An overview of food price trends

1
An overview of food price trends

• Food Pricing Monitoring Committee

2
The Food Price Monitoring Committee

• Monitoring Task
• Selected 26 basic food commodities
• Continous monitoring at 6 monitoring points in
  all 9 provinces (urban and rural) since October
  2002.
• Will also monitor farm requisites fertiliser,
  chemicals and animal feed
• Inputs from consumer forums, public, and annual
  minimum standard of living survey.
• Retail scanner data
• Other official data sources

3
The Food Price Monitoring Committee

• Investigations
• marketing margins and farm-to-retail price
  spreads
• influence of changes in the exchange rate, the
  price of fuel and other factors on the costs of
  processing and marketing in the food chain - also
  input costs in production
• farm-to-retail price spread in the case of spaza
  shops and other rural stores
• Analysis of price transmission in the food chain
  and role of market power

4
Detail analysis of supply chains

• Ø      Maize maize meal
• Ø      Wheat bread
• Ø      Sunflower cooking oil
• Ø      Sugar
• Ø      Red meat
• Ø      Milk
• Ø      Dry beans
• Ø      Potatoes

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Aspects we are analysing

• Lags/Volatility
• Farm-retail price spread
• Price transmission along the value chain
• Trader behaviour on SAFEX
• Role of structure/concentration in food
  manufacturing and retailing
• Retail and distribution practices
• Role of Spoornet and administrative prices

6
Changes in grain market spot prices April
August 2003and year on year change (Aug 2002
Aug 2003)
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SAFEX white maize price and maize meal price
Jan 2000-July 2003
46.3
Average Maize meal price Jan00-Jan02. R23.5/10kg
25.8
166
Average SAFEX price Jan 00-Sep01 R743/ton
Price returning to previous average
8
Bi-monthly average retail prices for different
brands of super maize meal March/April 2002
May/June 2003.
9
Average monthly retail prices for sunflower oil
and Rama margarine Jan 2000 July 2003
10
Average monthly retail prices for brown and white
bread Jan 2000 July 2003.
Average Brown Bread Price Jan00 Nov01 R2.67
33
57.2
Average SAFEX price Jan00-Oct01 R1321.73/ton
SAFEX price returning to normal levels
11
Average monthly retail prices for 2.5kg white
sugar Jan 2000 July 2003 
12
Average monthly retail prices for 500g sugar
beans Jan 2000 July 2003.
13
Average monthly retail prices for 1kg Tastic
rice Jan 2000 July 2003.
16.9
Average price of rice Jan00-Dec01. R6.67/kg
Price returning to previous average
14
Average monthly retail prices for 10kg of
potatoes Jan 2000 July 2003
Prices beginning to return to normal
15
Average monthly retail prices for Elite milk
powder and cheapest full cream milk (1l sachet)
Jan 2000 July 2003
16
Average monthly retail prices of eggs January
2000 July 2003.
17
Average monthly retail prices of stewing beef
(R/kg) January 2000 July 2003.
Average price Jan00-Sep02 R17.90/kg
43.2
18.8
Prices returning to previous levels
18
Average monthly retail prices of fresh and frozen
whole chicken (R/kg) January 2000 July 2003
Prices moving closer together and leveling off
19
Miller to retail margin Super maize meal
20
Cost components of maize meal
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Why are prices not coming down?
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Composition of bread price
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Summary

• It is difficult to find a general trend over all
  the commodities
• It is clear however that in general food price
  inflation (the rate at which food prices
  increase) is decreasing
• Most food prices appear to be returning to
  previous seen averages
• Areas of concern include dairy, sugar, and
  cooking oil

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Current issues and investigations

• Many manufacturers used the exchange rate
  argument to justify sharp price increases in
  2001/2002. But despite exchange rate appreciation
  prices still increased in 2003.
• Concerns relate to
• Polymers for packaging material
• Agricultural chemical and fertiliser companies
• Paper and card board manufacturers
• Agricultural machinery as well as food processing
  suppliers
• Glucose chicory, etc..
• All these industries and companies are being
  investigated