Price-shocker: Sharp increase for rice, bread and beans

The National Agricultural Marketing Council keeps tabs on monthly food prices. In its latest report, the economists group flag a number of food items that have seen significant price increases.

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Rice has been flagged as the highest food inflation contributor in the urban food basket. This is according to the National Agricultural Marketing Council’s (NAMC) latest monthly report on food basket prices.

Insights shared in the report show that the price for rice at retail level increased significantly with 52.7% year-on-year. This means consumers had to cough up R2.86 more for a 2kg packet of rice compared to what they did in December last year.

The price for rice in December 2020 priced at R39.42 and spiked to R42.28 in January 2021.

Global demand, export restrictions

According to the NAMC report, rice showed the largest price difference, making it the highest food inflation contributor during January compared to other food items.

“This can be attributed to higher global export prices for rice associated to higher demand and restrictions to exports by leading global producers when compared to the previous year,” the NAMC said.

The report keeps tabs on the movements of food prices in Mzansi. Twenty-eight food items are selected of which those in the bread and cereals, and bean products price categories were the highest food inflation contributors.

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Bread and cereal price category – under which rice falls – saw a spike of up to 25.6%, and bean products almost 18.0%.

Net importer of rice

The increase of 52.7% in rice when compared to the previous year is due to increasing demand from the global market, mainly from the Middle-East and Sub-Saharan Africa which are dominant importers of rice, the NAMC states.

Fezeka Matebeni, agricultural economist at the NAMC. Photo: Supplied/Food For Mzansi
Fezeka Matebeni, agricultural economist at the NAMC. Photo: Supplied/Food For Mzansi

According to NAMC agricultural economist Fezeka Matebeni recent rice price increases are influenced by developments in the global market as well as the exchange rate.

She says, “In the 2019-2020 seasons, Thailand produced less rice, leading to sharply higher export prices that constrained total rice exports. Meanwhile, India has ample supplies and competitive prices and can respond to rising market demand.”

India is currently the largest parboiled rice supplier followed by Thailand. These countries are the main major exporters for South Africa – a net importer of rice.

Matebeni adds the disturbance in global food chain supply due to the Covid-19 pandemic must also be factored in.

Consumer pays more

Meanwhile, with South Africa being an importer of rice, an increase in export prices is likely to have an impact on the country’s domestic prices as observed in recent months. 

Rice, among eight other products, also exceeded the South African Reserve Bank’s (SARB) upper annual inflation band of 6%.

Economic Justice & Dignity Group programme director Mervyn Abrahams says they have seen in an increase in prices of staple food. Photo: Supplied/Food For Mzansi
The Economic Justice & Dignity Group says they have seen in an increase in prices of staple food. Photo: Supplied/Food For Mzansi

These include dried beans, polony, eggs, beef offal, white bread, super maize meal, IQF chicken portions, brown bread, chicken giblets, bananas, instant coffee, sunflower oil, peanut butter, beef mince, and cheddar cheese.

According to the NAMC the nominal cost of their 28-item urban food basket amounted to R971.98 compared to the R959.62 reported during in December 2020.

The SARB uses inflation targeting, which aims to maintain consumer price inflation between 3% and 6%. The value of the currency is therefore protected relative to domestic consumer prices.

This basically means that the average consumer paid R12,46 more for the same times.

Food prices to remain high

Meanwhile Agbiz believes South Africa’s food price inflation could remain relatively higher in the first quarter of 2021, primarily underpinned by bread and cereals products.

However, Agbiz expects food price inflation to slow down somewhat from the second quarter onwards.

Wandile Sihlobo, Agriculturalist of the Year
Wandile Sihlobo, chief economist at Agbiz and author of “Finding Common Ground: Land, Equity & Agriculture”. Photo: Supplied/Agbiz

“We still expect South Africa’s food price inflation to remain at slightly elevated levels in the first quarter of the year because of higher grain prices and the imported vegetable oils and fats.

From the second quarter of the year, grain prices could soften and filter through, with a lag, on the “bread and cereals” products prices,” Agbiz chief economist Wandile Sihlobo states.

Agbiz believes the “bread and cereals” products price inflation, which mirrors the increases observed in the past few months in grain prices, will likely prevail for most of the first quarter. This, as grain prices have continued to surge since the start of the year.

“While South Africa had its second-largest grain harvest in history in the 2019/20 production season, one would have expected prices to soften but we have experienced the opposite,” Sihlobo explains.

ALSO READ: Food prices: ‘No rest for poor mothers’


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