Competiton watchdog slams ‘opportunistic’ price hikes on food basics in damning report | Business

The Competition Commission is concerned about essential food prices passed onto consumers over the past two years.

• The Competition Commission has flagged price increases that are “opportunistic” and “may not be justified by costs” on certain food basics over the past two years. 
• The latest Essential Food Pricing Monitoring report, the eighth of its kind since 2020, included a special focus on the ‘feed-to-poultry’ value chain. 
• The commission says it will now be investigating the price of a range of essential food products, including bread, cooking oils, maize meal, rice, flour, margarine and pasta at retail and wholesale levels.
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SA antitrust watchdog, the Competition Commission, says retailers, processors and producers passed on unjustified price increases on essential products such as sunflower oil, white and brown bread to consumers over the past two years.

This comes as South African consumers continue to wrestle with food inflation, which is at its highest rate in 14 years.

In the latest Essential Food Pricing Monitoring (EFPM) report released by the Commission on Tuesday, the body said that at the same time there had been “opportunistic price increases in maize meal” to consumers over the past 24 months. The report, which is the eighth one issued by the body since 2020, also had a special focus on the “feed-to-poultry value chain” in 2022.

The commission said the food sector remained a “top priority” for it, as “poor consumers spend a significant portion of their income on essential food items”.

It explained:

It said the EFPM reports issued to date have “pointed to concerning features in several food markets and value chains” including larger differences between what farms get paid for food items and in-store prices, growing margins at the processor and retailer level, and “potential opportunistic pricing behaviour for staple food products such as bread and cooking oil”.

Some of the key findings included that from January to December 2022, white and brown bread retail price increases of 20% and 19% respectively, were larger than producer prices of 15% and 14% respectively. The commission said this implied that the shelf price increases from R15.47 to R18.62 for white bread, and R13.99 to R16.61 for brown bread “may not be justified by costs”.

Probe to follow

The price of maize meal increased 32% from R26.62 to R35.29 from January to December 2022, while the South African Futures Exchange (SAFEX) price of white maize increased at a slower rate of 28%. This resulted in the “price of maize charged by farmers being a lower proportion of the retail price of maize meal over the year”.

It said it would therefore be investigating the price of a range of essential food products including bread, cooking oils, maize meal, rice, flour, margarine and pasta at the retail and wholesale levels.

This latest report comes as the competition watchdog launched an inquiry into the market for fresh produce in February. The fresh produce investigation will look at competition in the supply chain including the role of farmers, retailers and exporters.