[UPDATE] Good news! The Competition Commission announced in March 2023 that they are investigating the prices of essential food products. Loadshedding, the conflict in Ukraine and other issues have impacted food prices. However, the Competition Commission is still concerned that some price increases are not justified and are looking at sunflower oil, white and brown bread, and maize meal [1]. The Competition Commission touched a nerve within big business, with the CEO of Pick n Pay attacking the Commission. This is the same Pick n Pay who were price gouging garlic and ginger at the height of Covid-19 [2]. Big businesses must open their books to show us they are not using a crisis like load-shedding as an excuse to increase prices, similar to how some businesses used Covid-19 to profiteer [3]. Now is not the time to be profiteering. People are hungry!
Supermarkets need to explain why food prices are so high! In 2021, the supermarket price of a dozen eggs was about R35, but if you could buy from the farmer, you would only pay about R17. Why charge us double? [4]
Why does the price of bread always go up but not down? Supermarkets like Shoprite are being asked this question by the Competition Commission because the numbers don't add up. In late 2019 the cost of buying bread from wholesalers went down for supermarkets, but they kept the price the same for the consumer [5]. And it's not just bread, the Competition Commission is also investigating how much supermarkets have been charging for sunflower oil and maize meal to make sure they have not been profiteering [6].
People are really struggling to put food on the table, and what people can afford is not nutritious, which threatens people's health. Mzansi has enough food to feed everyone, but the price of food means people go to bed hungry. Our food system is broken.
Over the years, we have built public pressure to increase and top up social grants and bring back and extend the R350 grant. But even if we got the big social grant increases we have been demanding and turned the R350 grant into a Basic Income Grant of at least R1335 from 1 April 2023, the cost of living will undermine these victories and keep people in poverty. The R350 is hardly enough to travel to a job interview or start a small business, let alone buy enough food for the month.
We are tired of supermarkets like Shoprite pretending to care for consumers when they can increase their food prices without having to show that the increase is justified. Big businesses have a history of unfair pricing, like how mobile networks were found to unjustifiably charge low-income consumers much more for data.
[1] Consumers hit by unjustified price hikes for staple foods in South Africa. Business Tech. 28 Mar 2023
[2] Stores hiking garlic and ginger prices could face fines of up to R1m by Jolene Marriah-Maharaj for iol news. 4 Feb 2021.
[3] Excessive pricing in the time of COVID-19: insights from a regulator’s Perspective by M Keleme and N Moeketsi.
[4] South African Poultry Association. Subsistence and Small Commercial Farmer Report for 2H2021.
[5] Watchdog worried that retailers didn't pass cost cuts for bread on to consumers, Carin Smith for Fin24, 25 August 2022
[6] Essential food price monitoring report, Competition Commission of South Africa, August 2022
Dear supermarkets, big food businesses, the Presidency, Minister of Trade and Industry and the Minister for Agriculture, Land Reform and Rural Development,
The cost of living is high, but it is not out of our control. Supermarkets like Shoprite and big food businesses like Tiger Brands sell and produce our food and basic necessities. These big businesses make huge profits[7] [8] and can afford to reduce their prices. Big businesses control more and more of our food system [9], and some have profited at people's expense, such as the bread price-fixing scandal [10]. We call on our leaders to urgently implement the below demands so people can put nutritious food on the table.
- Reduce prices on basic necessities and nutritious food. We call on supermarkets like Shoprite Checkers, Boxer, Pick n Pay and Spar etc., to reduce the gap between supermarket prices and farm gate prices of essential food items such as eggs, meat, milk, fruit, and vegetables also call on businesses that package and process food and basic necessities, like Tiger Brands, Unilever, Parmalat, Clover, Pioneer Foods etc., to do the same. These businesses can afford to do this while paying farmers a fair price and workers a decent wage while still making large profits.
- Supermarkets and big food businesses must be transparent about their pricing. Some businesses have been ripping off consumers. For example, Pick n Pay admitted to price gouging garlic and ginger [11]. It must be a requirement that supermarkets and big food businesses provide data and information about their pricing throughout the supply chain, including how much is paid to producers. This will enable regulators and others to monitor prices more effectively.
- Increase fines for businesses that profiteer and do more to protect consumers. The Presidency must take urgent action to reduce the high cost of living by working with relevant bodies, such as the Department of Trade and Industry, to strengthen the powers and mandate of the Competition Commission, Competition Tribunal and other public institutions tasked with protecting consumers.
- Change the law to help end unfair prices, especially for nutritious food. The Presidency and the Minister of the Department of Agriculture, Land Reform and Rural Development must amend Section 2 of the Marketing of Agricultural Products Act of 1996 [12], which currently prevents government from being able to reduce poverty [13] by regulating prices. Since 1996 when this Act was introduced, it has made big food businesses more powerful and hurt the poor, smaller farmers and farm workers [14]. Changing the Act will help us begin to fix our broken food system so we can end hunger and malnutrition.
-The Competition Commission must investigate the price difference between farm gate and retail prices. The Competition Commission's investigation into mobile networks helped reduce some data bundle prices [15]. Now it's time for supermarkets and big food businesses to be investigated. We need to make sure food prices are fair, especially for products that don’t need any additional processing, like fruit, vegetables, eggs and whole chickens. The Competition Commission has also expressed concern over the wide farm-to-retail spread in prices [16].
[7] Extraordinary growth in sales and profits’- Shoprite CEO, by Suren Naidoo for Moneyweb, 8 Mar 2022
[8] Tiger Brands interim results, 25 May 2022
[9] Power and Governance in Agri-Food Systems: Key issues for policymakers. Tracy Ledger. March 2016
[10] Tribunal Imposes Penalty of R195 million on Pioneer. Competition Tribunal statement 3 February 2010
[11] Pick n Pay agrees to cap some prices amid investigations into alleged price gouging. Business Tech. 15 March 2021
[12] Marketing of Agricultural Products Act 47 of 1996. Republic of South Africa Government Gazette. 1996
[13] Power and Governance in Agri-Food Systems: Key issues for policymakers. Tracy Ledger. March 2016
[14] Power and Governance in Agri-Food Systems: Key issues for policymakers. Tracy Ledger. March 2016
[15] Vodacom and MTN ordered to reduce ‘anti-poor’ data prices, By Karabo Mafolo for Daily Maverick, 02 Dec 2019
[16] Latest essential food pricing monitoring report highlights high and growing concentration along the sunflower oil value chain, Competition Commission of South Africa, 24 August 2022
