Producers and manufacturers blame soaring costs of fuel and wheat for inflation.

There is no relief in sight for cash-strapped consumers reeling under the global effects of food-price inflation.

Producers, manufacturers, retailers and fast-food outlets say there is little that they can do to stem the rapid increase in international food prices.

In South Africa, food price inflation rose to 14.1 percent in February from 13.4 percent in January. Food prices make up 27.9 percent of CPIX, the most commonly used measure of inflation in the prices of consumer goods and services.

Noel Doyle, chief financial officer of Tiger Brands, SA's largest food manufacturer, expects food inflation for the year to September to be in excess of 15 percent, based on a basket of goods. The basket includes Albany bread, Koo baked beans, Tastic Rice, All Gold tomato sauce, Enterprise cold meats, Koo jams and preserves, Black Cat peanut butter, Ace mealie meal and Beacon chocolates.

The price of a loaf of bread in September this year is likely to be at least 25 percent higher than it was a year ago.

The biggest cost pressure is in bread, flour, and rice. "We're at the mercy of the world markets," said Doyle.

Some prices have doubled in a year

Nico Hawkins, economist at Grain SA, said that some prices, including that of wheat, have doubled in a year.

Andre Hanekom, managing director of food and beverages company Pioneer Foods, confirmed that the major cost driver in the group is the increased price of wheat.

"With wheat and flour taking the biggest strain, this impacts bread, pasta and all products made from wheat," said Hanekom.

Among retailers, Shoprite subsidises some basic products like bread, maize and red meat.

Brian Weyers, Shoprite's marketing director, said in the first three months of the year the top 10 ranked categories in terms of percentage increase in cost price, compared to 2007, were: edible oils, wheat products, canned milk and cream, cheese, fresh milk and cream, buns and cakes, powdered milk, pasta products, dried cereals and margarine and butter.

"Petrol price increases will put businesses and their suppliers under pressure. We can't absorb all the costs; they will be passed onto consumers," he warned.

Kevin Hedderwick, chief operating officer of Famous Brands, said the group — which runs franchises such as Steers, Wimpy and Debonairs Pizza — is most affected in the area of beef, particularly beef patties.

Manie Booysen, chief executive of the SA Meat Industry Company, said that meat prices had remained "fairly stable" over the past year, but rising fuel prices were putting great pressure on farmers.

The Transvaal Agricultural Union said that "farmers have no control over escalating input costs. Oil prices are fixed internationally and the levies are regulated by government. This has a domino effect on seed, fertilizers, parts, and so on."

"If a farmer receives almost two-rand for a litre of milk and the consumer has to pay over seven-rand for that same litre of milk, there is clearly a problem somewhere. The same principle is applicable to basic foods."

Kevin Lovell, chief executive of the SA Poultry Association, said that chicken prices had declined over the past year. However, the "farm gate" price of a chicken is usually doubled by the time it is sold at supermarkets.

Further increases are inevitable

Nick Wentzel, chief executive of chicken supplier Astral Foods, said the price of feed costs rose by 29.7 percent during the year. What's more, transport costs are rising because of the price of diesel; liquid petroleum gas prices have increased; wage demands are higher; and packaging materials cost more. Worse, he has to factor in the cost of operating factories on overtime because of power cuts - so further increases in the prices that consumers pay are inevitable.

For the lucky ones who can still afford to eat out — albeit on a tight budget — restaurants such as the Mugg & Bean are benefitting from people "buying down".

"We're in a slightly better position as people are migrating from expensive dining to more casual dining," said Ben Filmalter, chairperson of Mugg & Bean.

On the other end of the scale, the impact on the poor is substantially higher, according to Azar Jammine, chief economist at Econometrix. For those who earn less than R1500 a month, food is 51.3 percent of their expenditure; middle-income earners 43.3 percent; high-income 33 percent, and the very rich 15.8 percent.

Business Unity South Africa said that anti-competitive, collusive practices among food manufacturers and retailers were "concerning". But the organisation said it opposed a call to nationalise the maize-meal, bread and milk value chains "as that enhanced competition best presents the platform for price reduction and efficient allocation".

Sunday Times