Mounting trade union concerns about government food security measures boiled over this week in a broadside against the food price monitoring committee set up by Minister of Agriculture and Land Affairs Thoko Didiza at the end of last year.
The Congress of South African Trade Unions (Cosatu), which made a presentation to the food security hearings in Parliament this week, accused the committee of failing to do the job it had been set by the government.
Committee chairperson Johann Kirsten was focusing narrowly on monitoring food prices, rather than exploring the market failures that appeared to feed inflation, said Cosatu economist Neva Makgetla.
Under its terms of reference, the committee is required to examine the pricing structures of food-supply chains and if there is price manipulation and profiteering, Makgetla said. ”We can get food price data from Statistics SA.”
Cosatu has previously claimed that Kirsten has written for the Free Market Foundation, suggesting a possible ideological bias in his approach to food prices.
The claim was ”absolute bullshit”, Kirsten said this week, insisting that he had been ”an independent economist all my life”.
Cosatu has also complained that the committee has met only twice since it was formed, despite the urgency of the food price crisis. It says civil society is under-represented on the committee. Five members are academics, one member represents the National Consumer Forum and one is from Cosatu.
The labour federation says a proposal to involve its research arm, Naledi, in the committee’s work has been rejected, and that R300000 in government research funding seems destined for the universities of Pretoria and the Free State.
”There does not seem to be a full appreciation of how to deal with public money,” Makgetla said. ”There has been no tender process, no transparency, no quality control.”
Kirsten is the professor in charge of agricultural economics at the University of Pretoria. Another committee member, Herman Daniel van Schalkwyk, holds the same post at the University of the Free State.
Kirsten said the food price monitoring committee would conduct the research itself without appointing ”outside organisations”.
”If we appoint Cosatu’s research arm, organised agriculture might complain. I have got my own expertise, and we will use the National Agricultural Marketing Council and the agriculture department as support.”
He said Cosatu’s complaint about the committee’s narrow focus on price monitoring was misinformed. A detailed study was planned of five or six food-supply chains. The study would look at the role of market power, unfair price increases and profit margins.
Union suspicions about Kirsten’s ideological orientation have been reinforced by a study he conducted for the Ministry of Agriculture last year, which found ”that there was nothing wrong with the market up to the farm gate”.
Cosatu’s view, set out in its parliamentary submission on food security this week, is that the soaring price of maize points to the abuse of market power throughout the maize industry.
It attacks the media and agicultural companies for ascribing the price jump wholly to the depreciating rand, arguing that the dollar rose 25% against the rand between August 2000 and February this year, but the maize price rose 150%.
The federation points out that the price drifted up between July 2001 and January last year on rumours of a maize shortage, but remained high after a surplus was generated. The recent revaluation of the rand had not led to a corresponding retail price drop.
Makgetla said the inelastic demand for maize — consumers would buy the staple whatever the price — made it possible for large players to withhold stocks and to manipulate the price at various stages of the supply chain.
Three privatised cooperatives controlled 72% of all storage silos, four handlers controlled milling and three retail groups had 88% of market share. A handful of players, including the multinational giant Cargill, dominated futures trading.
Naledi researcher Eric Watkinson said the abolition of price controls and privatisation of agricultural cooperatives in the 1990s had not freed agricultural markets, as the government claimed. ”The cooperatives were not broken up and have in fact consolidated along the chain into areas like animal feed and poultry.”
Big commercial farmers with a controlling interest in the cooperatives now dominated their privatised successors.
”The strategy of the big players has evolved as they have discovered their market share,” Watkinson said.