Food prices could be set to soar

By Staff Writer

South Africans will have to fork out even more for food from 2010 as the economic recovery after the recession continues to gain pace.

The Agricultural Business Chamber said on Monday that they expect the increase in prices to lead to even more service delivery protests.

Most households, in particular those from the lower income level, spend most of their income on food and John Purchase, chief executive of the chamber believes the hike in food prices is likely to cause an uproar and could even lead to more strikes by labour federation Cosatu.

"While food prices are still coming down at the moment... it is going to bottom out probably within the next six months or so," he said on the sidelines of an agriculture conference.

"There will be gradual increases in food prices, we believe, again from 2011. How big that rise is, is very difficult to predict," Purchase added.

South Africa's yearly consumer price inflation slowed much more than expected when it hit a four-year low of 4.8% in April while food prices have continued to stabilize.

Despite the recession being over, households are on a tight budget after about one million jobs were cut which led to high levels of debt and many families are struggling to keep head above water.

Two of South Africa's largest union federations the Congress of the South African Trade Unions and the Federations of Unions of South Africa - led protests against high food prices in 2008 and it's expected that there will be more of the same as the first sign in food inflation will show in the price of maize.

South Africa's agricultural minister said in April the country had secured foreign markets to sell the surplus maize produced in the 2009/10 season to help safeguard maize prices for local farmers.

In April, South Africa's minister of agriculture said that the country had secured foreign markets to sell excess maize products to in order to safeguard maize prices for local farmers.

"We have a big surplus of 4 million tonnes and if it's not all exported... it's going to depress prices probably into the next season quite significantly, that's why I say there is going to be a time lag in this whole period.

"As we see economic recovery taking place we will probably see bigger demand for resources, like oil and fertilizer ... So all this puts pressure on demand for (commodities like maize) and that's going to drive up food prices," he said, adding an upturn in consumer spending power will also add to the pressure."

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