• September 18th, 2018
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Basic food prices to increase for the second time this year

Business & Finance
Business & Finance

Windhoek By the end of February consumers will be hard hit by another rise in the price of basic foods. Top Score maize meal will have increased by 16 percent while other maize meal products will have gone up by a whopping 26 percent. These and other increases were confirmed yesterday by Namib Mills with the company’s chief executive officer, Ian Collard, citing the unfavourable exchange rate and the regional drought caused by the El Nino weather phenomenon as the main reasons for the increases. The company’s first price increase for the year came into effect on January 25, while the increases announced yesterday will be affective as of February 29. When Namib Mills announced the first increase late last year in the wake of the steady weakening of the Namibian dollar against the US dollar the exchange rate was N$14.50 to US$1 and the SAFEX (South African Futures Exchange) traded at N$3 425 per ton. SAFEX is the futures exchange subsidiary of the Johannesburg Stock Exchange. It consists of two divisions – a financial markets division for trading of equity derivatives and an agricultural markets division (AMD) for trading of agricultural derivatives. Since then, South Africa received very little rain and the Namibian dollar weakened further, which Collard said triggered the second price increase. “The current situation regarding maize meal is still not very positive [because of] … the prices of white maize since the middle of January 2016, due to the continued drought in South Africa. Should the current price levels on the commodity exchange in Johannesburg, SAFEX, continue then another price increase in the near future for maize meal is very possible. Unfortunately we cannot predict prices over the medium term, as markets regarding soft commodities and currencies are very volatile, therefore the two price increases until the end of February 2016,” Collard explained. He added that should soft commodity prices start to decrease again due to sufficient rains in the future and the Namibian dollar strengthens against the US dollar, Namib Mills will announce price decreases as they have done in the past. “We however do not see such a possibility in the next 12 months,” Collard noted. The prevailing drought has put southern Africa under tremendous strain as Zambia barely has enough maize for itself, Zimbabwe expects to import 1.2 million tons of maize and the South African crop estimate of 7.44 million tons is the lowest since 2007. This year Namibia expects a maize harvest of approximately 30 000 tons, which means the country will have to import between 110 000 tons and 130 000 tons. However, Namib Mills might have to look alternative sources of maize as South Africa will hardly have enough to sustain itself. “White maize is however available from Mexico, the United States and Russia. Availability will therefore not be an issue but unfortunately the prices will be higher as can already be seen with the current prices,” Collard added. Additional factors that have influenced the price of basic foods include increased import tariffs but fortunately for consumers the low oil price and low freight charges have not increased transportation costs. Collard also mentioned that he does not foresee any impact on jobs at Namib Mills and that the company strives to maintain its profit levels. “We also try to maintain stock levels to lessen the losses. We do this in order to avoid price volatility of products already on the shelves,” said Collard.
2016-02-05 11:16:12 2 years ago
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