Cabinet has directed the Economic Cluster to put in place an action plan on food prices, food security and access to food.

“Cabinet has approved that the Economic Cluster must put in place an action plan on food prices, food secur[rity] and access to food,” Minister in the Presidency Khumbudzo Ntshavheni said.

Briefing the media on Thursday, Ntshavheni said the Competition Commission has been monitoring essential food prices pursuant to price gouging concerns raised since the declaration of the State of Disaster in March 2020.

She said that the continuation of essential food price monitoring is motivated by the need to ensure affordable and accessible essential food products for consumers. 

“The Commission has noted the ‘rocket and feather’ effect, where prices are quick to rise often in excess of cost increases and slow to fall once cost pressures decline. It has also flagged the concentrated nature of the food and retail markets as a concerning contributing factor.”

At the briefing held in Pretoria, the Minister said that Cabinet has noted the Commission’s recommended measures including market inquiries to address structural features in the market that lead to high food prices and low levels of competition.

Market inquiry

The Competition Commission launched a market inquiry into food prices back in March 2023, where it is seeking to investigate market conditions all along the fresh produce supply chain in the country, looking for any indications of uncompetitive behaviour or price fixing.

It said that concerns around the fresh produce market were raised during the Covid-19 pandemic, with various reports and findings of uncompetitive and unfair pricing in the sector.

A study published by the commission in 2021 also found worrying trends around the concentration and participation of farmers in the South African economy which raised red flags.

Regarding price gouging, the commission’s records show that of 1,254 excessive pricing investigations during Covid-19 – 713 of them related to basic food and fresh produce.

For the purposes of the inquiry, fresh produce includes products such as fruit and vegetables, whether processed or not.

The main fruits produced and consumed in South Africa include apples, bananas, oranges and other citrus, stone fruit, pears, avocados, grapes and nuts. The main vegetables include potatoes, onions, tomatoes, sweetcorn, carrots and cabbage.

While the terms of reference cover more than just the shelf price of items, the commission will be looking at retailer margins, markups and price determinations in the review.

The final report is expected to be published within 18 months of the inquiry launching, unless an extension is given by the minister in charge.

(With SA News)

Read: Food prices still hammering consumers in South Africa