Impending food crisis draws near as import delays and costs surge
28 July 2022: South Africa’s food security is under threat by virtue of a declining and crumbling infrastructure, skyrocketing fuel and input costs, and long delays at ports.
Supply chain management within the food industry is built on a foundation of competent quality control, cost management, and timeliness. One weak link places the entire foundation at risk of breaking.
Poor infrastructure obstructs imports and logistics
It’s no longer a question of if but rather when the cost- and time-links will break if government doesn’t intervene to build and maintain infrastructure.
Ports depend on electricity to run smoothly, yet South Africa has already seen 53 days of loadshedding within the first seven months of the year alone. On average, this means that there has been an average of one full day of loadshedding every four days, resulting in significantly longer unloading times and higher costs for importers.
Inadequate and decaying infrastructure, especially in and around ports, further decreases the speed at which food is distributed.
For instance, as railways continue to deteriorate, more companies are being forced to use already overburdened or dilapidated roads for freight transportation. According to Statistics South Africa, 17.1 million tonnes of freight was transported by rail and 37.9 million tonnes by road in April 2012, against 14.5 million for rail and 58.9 million for road in April 2022 – a startling increase of more than 50% in just a decade.
Delays in transportation results in higher fuel and labour costs, which in turn means higher food prices.
Increase in cold storage use can lead to millions in lost revenue
Owing to increasing transportation delays, importers are also obliged to store food at cold-store facilities for an average of seven to 10 days longer at about R5,000 to R6,000 per container per day.
As a recent example, damage to vital infrastructure and cold-store facilities at the Port of Durban during the April floods resulted in ships being redirected to other ports, causing ongoing delivery backlogs.
These mounting costs add millions to companies’ monthly expenses and, in turn, a few rands to every food item for consumers. Again, this risks aggravating food insecurity for low-income and vulnerable households across the country.
Why is food getting more expensive?
The cost of basic foods has already skyrocketed as a result of the war between Russia and the Ukraine, who together are responsible for more than half of the world’s vegetable oil exports, and over a third of its wheat.
According to the latest United Nations’ Food and Agriculture Organization (FAO) figures, the global food price index has soared from 135.6 points in January to 154.2 points in June. Over the same period, the FAO Meat Price Index rose from 112.1 points to 124.7 points, and the FAO Cereals Index from 140.6 points to 166.3 points, reflecting the growing squeeze on pockets around the world.
Add to this:
- Sharp fuel price hikes such as the R8.28 per litre of 50PPM diesel and R7.13 per litre of unleaded 95 petrol January to July;
- Inflation surging to a 13-year high of 7.4% in June, reducing the purchasing power and value of South Africans’ hard-earned salaries;
- A gradually weakening rand which has shed over R2 against the dollar over the past year; and
- Soaring shipping costs, such as a 500% freight rate increase within the past two years for a standard 12-meter container to South African from China.
Together, these factors make it clear that South Africa is perilously close to the brink of a national food crisis. If nothing changes, it will soon become too expensive for many breadwinners to fill their grocery store trollies with enough food to feed a family.
We again urgently call on the government to intervene by addressing critical infrastructure and energy issues, and to further consider measures such as emergency concessions or temporarily lowering import tariffs.