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Grain SA denies price-fixing
14/04/2008 21:06 - (SA)
Johannesburg - Farmers on Monday expressed concern about rising food costs and the effect it had on the poor.
Grain SA said it was also concerned about accusations that producers were "deliberately co-responsible" for high food prices.
Chairperson Neels Ferreira said: "In the primary sector, in agriculture price-fixing cannot take place. Prices are determined on the opened market by the Johannesburg Stock Exchange (JSE) and how that price is determined takes different factors into account."
The difference between what a producer received for his product and what the consumer eventually paid was controlled by intermediates in the value-chain.
Ferreira said Grain SA intended to hold discussions with interest groups such as the Congress of SA Trade Unions (Cosatau) on the reasons for the present high food costs and the consequences for the poor.
Cosatu began nationwide protests on Sunday to draw attention to rising food prices.
'Reduce price of bread'
The protests would also focus on companies that had been found guilty of price fixing in Competition Commission rulings and demand that implicated company directors be prosecuted, not the companies themselves - as these fines were ultimately paid by the consumer.
Cosatu was demanding a reduction in the price of bread as a refund to customers for being overcharged and would ask for a zero value-added tax rating on basic foods, as well as subsidies for the poor.
Ferreira agreed that one way of easing the burden of rising food costs for the poor was for the government to provide food subsidies.
A long-term solution would be to speed up the country's economic growth and deal effectively with unemployment through job creation.
He attributed the crisis to soaring commodity prices internationally due to economic growth in countries such as India and China and because of changing eating habits which had led to shortages in the market.
"In South Africa, more people are eating meat and therefore more grain is needed to feed livestock to meet the rise in demand," he said.
He predicted that the crisis would not be short lived due to rising fertiliser and fuel costs.
"According to calculations by Grain SA, the year-on-year increase in the variable input cost component for winter grains amounted to between 60% and 70%, and it was expected that production costs for summer grains could increase by as much as 40%."
These increases exerted pressure on the profitability of producers.
"The present price levels for grains are indeed higher than a year ago, but there is great concern about the ability of producers to produce at a profit, even at these higher levels.
"The profit margin at producer level is seriously eroded by input inflation, which, at present, is exceeding consumer inflation by far.
"Because producers cannot control prices and are also susceptible to the greatest risk of all, namely weather conditions, they cannot effectively take protective action.
The only counter available to producers is to add value or services to the basic agricultural product," said Grain SA.
Safeguard natural resources
Meanwhile, the United Nations Educational, Scientific and Cultural Organisation (Unesco) has released a report which said farming practices had to change to confront the soaring food prices threatening to drive millions of poor people around the world into even deeper poverty.
According to reports, the Unesco study urged agricultural sciences to pay greater attention to safeguarding natural resources and to promoting "agro-ecological" practices, such as the use of natural fertilisers and traditional seeds and reducing the distance between the farm and the consumer.
Basic foodstuff prices have all risen sharply around the globe in recent months, sparking violent protests in many countries, including Egypt, Cameroon, Ivory Coast, Mauritania, Ethiopia, Madagascar, the Philippines and Indonesia, said the report.
- SAPA
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