Food prices to rise

2012-08-03 13:19

Droughts, mergers and input costs are expected to push up food prices in the coming months, economist Mike Schussler said.

“The major impact on the food price now is not just the seed prices but the fact that when the food prices do come down, the maize prices are not going to go down because of the huge, other input costs which are going up,” he said in Johannesburg today.

Schussler was briefing media on his latest report on the current state of food prices and threats to the food sector.

He said the current drought in the United States was already pushing maize prices up, as the US was the largest maize-growing region and the world’s major exporter.

At present, the SA maize price was 44.4% higher in the first seven months of 2012 compared with the first seven months of 2011.

He said that input costs such as electricity, fuel and seeds would still cause high food prices in South Africa, even when the US drought was over.

Schussler said seed, the second-highest input cost for farmers, could go up because of the proposed merger between American seed company Pioneer Hi-Bred and South African company Pannar Seed.

The merger has been approved by the Competition Commission but has been taken to the Supreme Court of Appeal, which would make a decision as to whether it would listen to the matter.

The merger was expected to increase the price of seed by up to 12%. This could be on top of the average price increase of seed in South Africa which is 18%, Schussler said.

“The poorest of the South African consumers will be the hardest hit, because they spend 40% of their income on food.”

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