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Botswana: The Shrinking Food Basket
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The Voice (Francistown)
20 May 2008
Posted to the web 20 May 2008
Moses Maruping and Zeph Kajevu
Francistown
Recent increases in food prices in Botswana are a replication of higher commodity prices since 2006. According to the 2007/2008 United Nations Food and Agricultural Organisation report, the prices rose from 9.0% to more than 37% in September 2007. Research carried out on the level of retail prices in local supermarkets indicates that bread increased by 30% a loaf from less than P3 to more than P4.50, while white sugar and baking flour had the lowest percentage increases of 7.5% and 9.0%, respectively.
Pinkie Kebakile, associate researcher at the Botswana Institute of Development and Policy Analysis (BIDPA) said that changes in food prices are due to increasing food demand as a result of global changes in eating habits in countries such as China, the growth in the world population that does not meet up with the amount of arable land available and further exacerbated by production of bio-fuels and animal feed. Consequently, increases in fuel prices have a contagion effect since fuel is part of the inputs used in food production and distribution (transport).
According to the May 12 edition of the New York Times, the price of crude oil has risen from US$100 in the fall of 2007 to US$125, May 2008 per barrel.
Increases in food prices can also be attributed to constraints in countries where populations have been displaced by civil wars, such as in Dafur in southern Sudan.
Kebakile explained to The Voice that Botswana, as a country, imports a lot of foodstuffs because it is not producing enough to feed the entire population. "Before 1991, Government policy towards the agricultural sector was geared towards the self-sufficiency strategy. The policy stance was changed in 1991 after realizing that the country cannot produce enough food to meet its national food requirements. So we depend on the external market to meet the shortfall to beef up what the country produces locally. However, the 1991 policy allows for freer trade, meaning more food at lower prices. By being a net food importing country, it means the country is a higher-cost producer."
He added that with the recent developments that have seen the prices of rice, wheat and crude oil skyrocketing, Botswana is highly likely to be affected. The rise in food commodities consumed by the poor means that the bulk of their income would be spent on food, leaving less for other basic items. Assuming other things are the same, food-related inflation and, therefore, national inflation will increase.
Botswana has a comparative advantage beef production, with some for the lucrative EU export market. However, it imports the bulk of its cereal and horticultural requirements as it produces comparatively less than neighbouring countries such as South Africa. As a food importing country, this is reflective of the fact that the country is a high cost producing country. But, of course, where possible we should improve efficiency and produce more to reduce dependence on imports and to the food import bill.
Kebakile observed that since the poor in the country spend a high proportion of their income on food, social safety nets, such as public works programmes, could be intensified as a temporary measure to cushion the poor against the adverse effects of the global food crises. Government should also rethink the possibility of subsidizing food production as an interim measure to ensure that rural households have access to own-produced food.
Stockbrokers-Botswana analyst, Pulafela Isaacs, confirmed that the prices of some of the world's basic foodstuffs have increased. For instance, the price of wheat has more than doubled in less than one year from US$150/t in 2005 to US$389/t in 2008, due to global warming, floods, low and unreliable rainfall resulting in low yields and a lower supplies. The production of ethanol from maize, has curtailed the amount of land available for food crops, pushing up the price of maize flour on international markets.
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Isaacs also noted that "the extent of severity of the problem is very difficult to measure but we cannot deny that the problem exists. The inflation rate for March 2008 was 9.8%, up 80 basis points from the February figure of 9.0%. The rise in inflation has been attributed to sharp increases in food prices, which constitute about 22% of the CPI basket, and fuel prices. If the trend in international food prices continues, inflation will rise further as Botswana is a net importer of foodstuffs."
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