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Task Team to tackle high food prices

by Nthambeleni Gabara
on 23 May 2008
BuaNews Online
BuaNews Online

Cabinet has set-up an Inter-Departmental Task Team to conduct an analysis and identify the factors contributing towards high food prices.

This was confirmed by Agriculture and Land Affairs Minister, Lulu Xingwana during her budget vote for the 2008/09 financial year in the National Assembly earlier this week.

The Task Team will assess the low availability of grains worldwide; unfavourable climatic conditions for the production of grain in major grain producing and exporting countries; trade restrictions that were imposed by major grain exporting countries, such as Argentina.

It will also look at the increased demand for animal proteins that in turn require grains as inputs for the production of more meat; increasing energy and fuel costs making transport of grains more expensive.

In addition, they will also focus on increasing input costs especially fertilisers and potential misuse of market power on the input and output sides of the agro-food chains.

"Higher food prices impact negatively on the purchasing power of poor households. Thus it is important for our budget to speak in providing cushions to the poor.

"Short term intervention measures should also ensure that they provide safety nets for the poor," the minister said.

Given the risks currently facing the vulnerable groups due to high food prices, Cabinet has instructed the Social and Economic Cluster departments to expand on programmes that support the vulnerable groups in the country.

During its meeting in April, Cabinet instructed the minister and other ministers responsible for the Economic and Social clusters to develop a strategy to address the challenge.

According to Ms Xingwana they are working hard together to produce a strategy that will assist the country in addressing the food prices.

She said South Africa has also been affected by the rising prices, although the food prices have not increased at the same pace as in other countries.

"We are living in times of escalating food prices globally. According to the World Bank report food crop prices are expected to remain high in 2008/9.

"However, they are likely to remain well above the 2004 levels through 2015 for most food crops," she said.

International stock levels of major staples are at long-run lows, which resulted in a serious shortage of major staples such as rice, wheat and maize.

According to the National Agricultural Marketing Council report released in February, price increases for maize during the period from January 2007 to January 2008 increased by 33.2 percent, wheat by 81 percent and sunflower by 81.02 percent.

In addition, the minister said Cabinet is considering proposals on the zero rating of chicken, sorghum meal and selected baby foods.

"We have also embarked on a private sector mobilisation project to ensure that we look into mechanisms of donating food and addressing costs of agricultural inputs, such as fertilisers, seeds," she said.

The total contribution of agriculture into the economy since 2001 has increased from R27 billion to R36 billion in 2007, but investment in agriculture lags behind when compared with other sectors.

Ms Xingwana said soon they will be announcing the approval of a substantial increase of Land Agrarian Reform Project (LRAD) grants to make more money available to qualifying land reform beneficiaries.

The minimum grant for qualifying applicants will increase from R20 000 per individual to R111 125. The current maximum grant of R100 000 per qualifying individual will be increased to R430 085.

With regard to the settlement of land claims, she said the Commission for Restitution of Land Claims has settled more than 95 percent of total claims lodged.

According to the minister the commission is left with only 4 998 rural claims. However, she said a number of challenges are still confronting them in finalising the outstanding land claims.

These challenges include disputes with land owners around land prices and the validity of the claims, disputes around traditional leadership and boundaries and community and family disputes.

As a result of these challenges, Ms Xingwana said between 2 to 3 percent of the claims may not be finalised during this financial year. - BuaNews


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