Industry Protection Not to Blame for High Food Prices

THE Infant industry protection is not the only reason that has led to increases in consumer prices of basic foodstuffs and commodities, such as poultry, meat and dairy, Mihe Gaomab II, Chief Executive Officer of the Namibian Competition Commission has said.

“Caution should, however, be taken when apportioning such a blame on the infant industry protection,” Gaomab said.

He said prices of basic foods are increasing worldwide. Food prices are expected to rise three to four percent in 2014 and will continue rising till year 2018 representing a 12% to 15% increase over a four year period. He said there are global factors at play that can have repercussions on food prices. The El Nintildeo drought impact of 2012 to 2013 withered crops in the fields.

“As a result, prices for agricultural goods and agro-processing products will tend to rise and since it usually takes several months for these commodities prices to translate to the food we buy, most of the drought’s price effect will occur in 2014 as it is happening currently in Namibia,” Gaomab said in a statement yesterday.


He higher prices of agricultural inputs will directly affect the cost of meat and any other animal-based product. Also hardest hit will be cereals, baked goods and other grain-based food. Gaomab said current exchange rate depreciation from around eight plus to the US Dollar in 2012 to around 10 plus in 2014 will also cause the price of imported food to increase in line with the depreciation impact of the exchange rate.

“There is therefore cold comfort that Namibians will have to dig deeper into their pockets to meet the rising prices of foodstuffs. According to data and inflation reports by Namibia Statistics Agency, food price inflation is on an increasing trend and this trend, based on forecasted data worldwide, will continue till 2018,” he said.


Gaomab said this situation will be worsened if the Namibia dollar depreciates against currencies of its trading partners, as is the case currently where food imports rises in local currency against foreign prices. He said the squeeze on many Namibian consumers’ finances will continue for at least the next four years as many experts warn food prices will continue to increase significantly in the world.

He said rising food prices will result in the annual food bill for the average family tripling over the coming years, heaping further pressure on already overstretched household incomes of the Namibian consumer. In Namibia, food price increases are being driven by rises in key inputs such as maize and wheat as well as commodities of administered prices such as energy, fuel and water.

“This implies rising cost structures across the firms involved in the food value chains, prompting them to either seek productive efficiencies and financial viability through assimilations and integrations in terms of mergers and acquisitions,” he said.

Source : The Namibian