Up Up Up Basic food prices

By: JO-MARÉ DUDDY

CONSUMERS will soon have to pick up the tab for a drought in the United States that has wiped out maize crops and driven up prices worldwide.

Namib Mills will increase the prices of mealie meal, wheat flour and pasta by between five and six percent on August 20. The increase might not be the last for this year, Namib Mills managing director Ian Collard warned yesterday. All depends on the final maize harvest figures in the US, and “currently we only receive bad news” as far as the situation is concerned, Collard said.
“We want to warn that further increases are imminent, especially on maize meal. We cannot predict the effect that this will have on wheat price. Our guess is that it will also increase,” he said.
The announcement that basic foods will soon be more expensive follows shortly after the Ministry of Finance said that the poorest in Namibia face higher inflation than the rich.
“This is because the poorest in society spend a higher proportion of their income on food, which has faced high levels of inflation in recent years,” the ministry said in its latest Quarterly Economic Update last week.
Collard yesterday couldn’t say what effect the increase will have on prices charged by shops. Namib Mills sells to wholesalers and retailers, but has no control over how much shops sell mealie meal, wheat flour, pasta or bread for.
Collard did say that, compared to the cost of these products in the rest of world, Namibians are still getting good value for money.
The US is the world’s food basket when it comes to maize, and therefore it is also the “price-maker of the world” when it comes to maize, Collard said.
The US has been hit by its worst drought in five decades, slashing its production estimates for the season from 380 million tons to 320 million tons. The expected shortfall of 60 million tons was softened by the fact that the high price of maize led to less being used for bio-fuels, and the American production shortfall should therefore only be 37 million tons, Collard said.
The shortage has sent international maize prices spiralling. White maize prices on the South African Futures Exchange (Safex), which determines the price in Southern Africa, rose by nearly 30 per cent from the beginning of May, he said.
Although Namibia had a bumper maize crop of 75 000 tons this year, it will need to import 45 000 tons to meet annual consumption.
Collard said Namib Mills has already ensured sufficient maize by entering into fixed supply contracts with South Africa. However, the contracts don’t stipulate a fixed price, leaving Namibia vulnerable to further price hikes.
Although no shortage of wheat is expected worldwide, the price of wheat normally trails that of maize. This is because wheat is used as a substitute for maize in animal feed, Collard said.
The Safex price for wheat has increased by nearly 34 per cent since the beginning of May.
Namibia produces around 15 000 tons of wheat per year, but consumes about 75 000, and will have to import the rest.
Collard said Namibia’s food security is not threatened, as Namib Mills has already procured enough maize and wheat to see the country through to the next harvest. (Also see reports on pages 12 and 13.)

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