6 July 2020
South Africans are not alone in feeling that life has gotten more expensive under the covid-19 pandemic. In a major international survey conducted in 26 countries the majority of people say the overall cost of food, goods and services have increased for them and their families.
Three in five people (60%) in an online poll of nearly 18000 people conducted by Ipsos from 22 May to 5 June say costs have increased for them somewhat or a lot.
81% of South Africans say they are really feeling the pinch, putting them in line with respondents in Argentina, with Mexico (81%), Turkey (80%) and Chile and Belgium (79%) coming close behind.
Ipsos is the world’s third largest market research company, present in 90 markets serving more than 5000 clients across the world.
In the survey South Africans said they strongly feel that food and utility prices increased extraordinarily in comparison to other costs.
According to the survey 80% of South Africans said that the prices of food, groceries and household supplies increased, 60% said the prices of utilities (including water, electricity, communication) increased. The costs of healthcare (40%) and personal beauty (36%) were also perceived to have increased.
“South African women are more worried about this issue than men, with 84% of women and 77% of men saying that the overall cost of necessities have increased over the last few months,” the report states.
“When looking at the different age groups older people are keenly feeling these cost increases with 87% of those 50 years and older, 83% of those 35-49 years old and 76% of those up to 34 years old saying that costs have increased a lot or somewhat.”
Half of South Africans thought that their increased costs were the results of purchasing more expensive items or paying delivery charges due to store closures, as well as a shortage of supplies due to the coronavirus epidemic. 35% said the additional costs come from being at home and consuming more. Only 5% said that the cost increase was due to purchasing covid-19 medical treatment.
Overall, 80% of South Africans feel that the covid-19 pandemic has seen the prices of food, groceries and household supplies increase.
Farmers feel the squeeze
While the South African consumer seems to be spending more to meet their basic needs, the increased spending does not seem to be reaching the farmers.
Eric Mauwane, a vegetable farmer from Tarlton, north west of Krugersdorp in Gauteng, complains that retailers are buying vegetables at increasingly low prices and then selling them at inflated prices.
“Within the first two months of the national lockdown the prices of my main crops had dropped tremendously. I was receiving R4 for broccoli and red cabbage and about R1,50 for my lettuce. I was told that it is because the restaurants and the fast food outlets were closed,” he said.
“But the only surprising part was the prices (only) went down at the farm gate. The retail stores were probably charging about 400% more. So, the very thing they were buying for R1,50 to R2 they were selling at R14,” he said.
Mauwane says farmers have nothing to look forward to in coming months because even though “sit down” in restaurants are again permitted, there is no guarantee that consumers will actually visit the restaurants for fear of contracting covid-19.
“A lot of farmers are saying that they are currently planting for end of September and October when it starts to get hot, because by then chances are the covid-19 cases might have gone down.”
How are the vegetable prices set?
According to Grow Fresh Produce agent Deon Van Zyl there are 23 produce markets in South which sells about 3.2 million tonnes of produce annually.
Market agents determine the price on the fresh produce market based on supply and demand, he says. “So, the higher the supply of the product that is available, the lower the price. If the demand is higher than the supply, the price goes higher.”
He says that external factors, like people getting paid at the end of the mont,h drives demand for fresh produce, “and if your supply doesn’t increase accordingly you are going to have a spike in price”.
The weather often also has an influence – recent cold snaps decreased the availability of finer vegetables like potatoes, pumpkins and baby marrows that are very sensitive to cold fronts. “The moment they get frost those products are out of the market. That decreases your supply.”
“That’s how the market works. We as market agents can’t decide to lift the prices. We compete with each other with the same product line and we try and sell to the best of our abilities. If my opposition sells the product cheaper, I have to call the farmer (to lower the price) because if he is too expensive, he is not going to sell,” he says.
Source: Food For Mzansi