FOOD
WANDILE SIHLOBO: Bagful of cost rises could counteract lower maize price
Farmers do not necessarily produce food products, but agricultural commodities
I recently tweeted a chart showing the long-term trend of South African maize prices. The message was that the price of a tonne of maize was about 60% lower year on year in July. This was thanks to good summer rain, which led to a record maize harvest. The question by folks on Twitter was whether the price decline had been passed on to the end-consumer. The answer is only partially yes, since the price of a product such as 1kg of maize meal has declined only about 7% year on year. There are a number of reasons for the stickiness of maize meal prices. Farmers do not necessarily produce food products, but agricultural commodities. There is, therefore, a processing time lag between the farm gate and the retail level that includes costs such as labour, transport and processing. This processing chain typically explains the delays in price transmission between agricultural commodity prices and the food products. Regarding maize meal, the lag could be three to six months.A study published ...
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.