Drought raises South African food prices

The price of South Africa's key food item, maize meal, rose a massive 36.16 percent year-on-year in December amidst growing fears that the looming drought conditions will push it even higher. It is consumed mainly by some of the poorest people in the country but abnormally hot, dry conditions in key maize-growing areas are threatening its availability, pushing up the price.

The price of bread, also a staple food product for many South Africans, is also set to increase due to low level of soil moisture to plant wheat in the northern production regions.

The National Agricultural Marketing Council reported that prices for brown and white bread for the year increased by 3.25 percent and 3.60 percent respectively, which is still well below the SA Reserve Bank's six percent inflation target. "Wheat producer prices could be on average 1973 Rands per tonne for 2007, some R500 higher than the average for 2006. Increased maize and wheat prices are likely to result in increased maize meal and bread prices," NAMC said.

NAMC added that heat and limited rainfall could also impact negatively on the availability of grazing. "Reduced rainfall could result in poor grazing conditions resulting in an increased supply of livestock to auctions and to feedlots, potentially depressing abattoir prices," NAMC said.

NAMC said grain-fed carcass prices have already decreased by 13 percent and five percent respectively between December 2006 year and January this year.