FOOD PRICES
WANDILE SIHLOBO: Poor will be hit hardest by downgrades
‘Over the longer term, higher production costs could negatively affect SA’s farming businesses, thus compromising national food security’
The debate over the recent downgrade of SA’s credit score has been dominated by the middle class and the wealthy rather than the indigent, who are most likely to be negatively affected, due to information asymmetry. This is unfortunate since the indigent will be one of the hardest-hit population groups, specifically through higher food prices and soaring lending rates. Statistics SA data show that more than 15-million South Africans rely heavily on staple foods such as grains for their daily meals. One of the more direct effects of the downgrade is reflected in the depreciation of the rand. While the implications are manifold, a weaker rand has a significant effect on the food value chain – from the farmer to the consumer. From the farmer’s perspective, the backlash could be twofold. On the one hand, SA’s agricultural sector imports a significant amount of inputs — 80% of annual fertiliser consumption, 98% of annual agrochemical consumption, as well as fuel, machinery and capital eq...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.