The prices of essential foods are threatened by climate change causing droughts, as well as an army worm infestations and avian flu.
The Competition Commission has identified a decline in essential food prices but warns that savings in the supply chain are not always passed on to consumers, making it essential to keep an eye on these prices.
The Commission released the latest edition of its Essential Food Pricing Monitoring Report today. The Commission monitors the prices of essential foods to support transparency regarding the margins producers and retailers earn. The monitoring includes products such as sunflower oil, brown bread, canned pilchards and individually quick frozen chicken.
At the retail level, the Commission analysed the aggregate spread between retail and producer prices. The spread is the percentage difference between the producer price of goods and the retail price.
The analysis of spreads is based on publicly available information and the Commission emphasises that it is not intended to make inferences of anticompetitive conduct by individual firms whether acting alone or with competitors. It is rather used to assess price transmission through the value chain and to show where spreads are expanding and contracting.
In this edition of the report, the Commission says it observed that some of the prices of the foods it tracks started decreasing, although only modestly. Nevertheless, monitoring remains necessary to ensure that as costs decline upstream, those are passed through quickly and proportionately to retailers and subsequently consumers, Kagiso Zwane, senior economist at the Commission, says.
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Commission observations about essential food prices
According to the report, the Commission observed that:
- despite better and more responsive price transmission for sunflower oil, the producer to retail spread of sunflower oil remains at its highest level since 2021
- the producer-to-retail spread of canned pilchards has been on a downward trend in the last six months, illustrating that the restraint shown by producers and retailers in their pricing behaviour for canned pilchards continues
- egg producer prices are currently cheaper than in November 2023, suggesting recovery in the sector enabled by various private and public measures, including biosecurity protocols and monitoring programmes, import of fertilised eggs and tariff rebates
- average retail prices for brown bread were lower during the time under review.
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The white maize market as part of essential food prices
The report also explores supply and demand dynamics in the market for South African white maize in the 2024/25 maize marketing season. Zwane says the analysis of the dynamics in this market is important for a competition regulator and deepens its understanding of whether the abuse of market power or collusive activity may have driven prices to current levels, or if markets are inefficient, including whether speculative trading moves the prices away from supply and demand fundamentals.
“The 2024/25 maize marketing season has been particularly challenging for Southern Africa due to the midsummer dryness experienced between February and March 2024, a valuable time for the development of the next season’s crops.
“The impact of this period was felt regionally, resulting in increased demand for South African white maize from our major export markets. At the same time, processors’ local demand remained robust. The consequence has been white maize prices trading above import parity prices compared to good seasons when prices are often at export parity levels,” Zwane says.
Import parity prices refer to the price a product is imported for, including the cost of transport and tariffs, while export parity levels refer to the price that product is exported for.
Despite these pricing dynamics for white maize, the analysis shows that higher prices have not been fully transmitted to the producer. Higher retail prices for maize meal were due to ordinary lag effects, higher stocks held by processors at the start of the seasons and higher processing and supply to downstream maize meal markets.
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Adverse climate events and essential food prices
The report highlights the regionalised impact of adverse climate events and the important role that timely information plays in the functioning of domestic and regional food markets, Zwane says.
According to the report the Commission’s monitoring indicates that consumers are slowly feeling the benefits of easing cost pressures throughout the economy. Nevertheless, monitoring remains necessary to ensure that as costs decline upstream, those are passed through quickly and proportionately to retailers and subsequently consumers.
Zwane says this transparency is necessary to deter profiteering which is typically enabled by a lack of information. “Naturally, new risks emerge that may reverse cost reductions, such as the recent African armyworm infestation in Gauteng, Mpumalanga and Limpopo and potential avian flu contagion from the Northern Hemisphere.”
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Summer of 2024 hottest on record, with climate change threatening food security
The report also points out that the summer of 2024 was notable as being the hottest on record and before that, the hottest summer on record was 2023. The world also experienced record temperatures in January 2025 despite being in La Nina.
“As climate change continues to be a serious threat to food security throughout the world, the functioning of regional food markets is becoming increasingly important. Climate change changed the context for price forming in the market.
“While seasons of plenty were punctuated by periodic seasons of lack, we now must contend with fewer seasons of plenty and more seasons of lack. Under these conditions, accurate and timeous information has become more valuable than before,” Zwane says.
“Timeous transmission of information can ensure markets work better and minimise disruptive events in food value chains. On the other hand, information could be horded by large market players to their advantage while harming the rest of society through higher commodity market prices that diverge from market fundamentals.”
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