Govt to tackle high food prices
Nthambeleni Gabara
26 May 2008
The Cabinet has set up a task team to investigate factors contributing to high food prices and to come up with short-term interventions to provide relief, especially to poorer citizens.
During her budget vote for the 2008/9 financial year in the National Assembly in Cape Town last week, Agriculture and Land Affairs Minister Lulu Xingwana said the task team would assess the low availability of grains worldwide, unfavourable climatic conditions in major grain producing and exporting countries and grain export restrictions imposed by major grain exporters such as Argentina.
It will also look at the increased demand for animal proteins that in turn require grains as input for the production of more meat, increasing energy and fuel costs that make transporting grain more expensive, increasing input costs and potential misuse of market power on the input and output sides of the agro-food chains.
"Higher food prices impact negatively on the purchasing power of poor households," Xingwana said. "Short term intervention measures should also ensure that they provide safety nets for the poor."
Given the risks currently facing the vulnerable groups due to high food prices, the Cabinet has instructed government departments to expand on programmes that support the vulnerable groups in the country.
Xingwana said the government was working hard to produce a strategy that would address high food prices.
Escalating food prices globally
"We are living in times of escalating food prices globally," she said. "According to the World Bank report food crop prices are expected to remain high in 2008 and 2009."
"However, they are likely to remain well above the 2004 levels through 2015 for most food crops."
International stock levels of major staples are at long-run lows, which resulted in a serious shortage of major staples such as rice, wheat and maize.
The National Agricultural Marketing Council report released in February shows the price of maize increased by 33.2% between January 2007 and January 2008, and wheat and sunflower by 81%.
Zero VAT foods
In addition, Xingwana said the Cabinet was considering proposals on the zero rating of Value Added Tax (VAT) for chicken, sorghum meal and selected baby foods.
"We have also embarked on a private sector mobilisation project to ensure that we look into mechanisms of donating food and addressing costs of agricultural inputs, such as fertilisers, seeds," she said.
The total contribution of agriculture into the economy since 2001 has increased from R27-billion to R36-billion in 2007, but investment in agriculture lags behind when compared with other sectors.
Source: BuaNews
