Food prices stable for now… but maybe not next year

South Africans can look forward to stable food prices going into 2019, thanks to sufficient food stocks, but economists warn that dry weather and international tensions could be of concern next year.

Experts were concerned that the dry weather in the western parts of the country would affect pricing even before food supplies ran out around June next year.

Agricultural lobby group Grain SA warned this week that dry conditions, which had affected the main part of South Africa’s maize belt, were threatening yields and could send prices skyrocketing.

Rainfall in the next three weeks would be crucial in determining the extent of this threat, said Grain SA’s senior economist, Corne Louw.

AgriBiz agricultural economist Wandile Sihlobo said South African Weather Service’s prediction of above-normal rainfall between now and February could be what farmers were waiting for. Many in the Western Cape, Northern Cape and Free State had yet to begin planting.

But he added that food prices in the foreseeable future were not expected to change dramatically from January 2019. The cost of food increased 3.4% year on year to October.

“At this point we are obviously concerned with the dry weather conditions negatively affecting the planting rate on the western side of the country so that will matter more in terms of what crop is being planted now and which will be harvested around the middle of next year.

“In terms of food supply, we have sufficient stocks until the end of April and then we will have about 3.3 million tonnes of maize stock, so we should be good until about mid-next year.”

Louw warned international factors could affect the volatility of the rand.

“… things affecting the exchange rate can affect food prices even earlier,” he warned. “… Brexit, the US-Chinese trade disagreement, as well as our elections that can influence the volatility of the exchange rate and [that] might influence food prices.”

He added the dry weather could cause some in the industry to pre-emptively raise prices over uncertainty of the expected harvest in the middle of next year.

– simnikiweh@citizen.co.za

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