WINDHOEK – Rising food prices could result in the annual food bill for the average family, tripling over the coming years, heaping further pressure on already stretched household incomes of Namibian consumers. There is cold comfort that Namibians will have to dig deeper into their pockets in the years ahead to meet the ever-increasing prices of foodstuffs.
According to data and inflation reports by the Namibia Statistics Agency, food price inflation is on an increasing trend, and based on forecast data worldwide, this will continue until 2018. The situation will worsen if the Rand/Namibia Dollar depreciates against its trading partners’ currencies, as is the case currently where food prices of imports in local currency are rising against foreign prices. 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.
Locally, some critics blame Government’s Infant Industry Protection (IIP) policy for the increases in the consumer prices of basic foodstuffs and commodities such as poultry, meat and dairy. Others say caution should be taken when apportioning such blame on the IPP.
The Minister of Trade and Industry, Calle Schlettwein, recently indicated that the rationale for the adoption of the IPP, and regulatory measures such as quantitative restrictions on imports of selected products entering our market, is to preserve and nurture our economic and industrial growth, and in turn accelerate jobs and wealth creation. And also to equalise wealth distribution by cushioning and creating policy space for existing economic value chains to get off the ground and build the requisite competitive capacity.
The protection of infant Industries usually takes three forms, namely protecting and nurturing local industries such as the imposition of an import duty levy on imported goods, a quantitative restriction on imports and the granting of targeted and performance based incentive subsidies to stimulate local production and ensure market supply.
Food prices are expected to rise three to four percent on average before the end of this year, and will continue rising till 2018, representing a 12-15 percent increase over a four year period. Higher prices of agricultural inputs will directly affect the cost of meat, and any other animal-based products. Also hardest hit will be cereals, baked goods and other grain-based food. The current exchange rate depreciation from around 8-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.
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. In July, the prices of maize products from Namib Mills were reduced by six percent due to efficient supplies but no other food prices have followed suit.
Government has a legislative mandate to control prices by intervening where necessary in the public interest in order to combat price increases. Such pricing control was done for butter and sunflower oil in the past. Namibia does not have an overarching food control regime, and therefore it is very hard to tell what could happen.
By Deon Schlechter