Rain unlikely to dampen rising grocery costs as festive season draws near

Xolile Bhengu

Xolile Bhengu

Rain in maize growing regions is unlikely to slow down food prices as the festive season approaches, say farmers and retailers.

"The rains have been a good sign, but the maize prices are still too high and farmers have still not recovered," said South African Meat Industry Company chief executive Manie Booysen.

"Normal price increases are expected for beef, lamb and pork during December because of the high demand during the festive season," he said.

Abattoirs pay farmers between R20,50 and R21,50 per kilogram of beef. In January farmers were paid R17,50 per kilogram for beef as the year started badly with a drought pushing maize prices to a two year high, prompting dairy farmers to slaughter cows.

Caught between high feed costs and an oversupply of meat, farmers were losing between R600 and R800 per head of cattle.

Booysen said meat prices were now profitable again at current maize prices, prompting farmers to rebuild their herds.

Spar group marketing manager Roelf Venter said milk supply had improved, but prices were affected by many things besides rain.

"In the meantime though, we don't think that pricing for milk will go down.

"Red and white meat demands are traditionally higher during the festive season. The objective of any retailer is to minimise the cost effect to the consumer, and this can be done mostly for frozen meats, which have a longer shelf life."

He said retailers would be unable to do the same for fresh meat products, which had a shorter shelf life.

Commenting on August's producer price inflation figures, Standard Bank said: "The main inflation culprit arose at the agricultural level, as food prices rose by a whopping 6,2percent from the previous month and 23,8percent from August a year ago. Given the four to six month lag between agricultural food and retail food prices, these pressures will extend retail food price pressures until February next year."