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Thursday, May 22, 2008 - Web posted at 8:09:38 GMT No quick fix for high food prices BRIGITTE WEIDLICHFOOD producers and grain importers have little room for manoeuvring to buffer high food prices, experts said at a public meeting yesterday. |
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The meeting was called in an attempt to find solutions to the dramatic food price hikes that have hit Namibia, like the rest of the world, in recent months. Calls for exempting staple foods from value-added tax (VAT) and suggestions to achieve self-sufficiency as soon as possible through higher crop production were no "quick fix", several speakers said at a business breakfast organised by the Friedrich Ebert Stiftung (FES). "The best way would be to strengthen the social safety net and increase social pensions and grants to the vulnerable population groups," local economist Dr Klaus Schade said. "VAT exemptions might work in the short term, but the tax revenue lost in this way will might take from consumers in another way at a later stage," he warned. In Namibia, only maize and mahangu are exempted from VAT. In South Africa, milk is also exempted. Milk prices have soared locally, but according to Sakkie Coetzee of the Namibia Agricultural Union (NAU), it costs Namibia's dairy farmers over four dollars to produce a litre of milk, and they only make 6 cents' profit selling it to a dairy. "Milk is a staple food and it now costs around N$9.50 to ten dollars per litre, production costs are high but along the value-adding chain each player adds on a profit," Coetzee said. Koos Ferreira, Managing Director of Namib Mills, said shipping costs, rail and road transport costs for his company's grain imports had increased as a result of international oil price hikes. "We import wheat from the USA, Europe and South Africa and prices increased from N$2 000 per tonne to N$4 000 recently. We import rice from India and Thailand and the price exploded from N$2 530 per tonne in 2007 to N$7 660 this year." Ferreira added that India had recently stopped exporting rice out of fear that not enough would be produced for local consumption. "If demand is more than what is available from agricultural production, prices skyrocket," he pointed out. Migration from rural to urban areas and farmers changing from grain production for food to biofuel added to the problem, he said. On the local front, expecting higher yields from existing fields was not realistic. "To simply say plant more is not really a solution. You cannot boost yields from marginal land and not all areas in Namibia are suitable for growing crops and grains. "Production costs are high. It is often cheaper to import, say, maize from Zambia through Katima Mulilo, which we did last year, rather than buying locally." The NAU's Coetzee again urged Government to implement a 2004 decision taken by heads of state of the 14-member Southern African Development Community (SADC) to increase budgetary allocations for agriculture to ten per cent. "In Namibia, Government only makes four per cent available," he said. Comments from the floor during the discussion emphasised that lower-income groups could hardly tighten their belts more, as higher taxi fares and increased paraffin prices on top of food price hikes made it extremely difficult to make ends meet. "Students also suffer, some miss classes as they cannot afford taxi fares," a young participant told the meeting. |
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