SA’s social partners, the government, business and labour, need a compact that strikes at the heart of rising costs and dwindling incomes
Economists and statisticians tell us the cost of food in South Africa increased by 3.40% last month.
With an annual average increase of 6.65% in food costs since 2009, this marks a decade of rising food costs amid a stagnant economy which grows by below 1%. Add to that the VAT increase that came into effect early this year and it becomes a double whammy for ordinary South Africans.
These percentages sound theoretical on paper. For the well off – and there’s only a few of them – the impact of these increases may not be felt.
However, when you are involved in social welfare programmes like feeding the hungry, as our church is, the impact is evident. We see it in the growing number of people who come through our doors asking for something as basic as a meal. Times are tough for many of our citizens.
At the same time, the fuel price has doubled in 10 years. Not only does this drive up food costs via transport costs, it adds to the travel burden of working people. As we know, due to apartheid spatial planning, the majority of black workers reside far from their workplaces. It costs them an inordinate amount of money to get to work. I have heard of people who spend 30 to 40% of their earnings on transport costs.
The doubling of the petrol price means that working people, unless receiving above-inflation increases, have grown relatively poorer for 10 consecutive years. It also means that the burden on the poor, for as basic a need as food, has grown more severe with each passing year.
One can make allowances when external forces over which South Africa has no control occasion price increases. For example, the ongoing trade wars between China and the US have nothing to do with South Africa but are hitting the rand and other South African assets.
The reality, though, is that some of the challenges we are facing have to do with our own previous policy decisions and actions or inactions.
We know about the billions that left this country illegally while those in power chose to look the other way.
We know about the commercialisation of entities such as Eskom, which once gave us the cheapest electricity in the world while providing direct employment to thousands, and we allowed these to become shadows of what they used to be.
We know about the debacle early in our democracy involving outcomes-based education. No outcomes were achieved. In fact, that education spawned hundreds of thousands of young people who lack reading, writing and arithmetic skills.
We have done the analysis sufficiently now and we have to move on and start tackling the problems.
To address the cost of living crisis we are facing, South Africa’s social partners – government, business and labour – need a new compact that strikes at the heart of these rising costs and dwindling incomes.
This entails addressing the core economic issues of supply and demand in our national food system, by looking for ways to create incentives for new and more efficient businesses in the food supply chain. It also involves unbundling some of the monopolies that create an anti-competitive environment, and seeking creative ways to localise the supply of basic goods where possible, to eliminate production costs.
Where villages and townships can grow their own vegetables or produce their own food, the government and business must come to the party by, among other things, providing land, farming equipment, capital and the training required.
In essence, we need to rethink the economics of our food system, bearing the poor and working class in mind. That does not mean simply shifting the burden of affordability from their wallets to the public purse, which is already under pressure. It means creating a more efficient, affordable and equitable food system.
The way to do that is to drive up supply by making the upstream industries attractive to investors while carefully restructuring the industries to better reflect our particular needs and social contours.
For instance, why is something as basic as bread and flour available nationally through the provision of a few entrenched oligopolies? These mega-businesses, while conveniently supplying our chain stores with basic foodstuff, also capture all the value in the process from maize to the bakery to the shelf.
Surely, in a country such as South Africa, where we have deep expertise in agriculture and a rising tide of demand for land and opportunities to enter farming and small business, a strategy can be developed to decentralise bread production around our urban centres in a way that allows the market to behave in a more inclusive manner.
This would push up supply and increase competition, to give the hard-working parents and grandparents of our nation a more affordable basket of basic foodstuff. The same principles should be applied to commodities such as milk, chicken and pork and other areas that have low barriers to entry.
However, even at the level of the commanding heights of the economy we need a more inclusive approach. A few monopolies that are owned by a few in society are not sustainable in the long run.
Someone sitting in Alex seeing the buildings of Sandton across the highway must feel they have a stake in what they see in the skyline.
Otherwise, there is nothing that compels them from one day crossing the highway and torching everything because they feel excluded.
With the right policies, new paradigms, and public sector adjustments in incentives and regulation, we can ensure that the next decade is a period of increased relief and inclusivity, providing much-needed support to the poor and working-class citizens who feel the brunt of inflation in most starkly.