High prices amplify crisis facing the poor
8 July 2009, 18:29
By Craig McKune
From the farmyard to the table, price-fixing and big companies throwing their weight around are keeping food prices high and hammering the country's poor.
"There is a big crisis of price-fixing and market dominance in our agricultural markets," said Competition Commission deputy commissioner Tembinkosi Bonakele in a presentation to parliament's portfolio committee on agriculture, fisheries and forestry on Wednesday.
And because poor people were the first to suffer, the commission was heavily focused on the food value chain.
He pointed to the wheat price, which started dropping drastically in June last year, followed by the price of flour.
"But the price of bread never comes down. That is a big problem."
Bonakele called on parliament and government departments, including agriculture, fisheries, forestry, trade, industry and energy to assist by pressuring companies to comply, monitoring market conditions and reporting anti-competitive conduct.
"It's not that we can't manage, but we've got to prioritise and decide who is best placed to deal with a problem. You can't deal with them all."
The two largest contributors to high food prices were anti-competitive conduct throughout the food value chain and increasing input costs, particularly fertiliser.
"Fertiliser is the single largest input cost in the production of crops such as maize and wheat. Competitive pricing is crucial for increased food production," he said.
Sasol was recently fined R250-million for collusive behaviour on fertiliser prices. And the commission was negotiating with the multi-billion-rand company, which still charged import-parity prices when selling their product - manufactured in Mossel Bay - at certain inland centres.
"They charge inland farmers prices as if the fertiliser was being imported from the Middle East."
He ran through the commission's other major interventions to date, including the current investigation of supermarkets, various bread companies found to be guilty of price-fixing, grain storage, dairy and poultry.
Having moved from the heavy food price regulations of the apartheid era, Bonakele said the industry was deregulated very quickly. "We left everything to the markets, and public regulation of prices was then replaced with private regulation of prices."
He emphasised that small businesses and emerging farmers needed to be enabled and supported once cartels had been broken. "Otherwise the cartels will just reconstitute themselves.
Read the full story in Thursday's editions of The Cape Times newspaper.
From the farmyard to the table, price-fixing and big companies throwing their weight around are keeping food prices high and hammering the country's poor.
"There is a big crisis of price-fixing and market dominance in our agricultural markets," said Competition Commission deputy commissioner Tembinkosi Bonakele in a presentation to parliament's portfolio committee on agriculture, fisheries and forestry on Wednesday.
And because poor people were the first to suffer, the commission was heavily focused on the food value chain.
He pointed to the wheat price, which started dropping drastically in June last year, followed by the price of flour.
"But the price of bread never comes down. That is a big problem."
Bonakele called on parliament and government departments, including agriculture, fisheries, forestry, trade, industry and energy to assist by pressuring companies to comply, monitoring market conditions and reporting anti-competitive conduct.
"It's not that we can't manage, but we've got to prioritise and decide who is best placed to deal with a problem. You can't deal with them all."
The two largest contributors to high food prices were anti-competitive conduct throughout the food value chain and increasing input costs, particularly fertiliser.
"Fertiliser is the single largest input cost in the production of crops such as maize and wheat. Competitive pricing is crucial for increased food production," he said.
Sasol was recently fined R250-million for collusive behaviour on fertiliser prices. And the commission was negotiating with the multi-billion-rand company, which still charged import-parity prices when selling their product - manufactured in Mossel Bay - at certain inland centres.
"They charge inland farmers prices as if the fertiliser was being imported from the Middle East."
He ran through the commission's other major interventions to date, including the current investigation of supermarkets, various bread companies found to be guilty of price-fixing, grain storage, dairy and poultry.
Having moved from the heavy food price regulations of the apartheid era, Bonakele said the industry was deregulated very quickly. "We left everything to the markets, and public regulation of prices was then replaced with private regulation of prices."
He emphasised that small businesses and emerging farmers needed to be enabled and supported once cartels had been broken. "Otherwise the cartels will just reconstitute themselves.
Cape Town
