Table set for soaring prices, drought and food insecurity

WINDHOEK � Tighten your budget belt and prepare for bundles of price increases, an intensified drought and food insecurity by May.

This is the loud and clear message resonating from the consumer market after food inflation rose by 5.9 percent year-on-year in February compared to two percent last year. The rising concern around food security in Namibia which government recognised last week by availing N$573 million for drought aid, coupled with the drought, will lead to increases in food prices by producers, economists and supermarkets have warned.

While Namib Mills assures that the price of Namibians' staple diet � maize and maize products � should stay stable until July when a price decrease is even possible, a dark and ominous cloud hangs over consumers with inflation expected to average at 5.4 percent this year. It was reported earlier this month that most households in several constituencies have run out of food and have resorted to begging.

The agriculture ministry last month reported that crop-producing regions would have no food by the end of May this year. The affected regions are Zambezi, Kavango East and West, Omusati, Oshana, Oshikoto and Ohangwena. Shoprite � one of the favourite supermarkets of many Namibians � made it clear that the Shoprite Group has a policy to procure locally as far as possible, but Shoprite Namibia is able to source only about five percent of food products and 40 percent of all fruit and vegetables from local suppliers.

The balance has to be sourced from South Africa, other African markets and further abroad, the news desk of Shoprite in Cape Town informed New Era.

Hester Vermeulen, economist at the Bureau for Food and Agricultural Policy (BFAP), agrees, adding that food prices were bound to increase due to factors such as the expected fuel price hike, which would drive up food distribution costs, as well as continued drought pressure in different parts of SA, that could negatively impact grain and vegetable prices.

Other factors contributing to food inflation include political uncertainty, fears about land expropriation without compensation and fluctuations in the exchange rate of the rand against major currencies, Vermuelen says.

Economist Indileni Nanghonga of Simonis Storm Securities was quoted saying the situation will heighten the pressure already felt by consumers after the Namibian Statistics Agency released the inflation numbers for February which shows prices for basic commodities shot up to 4.4 percent in February 2019 compared to 3.5 percent recorded in the prior year.

According to BFAP's latest analysis, vegetable prices had increased the most of all food groups, with prices 11.1 percent higher in January this year compared with the corresponding period last year, and 3.3 percent higher than in December 2018. Fish prices were up nearly six percent year-on-year, and 2.3 percent on the previous month.

This is bad news for consumers, who are already struggling to achieve proper dietary diversity and may be forced to eat less vegetables and alternative protein options, such as canned fish and more starches. [This could] exacerbate problems associated with poor nutrition, Vermeulen says.

Meat prices increased about two percent year-on-year, but no significant increases were expected over the next few months as a result of an export ban on meat products due to the recent foot-and-mouth disease outbreak in SA, which could result in supplies being diverted to the local market. The Namibian market is already bombarded with an oversupply of meat.

Even though fuel prices for March 2019 remained unchanged, an increase in fuel levies is expected at the Namibian budget tabling. Crude is expected to bridge US$70 per barrel towards the end of 2019, which will pose inflationary pressure for the transport category and Namibian imports. High oil prices raise shipping costs and Namibia imports about 70 percent of all food supplies from SA or elsewhere.

Oil by-products are a significant component of fertiliser. That contributes 20 percent of the cost of raising maize and can add up to 40 percent to the cost of growing maize, wheat, and soybeans. Namibia is set to import about 50 00 tonnes of yellow maize for fodder.

Source: New Era