Catherine Sasman
14 April 2008
Windhoek — The price of food has soared at an unprecedented rate, due to a combination of increases driven by the production of bio-fuels instead of food crops, the increased demand for protein and climate change putting pressure on food production on a global scale, said experts.
In Namibia, the annual price increase of food - from February last year (15 percent) to the same time this year - has been 15.6 percent. Milk, eggs, oils, vegetables, as well as potatoes and other tubers experienced an even higher annual increase of more than 20 percent. "Food prices are going through the roof," commented Jesko Woermann, a director of retail chain Woermann Brock. Food accounts for about 30 percent of the overall consumption basket, while in Namibia many families spend up to 100 percent of their income on food alone.
Woermann said the inflation on foodstuff has gone up by 21 percent from March last year to February this year. "The main problem is the fact that the price of wheat has doubled - from N$1200 per tonne to N$2500 per tonne," said Woermann. Globally, wheat prices have shot up due to the creation of bio-fuels, as well as the drought in Australia, which is a wheat producing country and the creation of a new middle class in South-East Asia that has developed an appetite for cereal-based breakfasts instead of the traditional rice.
A compounding factor is the doubling in oil prices over the last three months. Woermann also attributed the increase in food prices in Namibia to the power shortages and outages in South Africa, wreaking havoc on food production in that country. He said suppliers now give quotations for foodstuff on a daily basis, instead of the usual two-weekly or monthly quotations due to the uncertainty of the power supply in South Africa, with prices oscillating between 5 to 10 percent upwards. Patrick Hashingola, Group Manager: Public Relations of Olthaver&List, of which Model Pick 'n Pay is a subsidiary, said bread has gone up by 25 percent, maize by 35 percent and cooking oil by 40 percent.
Bank of Namibia Governor, Tom Alweendo, said there is no likelihood of reverse in the upswing of food prices, but an upward pressure of prices worldwide. The National Society for Human Rights (NSHR) has called on the Government to prepare massive food subsidies "or face a revolution by the poor and impoverished in the country". The human rights body also cautioned of an impending food crisis in the flood-hit north. "We warn the Government that floods and locust, armyworm and bird infestations will catastrophically hit subsistence farmers north of the red line, while south of the said line, the food productivity capacity of commercial farmers will be severely crippled by the rising fuel prices and severe electricity power shortages," said NSHR's Phil ya Nangoloh.
Woermann, who said the effects of the floods on food security would be felt especially within the coming months, shared this sentiment. Consumer behaviour, he said, has changed over the difficult months. "People are purchasing smaller and cheaper items; instead of buying fillet, they will buy cheaper cuts," said Woermann.
With the retail sector under pressure due to the increased prices, Woermann said it is time to tighten belts. "Less money in circulation means less money for salary increases. No one knows where it will go, but I am positive that we will not reach the inflation rate of 20 percent of the late 1980s," he said.
Hashingola said the O&L Group is looking at ways to improve efficiency without passing increased costs onto the consumers.
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