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The Competition Commission says South African consumers were subjected to unjustified price increases of sunflower oil, white and brown bread, and opportunistic price increases in maize meal over a two-year period.
According to findings contained in its latest Essential Food Pricing Monitoring report, covering 2021 to 2022, white and brown bread retail prices increased by 20 and 19 % respectively.
While the price of maize meal increased by 32% from R26.62 to R35.29 from January to December last year.
The spokesperson of the commission, Sipho Ngwema, says key trade policy decisions also affected the price of poultry products in 2022.
Ngwema says as food inflation remains elevated, and load shedding continues to affect business operations, food price monitoring will remain a priority for the Commission.
He says the Commission also launched a Fresh Produce Market Inquiry to assess if there are features in these markets that impede competition.
The EFPM report includes the following findings:
From January 2022 to December 2022 white and brown bread retail prices (20% and 19% respectively) have increased faster than producer prices (15% for white bread and 14% for brown bread) implying that shelf price (R15.47 to R18.62 for white bread and R13.99 to R16.61 for brown bread) increases may not be justified by costs.
The price of maize meal increased 32% going from R26.62 to R35.29 from January to December 2022 while the South African Futures Exchange (SAFEX) price of white maize increased at a slower rate, resulting in the price of maize charged by farmers being a lower proportion of the retail price of maize meal over the year. This is concerning and may indicate opportunistic behaviour throughout the value chain and raises questions about the use of export parity pricing throughout the maize value chain.
The prices of the five fruits and vegetables were generally volatile over 2022 and an in-depth value chain analysis will be conducted by the Fresh Produce Market Inquiry.
Ngwema says this edition has a special focus on the feed-to-poultry value chain, specifically individually quick-frozen (IQF) chicken products.
He says feed costs account for more than two-thirds of broiler production costs and are therefore a source of upward cost and pricing pressure throughout the poultry value chain.
Some of the findings in relation to the poultry value chain include:
The price of grains and oilseeds used to manufacture animal feed namely wheat, maize, soya beans, and sunflower oil, were volatile and increased over 2021 and 2022.
Over the same period, the price of poultry feed was relatively stable.
It is forecasted that raw material costs may fall over the first half of 2023. The Commission will monitor the extent and degree to which these reductions are transmitted to feed prices and ultimately to chicken prices at the retail level.
Feed prices increased faster than the producer price of IQF products, which are the most widely consumed chicken products in South Africa. Despite this cost pressure, producers reported improvements in their financial performance largely driven by high feed prices.
