Africa to miss out on fall in food import prices

The UN’s Food and Agricultural Organisation (FAO) predicts that the world food import bill will fall to a five-year low. But not if you are a poor African, say economists.

A market in Angola DR

The FAO predicts that the world food import bill will fall to a five-year low but African consumers may not benefit from lower food prices, as evidenced by varied food prices on a country-to-country basis.

“When we actually look at the food import bills in terms of local currency, they worsen to some extent. So it does vary according to the currency and how strong or weak it is against the dollar,” says FAO economist Adam Prakash.

“It is more important to look at the local picture throughout the continent because markets are not well integrated,” Sebastien Marlier, a Mozambique food commodities expert for the Economist Intelligence Unit in London.

For Mozambique, there are strong regional variations economically within the country, says Marlier.

“In the north you have the producing region, where you often have a crop surplus. In the south, you have a deficit region, where you often have to import cereals, especially from South Africa.”

He says South Africa’s crop shortages also affect neighbouring Mozambique, which will in turn lead to lower exports in Mozambique.

In Namibia, inflation is down to 5.5 per cent for food products, especially breads and cereals, where prices dropped sharply, says Klaus Schade, an economist for Institute for Public Policy Research in Windhoek. Bread and pasta products are currently cheaper, a positive trend, he says.

This is in line with the FAO prediction that, while cereal production will fall slightly, there are still “exceptionally high” levels of existing stocks, as outlined in its biannual Food Outlook report. It also says the price of corn should fall considerably.

“On the other hand, however, due to the prevailing drought in southern Africa and South Africa, white maize prices have increased by about 20 per cent since about the beginning of the year and impacted the maize prices in the shops so maize flour will further increase,” says Schade.

“And that affects in particular the poor people. They rely on maize more as a stable diet than the better-off population,” he adds.

Marlier contends the current situation in Mozambique is stable with decent food availability, three years of low inflation and decent crops. But its food outlook, like other countries in southern Africa, has been hit by climate change.

“The floods earlier this year have disrupted trade routes, and destroyed some crops, especially in the central and northern regions. This is putting parts of the country under stress,” says Marlier.

“If you look at food prices over the past few months, they have increased quite rapidly in January and February because of the floods. Now that we’re entering into the harvesting season they’re falling again but overall they’re still 5 to 10 per cent higher than a year ago.”

In Egypt all bets are off, as the country has been trying to cope with food price inflation.

“We have problems of food production and distribution in Egypt, which is quite poor,” says Angus Blair, an economist and chairman at the Signet Institute in Cairo.

“Inflation in a poor country is very difficult because it has political ramifications. It’s difficult for the average person when 50 per cent of the population is earning three dollars a day,” says Blair. He says food prices and inflation in Egypt is endemic and has been so since he started studying Egyptian economics, over 20 years ago.

“It really has to be made a fundamental core of government policy to bring food prices down as quickly as possible,” he adds.

The FAO’s Prakash says that lower fuel prices could be transferred to the consumer, especially if countries export goods.

But that really depends where you are on the socio-economic ladder, says Namibian economist Schade.

“It’s hard to talk about the average, because we have a huge discrepancy here in society between the better off and the poor. Namibians have benefitted from better prices over the past few years, especially motorists regarding the lower fuel prices. Currently fuel prices are 15 to 18 per cent lower.”

This is not the case for all Namibians, however. “It hasn’t trickled down to the poorer part of the population. Prices for public transport, public buses and taxis haven’t changed for the past couple of months so the poorer haven’t really benefited from lower fuel prices.”

In Egypt the government has been subsidising fuel, which eased the burden for some consumers, but Blair says Cairo plans to make a cut to the subsidy this summer, causing fuel prices to rise.

“Egypt, unfortunately, unlike other countries, has a domestic problem. It would be good to see prices coming down for food but I don’t think that’s likely in the short term,” says Blair.