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Increases in freight costs and congested ports weigh on food prices
Ongoing congestion and backlogs at South Africa ’ s ports are further fuelling meteoric food prices , driving increases of up to 500 % in transport and logistics costs for importers , retailers , and ultimately consumers .
Damage to vital infrastructure and cold-store facilities in Durban caused by the April floods , including the loss of key arterial roads and rail lines , combined with capacity constraints at other ports such as Gqeberha , has led to severe delays for importers and retailers .
This is costing companies thousands or even millions of rands extra in transport and storage fees , according to Hume International managing director Frederick Hume .
“ Seen together with escalating fuel prices , and delays at ports have meant a five-fold increase or more in logistics expenses for the food industry , which is quickly hitting endconsumers ’ pockets ,” Hume notes .
“ Then consider surges in meat prices resulting from higher feed costs , and the price of staple foods such as chicken will soon become unbearable , especially for poorer households .”
Notably , the Food and Agriculture Organisation of the United Nations ’ Cereal Price Index rose 29.7 % in the year to May 2022 , emphasising the dramatic rise in grain and animal feed costs seen over the past few months .
Further adding to cost pressures for meat producers and consumers , fuel is currently 39.5 % more expensive than just 14 months ago , with inland 95-octane petrol increasing from R17.32 per litre in April 2021 to a recordbreaking R24.17 in June 2022 .
Pointing to the effect of these rising input costs , the Pietermaritzburg Economic Justice and Dignity group ( PMBEJD ) therefore reports that the price of frozen chicken prices rose 16 % in the year to May 2022 .
“ Households are already at the financial breaking point and , unfortunately , low-income families are more often the real victims of supply chain disruptions and blockages . In difficult times for the country , government and businesses urgently need to come together to find creative solutions for keeping prices in check to manage a growing hunger crisis .”
CALLS FOR A STATE OF EMERGENCY CONCESSION IGNORED In May , Hume International called on government to implement a State of Emergency concession at Gqeberha to help alleviate the congestion at its port facilities , which remains an ongoing issue .
However , its calls have been met with silence .
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Low-income families are more often the real victims of supply chain disruptions and blockages
This concession would enable the company to pay for a secondary state veterinary inspector or assignee to be appointed to its facilities to perform the necessary quality checks on all imported food items , which in turn would allow it to double the volume of containers unpacked each day at the port .
The organisation was granted a similar concession during the July riots in 2021 to manage the added burden placed on the Gqeberha port after two cold stores in Durban were burnt down and a third damaged .
“ This concession immediately meant that we could double the volume of products moving through the port , and we even hired additional staff to help manage the workload which was another benefit for the surrounding area . But although it was a perfect solution , government declined to extend the concession once it lapsed , and refused our request to make the concession permanent ,” says Hume .
“ A concession would be an easy win for helping to keep prices in check for businesses and consumers , and also enable us to expand our operations and create more job opportunities in the region . But more than a month later , we ’ ve yet to hear any feedback .” CLA
10 www . coldlinkafrica . co . za COLD LINK AFRICA • September 2022