Grain prices may come down, but don’t expect cheaper meat any time soon
- Even with inflation generally low, food prices have been increasing at a rapid pace.
- Rice is a big reason food budgets aren't going as far as they used to, data from the National Agricultural Marketing Council shows.
- Meat prices may remain stable over the next tree months, but at least grain products may see price declines.
- For more stories, go to www.BusinessInsider.co.za.
South Africans are paying more than half again what they did a year ago for rice, according to the latest monitoring report by the National Agricultural Marketing Council (NAMC), which shows food prices escalating at an alarming rate – even as inflation in general remains low.
Stats SA’s latest data shows the overall inflation rate increased to 3.2% in January, from 3.1% in December, when the annual increase in prices slowed to levels last seen 16 years ago.
That inflation number would have been lower still had it not been for food. In January, food and non-alcoholic beverages price increased by 5.4% year-on-year, making them the biggest contributor to the increase in the consumer price index.
According to NAMC data, the price of a 2kg bag of rice rose by 52.7% between January 2020 and January 2021.
That was largely driven by demand for rice mainly from Asian and African buyers, coupled with tight supplies in Thailand and Vietnam, the NAMC said.
Relatively high price increases were also seen across dried beans, eggs, bread, and maize meal.
White bread was 15.7% more expensive, and brown bread was up 13.6%. Beef was up as much as 7.1%, and chicken portions by 2.8%.
Dawie Maree, head of information and marketing at FNB Agribusiness said prices for maize and soybean were affected by the exchange rate, strong international prices, and high demand from neighbours such as Zimbabwe.
He added that China was importing a lot of grain for pig feed in attempts to rebuild herds following an African Swine Flu outbreak last year.
On the red meat side, Maree said rising meat prices were on the back of favourable production conditions, “which means farmers will be holding on to their stock to rebuild their herds, so less red meat is available in the market for slaughtering and the demand is still strong and that’s why we’ve seen a rise in the price,” he said.
“Chicken we depend a lot on imports and with a weakened exchange rate that drove up the importing prices,” he said.
Maree said in the next three months, meat prices are likely to remain at current levels, as farmers continue to rebuild their herds and consumers remain under pressure. With good harvest for grains, though, there will be downward pressure on those prices
But a big risk factor for food prices is increasing fuel prices, Maree said.
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