by various factors, including drought in South America; China’s strong demand for grains and oilseed; higher energy prices and the Russia-Ukraine war.
Positively, from March 2023, South Africa’s consumer food price inflation began to slow, from 14,4% at that time to 8,0% in September 2023. The product prices underpinning the deceleration throughout this period were primarily bread and cereals; meat; fish, and oils, and fats.
But October 2023 disrupted the six-month consecutive decline, with consumer food inflation having quickened to 8,8% from 8% the previous month. The product prices underpinning this increase were mainly milk, eggs, cheese, fruit and vegetables.
Still, I believe the recent rise in the price of these products will probably be a temporary blip. They are a reaction to brief supply constraints in the past few months.
The avian flu was the main issue behind the egg supply constraints, which remain a challenge although not as acute as we saw in September and October.
Regarding vegetables, potatoes were mainly the driver of the prices in the basket as the harvest was limited following quality challenges caused by irrigation disruptions in some fields due to load-shedding in much of the year’s first half.
But with interventions underway in the poultry sector, such as importing fertilised eggs to rebuild the parental bird stock lost from avian flu, importing table eggs (powder and liquid eggs that would help in baking processes and free the whole eggs for other consumption), and the ongoing discussions about vaccinations to curb the spread of the disease, I am hopeful that the prices will normalise in the coming months.
Furthermore, eggs have a lower weight in the food inflation basket, at 0.4%, which means their impact might not be as pronounced in an overall inflation figure.
I expect a similar recovery in vegetable and fruit supplies in the coming months, which will help ease the current upside price pressures. Load-shedding has reduced somewhat, and farmers have invested in alternative energy sources, which is helpful for production conditions.
Overall, I remain optimistic that South Africa’s consumer food price inflation will return to a moderating path going into 2024. Some products that will probably drive such a price trend include grain-related products, as well as fats and oils.
Farm-level grain and oilseed prices remain lower than a year ago because of improved global and domestic supplies, notwithstanding the trade risks. This is one of the catalysts behind the slowing price of grain-related products and fats and oils and the expected favourable trend for the coming months.
Notably, these are products with a higher weighting in the food basket. Favourably, meat price inflation has also continued to slow. However, given the anticipated festive season demand and potential small price increase, the meat price trend could slightly change over the festive season months.
Also crucial for the food inflation outlook going into 2024 is highlighting that El Nino’s forecast in the 2023/24 summer crop season is another aspect to keep an eye on, although we remain optimistic that it will have a mild impact on the sector and thus keep production at decent levels and, by extension, sustain moderating food prices.
There are good soil moisture levels across South Africa following several rainy seasons.
Furthermore, the weather forecast remains reasonably favourable for the year, with El Nino expected to intensify from March 2024.
Farmers are busy planting across the country, and they hope the area planted with summer grains and oilseeds will increase from a year ago.
Still, the prices of these products are influenced by global developments as we are an open economy interlinked with the world markets. So, monitoring global agricultural developments, geopolitics, and energy markets remains essential.
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
by Wandile Sihlobo | Oct 21, 2023 | Food Security
On October 16 we celebrated World Food Day, commemorating the founding of the UN Food & Agriculture Organisation in 1945. This day is also an opportunity for countries to reflect on their food security conditions and efforts to boost agricultural production.
This column will therefore revisit an issue discussed a year ago in these pages: food security conditions in SA. One of the measures researchers use to evaluate the food security condition of each country relative to the world is The Economist’s global food security index.
In 2022 SA ranked 59th out of 113 countries in the index and was the most food secure country in Sub-Saharan Africa. This was an improvement from a ranking of 70th in 2021. We ranked the second most food-secure country in Africa after Morocco.
The index comprises four subindices: food affordability, food availability, food quality and safety, and sustainability and adaptation. The affordability and availability subindices carry a combined weighting of two-thirds of the total index. The affordability subindex includes the change in average food costs, agricultural trade, food safety net programmes, proportion of population under the global poverty line, and funding for food safety net programmes.
The availability subindex includes the sufficiency of supply, access to inputs, agricultural research & development, farm infrastructure, supply chain infrastructure, food loss and political and social barriers to food.
In 2022 SA experienced a mild deterioration in the food affordability subindex. Meanwhile, the rest of the subindices improved significantly. This decline in the affordability subindex is unsurprising as the country has witnessed a broad acceleration in consumer food price inflation since the start of the year.
Food inflation
SA’s consumer food price inflation averaged 9.5% year on year in 2022, up from 6.5% in 2021. Food inflation was also elevated in the first half of 2023, with only the second half showing moderation. In the first eight months of this year food inflation averaged 12.2%.
The higher food inflation in the past months was a global challenge. In an environment such as SA, with high unemployment, the effects of food inflation shocks tend to be felt more severely by consumers.
Over the past few years several factors have added to upward pressure on global food prices. The drought in South America, a major grains and oilseed-producing region, from the 2019/20 season reduced the harvest notably, worsening the grain price increases from 2020 to end-2022.
China’s imports of grains and oilseed as the country was rebuilding its pork industry after a devastating African Swine Fever outbreak added to the surge in demand while global stocks were tight.
As Covid-19 spread in early 2020, several major grain producers worsened global price increases by temporarily banning exports. Shipping costs also soared. These challenges were further worsened by the Russia-Ukraine war.
As a small, open economy SA was not insulated from these global agricultural and food price shocks.
A major issue to remember when observing international agricultural indices such as the global food security index is that subjectivity can never be fully eliminated from the authors’ judgment. Resource constraints can hinder objective data collection on the ground in each country, and they sometimes rely on blueprint models that may not be site-specific.
Sources of bias can stem from inconsistency in data quality, frequency and reliability across all countries. The weightings and rankings are also tricky because they must be tailored to different socioeconomic contexts.
SA is in a relatively good place regarding food security compared to most other countries. Still, we should continue to strive to improve food security through agricultural production and job creation expansion.
Ideas for expanding agriculture and agro-processing were well established as far back as in the National Development Plan of 2012.
Written for and first appeared in Business Day.
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za