Lower Food Prices Predicted For South Africa

Some more good news expected for South African consumers as the prospect of more rains means more reasonable food prices.
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Predictions for more rainfall (or La  Niña) promises lower food prices for the next two years, according to First National Bank. Normally, we talk about the weather to complain about traffic, water restrictions or lack of outdoor fun, but weather obviously has a big part to play in how much we spend on our grocery budget. For over a year, El Niño droughts have caused the price of maize and other staples to skyrocket. 468x60 Win Petrol “However, as South Africa gets closer to the predicted weakening of the El Nino pattern, and a transition into La Niña, there is a high probability of above normal rainfall early in summer, which would lead to a good 2016/17 crop season,” says Paul Makube Senior Agricultural Economist at FNB. crops

Lower food prices, but it takes time

Should weather forecasts remain on course, we can expect agricultural production to bounce back by mid-2017 resulting in significant moderation in food prices, particularly grains. Fruit and vegetable prices could also ease towards the end of the year as conditions improve, according to Makube. Due to the impact of the drought, the country will be a net importer of maize this year as a result of domestic supply shortages. We experienced a shortage of both the yellow and white maize which are commonly used for livestock feed and staple food, respectively. The sector also shed an estimated 37 000 jobs in the fourth quarter last year. This coupled with a weak rand led to an excessive increase in food price inflation directly impacting lower income households across the country, according to Makube. Favourable changes in weather patterns could result in South Africa producing enough maize during the 2016/17 season as production is dependent on rainfall during growing season which is normally between October and April. Although the impact of La Niña will not be felt immediately it will bring long-term relief to struggling consumers. On a more immediate positive note, dam levels in the Western Cape have shown a slight recovery in recent weeks. The medium to longer term rainfall outlook for the province is relatively good with light showers expected which will be beneficial for the winter crop. It will also replenish dam levels and possibly help ease water restrictions for the region, according to Makube. However, the situation for the rest of the country is expected to remain unchanged until we get La Nina induced rainfall in spring or early summer. It will also take commercial farmers about two years to fully recoup financial losses incurred due to the drought.

El Niño versus La Niña

Both El Niño and La Niña are global weather patterns that South Africa is very sensitive to weather-wise. Since March last year, we have been experiencing droughts as a direct result of El Niño, a pacific ocean climate pattern that has dramatically reduced the rainfall across the country, and consequently resulted in wide-scale cereal crop failure. However, fortunately El Niño is usually followed by a period of La Niña, which is the other side of the weather coin, causing greater-than-average rainfall in South Africa, and other parts of the world.   Lower petrol prices, and now lower food prices, what next….? The outlook for 2016 is certainly improving as we head into the new term. 468x60 Win Petrol