JOHN STEENHUISEN: Understanding why food prices remain high

One of the most pressing concerns I hear from South Africans is the high cost of food. Despite broader economic recovery and a slowdown in inflation, food prices remain stubbornly high. Many households are feeling the strain, and understandably so.

The reality is that food prices are shaped by a mix of global and local factors, some of which are beyond our control. But that does not mean we are powerless. There are clear steps we can take to address inefficiencies, remove barriers and ease the financial pressure on South Africans.

SA is deeply linked to the global economy, and many of our agricultural inputs — fertiliser, seeds and agrochemicals — are imported. This means we are directly affected by supply chain disruptions, currency fluctuations and international trade policies. Events such as the Covid-19 pandemic and the Russia-Ukraine conflict caused global shortages, pushing prices to record highs. While some of those pressures have eased, their ripple effects are still being felt.

Looking ahead, another potential challenge looms. Donald Trump’s return to the US presidency means his trade policies could create fresh disruptions, potentially triggering the most significant global economic shift yet. To minimise SA’s exposure to these external shocks, my focus is on securing new export markets, particularly in Asia and the United Arab Emirates, where there is room for significant growth. 

While global factors play a role, we also have inefficiencies in our own agricultural value chain that make food more expensive than it should be. Many farms are in municipalities with deteriorating infrastructure, where roads are in poor condition and transport costs are unnecessarily high. Without a functioning rail network, the agricultural sector has become over-reliant on road transport, making it vulnerable to rising fuel prices. Addressing these logistical challenges is part of a broader plan to modernise infrastructure, reduce costs and create a more efficient food supply chain. 

Another significant challenge is that the agriculture sector is highly concentrated, with a few large companies dominating the market — from input supply and processing to retail. This lack of competition raises prices for consumers and makes it harder for small-scale farmers to enter formal markets. One way to change this is by establishing rural agro-processing hubs, which would allow smaller farmers to add value to their produce locally, rather than selling it at a lower price to middlemen. By expanding local processing capacity we can increase agricultural output, create jobs and bring down food costs.

Climate change is no longer a distant concern — it is already affecting food prices. SA is experiencing more frequent droughts, floods and extreme heat, all of which disrupt planting cycles, reduce harvests and push up production costs. The 2023/24 maize harvest is a prime example. Due to severe drought, maize production dropped 22%, reaching its lowest level in six years. When supply drops, prices rise. This pattern is likely to repeat unless we take decisive action to make agriculture more resilient to climate change. 

One part of the solution is investing in drought-resistant crops. However, our genetically modified organisms (GMO) legislation is outdated and slows down innovation in this space. The Genetically Modified Organisms Act of 1997 needs urgent reform to align with modern scientific developments. The lengthy approval process for GMOs discourages investment in new agricultural technologies that could help protect SA’s food supply.

Another challenge is that smallholder farmers — many of whom are black farmers in rural areas — contribute only 5%-10% of national agricultural output. They face barriers that commercial farmers do not: lack of access to financing, land ownership challenges and poor infrastructure. Many operate on communal land without formal ownership, making it impossible to use their land as collateral for loans. If we are serious about transforming agriculture we need to remove these structural barriers so that small farmers can expand, invest and compete fairly.

There are no quick fixes, but there is a clear plan to lower food prices and ensure long-term stability. SA must reduce its dependence on imports by promoting local production of fertiliser and seeds while investing in infrastructure to fix roads, modernise rail transport and improve cold storage facilities.

However, the government alone cannot solve this problem. The private sector must play its part by driving down costs, improving efficiency and reducing waste. Technologies such as blockchain can increase supply chain transparency, preventing artificial price inflation. Retailers can shorten supply chains by sourcing directly from local farmers, reducing unnecessary middlemen. There is also significant potential for investment in local agroprocessing, which would lower transport costs and strengthen the domestic food economy.

The high cost of food is not just an economic issue — it is about ensuring that every South African can afford to put food on the table. Tackling this challenge requires bold decisions, investment in infrastructure and stronger partnerships between the government and private sector. While there are no overnight solutions, we are taking decisive action to build a more competitive, efficient and inclusive agricultural sector.

This is not just about responding to a crisis — it is about laying the foundation for a stronger, more sustainable future for all South Africans. 

• Steenhuisen is minister of agriculture.