The South African government is looking at a mechanism to stabilise prices of staple foods, such as maize or wheat, at times of high prices such as during food crises or drought, parliament’s chairperson of the portfolio committee on Agriculture and Land Affairs Neo Masithela told I-Net Bridge in an interview on Friday.
Masithela is a member of parliament for the ruling African National Congress party, which is in alliance with the trade union movement the Congress of South African Trade Unions (COSATU) and the South African Communist Party (SACP).
The possible mechanisms that the government could use would be a mixture of strategic food stocks and strategic funds, which would be released during times
of high staple food prices, Masithela said.
The government is not only looking at key staples like white maize, which is used for maize meal, or wheat, which is made into flour for bread, but also commodities like meat, eggs, and milks, essentially the full food basket, he added.
“The aim would be to ease pressure on (poor) urban and rural communities during periods of high prices. The government doesn’t just want to depend only on the market (to do that),” Masithela said.
However, Masithela said the state didn’t want to over power or control the free market for agri-commodities but instead wanted the ability to intervene during periods of high prices.
In South Africa, futures and options in white and yellow maize, wheat, sunflower and soybean are traded on the agricultural derivatives division of the JSE Securities Exchange South Africa (JSE) or what is better known as Safex.
“The idea would be for the government to have a mechanism to intervene, once in a blue moon, to stabilise prices. We want to alleviate the negative social impact of high food prices,” he added.
South African farmers, the industrial consumers of agricultural commodities like the milling industry, co-operatives, agri-traders and JSE brokers are all dead against government intervention in the free market mechanism.
Farmers, in particular, have the most to lose from any government move to
intervene during periods of high agricultural prices.
The background to the South African government’s investigation into food security follows a food crisis in six southern African countries that has affected about 15-million people.
At the same time, food prices in South Africa, especially the price of maize — the key agri-commodity — rocketed to sky-high levels due to the weakening of the rand and in anticipation of South African maize being exported to meet the regional food deficit, which failed to happen to the degree expected.
The South Africa government’s initial reaction to the rise in food prices in South Africa and the food crisis in southern Africa was to set aside R400-million — R230-million for food relief in South Africa and R170-million for southern Africa.
The concept of a strategic food reserve isn’t a new one and many of South Africa’s southern African neighbours, like Zimbabwe, Malawi, and Zambia for instance, have strategic food reserves and staple food controls in place.
The process from here would see the South African government do further research into the matter of food security and pricing, legislation would be drafted, which would be followed by public hearings, the legislation would then be passed and implemented.
The South African parliament and cabinet would most likely pass food security legislation in the 2004 parliamentary session, which would begin in February 2004, and implementation would start during 2004, Masithela said. – I-Net Bridge