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17 September 2008

Our contribution into the Social Cluster is to facilitate food security, especially addressing high food prices. We have challenges that are receiving our attention in order to develop suitable responses. Among them are the need to increase agricultural budget to support production growth in line with the Maputo Declaration; still a policy gap on how to address the needs of the unemployed and low wages that do not have the capacity to purchase food as well as the absence of networks and related logistics to service rural areas.

Our research indicates that between January 2006 and May 2008, maize and wheat grain prices rose by 144,1 and 107,1 percent respectively, soybean and rice increased by 114,7 and 218,4 percent respectively. Our proteins also increased as follows: beef by three percent, chicken by 28% and pork by six percent.

Between March 2007 and March 2008, the price of dairy products increased between 17,05% for skimmed milk and 93,89% for butter. Basically, the trend for increasing food prices is across almost all commodities and basic foodstuffs.

The latest price trends indicate that commodity prices have peaked and are levelling off as seen in the price of white maize which increased by about 1,28% year on year from August 2007 to same month in 2008. This trend indicates that the relative price has gone down. The price of wheat has gone up by 21,69 percent of the same period while sunflower and soybean have increased by 20,95 and 40,06 respectively during the same period (August 2007 to August 2008).

High food prices caused by the increases in agricultural commodity prices on the international market can be attributed to, among others, the increased demand for animal proteins (meat) that in turn requires grains as inputs for the production of more meat, unfavourable climatic conditions together with increased demand impacted negatively on stock levels, trade restrictions that were imposed by major grain exporting countries, increasing energy and fuel costs making transport of grains more expensive and increased production costs to farmers that may also translate to consumers in terms of prices, geopolitical in major crude oil producing countries limiting crude oil supplies globally, potential misuse of market power on the input and output sides of the agro-food chains.

These factors impact on the national markets and adversely affect approximately 2,2 million food insecure households which spend more than 60% of their income on food alone. These vulnerable groups include women, children, child-headed households, elderly and our people living in informal settlements.

In the short term, through the Interministerial Committee (IMC) we have reviewed the expansion of the Integrated Food Security and Nutrition Programme (IFSNP), the expansion of the Household food Production Programme, the expansion of the school feeding programme to include nursery schools, adapting the current system of social grants to the current crisis, working with humanitarian and church based organisations for food distribution and co-ordinating donations.

We have further embarked on a national call for the Ilima/Letsema campaign to promote agricultural production and healthy lifestyles. Through Ilima/Letsema, we encourage productive use of available land and especially fallow lying land. We have aligned our Ilima/Letsema campaign with the War on Poverty and other poverty reduction strategies.

In the medium term, we shall review the Competition Act to proactively discourage anti-competitive behaviours in the food markets, continue strengthening the small, medium and micro enterprises (SMMEs) in the food and agro-processing sector; develop an agricultural trade and tariffs policy that addresses and counteract subsidised imports. In addition, we will implement a proper plan for Transnet Freight Rail to support the cost effective movement of grains across the country. We are engaging with major input suppliers to supply inputs such as fertiliser at competitive prices. We shall also undertake more analysis on the pricing of basic food items and other related costs in order to ensure that our people attain well priced food.

In the long term, we shall link agriculture machinery to the industrial strategy. We will further invest in core infrastructure to support agricultural production through the Ilima/Letsema campaign, and implement a long-term financing strategy for agriculture to achieve the Maputo Declaration of 2002.

We will also look into the expansion of food production in the Southern African Development Community (SADC) region, support the expansion of food production in SADC region and promote regional integration, develop a responsive strategy to deal with food price crises as and when they occur, review the trade policy and follow-up on the establishment of a food reserve facility for the region.

Through our interdepartmental engagements, an in-principle agreement has been reached as to the need to directly address the root causes of the high food prices in production and productivity, strengthening national platforms for a comprehensive and responsive and informed and response; building internal capacity of the partners to respond and deliver.

Key activities in this regard include the expansion of agricultural starter packs with the intension of increasing on the target of 70 000 households per annum; explore mechanisms of co-ordinating public-private partnership initiatives and other humanitarian relief efforts from the public and social partners to support household in distress; expansion of the school feeding programme submitted by the Department of Education; adaptation of the current system of social grants to the current crisis submitted by the Department of Social Development – subject to budget approval.

Through key partnerships and co-ordinating mechanism comprising of the Interministerial Committee (IMC) chaired by Minister for Agriculture and Land Affairs in which the following Ministers make up the IMC: National Treasury, Trade and Industry, Education, Health, Social Development, Public Works, Minerals and Energy as well as The Presidency.

The IMC is supported by an established task team comprising the above departments and state owned enterprises (SOEs) to provide technical support and analysis. Furthermore, the committee participates at Nedlac where we have been keeping our partners informed of government plans, holding constant consultations with the private sector in particular agribusiness on reducing input, energy and transport costs, actively involving provincial clusters as well as the Southern African Development Community (SADC) secretariat, Food and Agriculture Organisation (FAO), World Food Programme (WFP) and other International agencies.

We have held consultations with Congress of South African Trade Unions (COSATU) to clarify Government Plan of Action, and are finalising on the matter of time frames and clear targets on the plan.

To date, Cabinet approved this action plan; however, as indicated earlier, the broadening of zero based items was not supported; the departments of Education, Social Development and Agriculture are still in consultations with National Treasury on the financing plan to address the short term measures; the Department of Agriculture concluded on the Agri-consultations on 1 August 2008, to engage with stakeholders and the industry.

In response, provinces submitted provincial responses to deal with the food prices including the development of national co-operatives to improve food distribution.

The Department aligned to the War on Poverty and participated at the launch held in Free State and linked to the Ilima/Letsema campaign for increased agriculture production. We shall be holding the Ilima/Letsema campaign in Eastern Cape later this month and follow through in other provinces and plan to complete the provincial campaign before the end of November.

Other discussions underway include faith-based organisations on food kitchens and other initiatives, consultations with the World Food Programme and other international bodies to develop alternative food aid strategies and also proposed partnership with related organisations on the establishment of food banks in South Africa.

We further have a memorandum of understanding (MoU) with the Human Science Research Council to assess the social impacts of the rising food prices on poor households; we are holding discussions with the commodity groups and trusts to support the Ilima/Letsema campaign through input supplies, application of fertilisers to improve the nutritive status of the soils as well as land preparation and mentorship programme; lastly, we are developing a discussion document on the implications of climate change and the mitigation practices.

In conclusion, we are faced with the food price crisis (affordability) and not food crisis (availability). We are calling on all our partners to ensure that we have long-term intervention measures in addressing escalating food prices. Our immediate intervention will focus on assistance to poor while also strengthening the application of competition policy. In the long-term we aim for increased investment in agriculture to ensure food security.

Released by the Office of the Director General for Agriculture for Ms Njabulo Nduli
Director General

For further information contact:
P Tsotso Sehoole
Chief of Communications
Tel: 012 319 7317
Cell: 083 265 8728
Fax: 012 319 7858
E-mail: cco@nda.agric.za

Issued by: Department of Agriculture
17 September 2008