Retail prices move up with the speed of a rocket when upstream prices increase but go down like a feather falling when input prices decrease.
The Competition Commission (CC) recently published a report on retail prices that clearly shows this trend. It quotes several South African studies that confirm this trend in terms of local beef, maize meal, bread, sunflower oil and fresh milk value chains.
The CC explains that retail prices in food value chains are formed by markups being added at every point. When input prices increase, the different role players increase prices in order to maintain their mark-up percentages.
According to the CC, this practice is not necessarily uncompetitive: the market power of firms allows them to increase prices to levels that boost their profits. If input prices increase sharply, as in the case of supply shocks, firms increase their profitability by maintaining mark-up levels.
TRENDS FOR SPECIFIC VALUE CHAINS
Cattle to beef value chain
In its latest report, the CC examined the cattle-to-beef value chain in detail. It found that during the first half of 2023, weaner prices decreased from R37,28/kg to R29,61 (-21%). Beef A2/ A3 carcass prices fell from R62,43 in July 2022 to R51,17 in July 2023 (18%).
This story is from the October 13, 2023 edition of Farmer's Weekly.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the October 13, 2023 edition of Farmer's Weekly.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
Syngenta Seedcare celebrates a decade of innovation
Syngenta's ambition is to enable their customers' investments to grow in healthy soil from treated seeds to young plants through innovation and collaboration, writes Magda du Toit.
Agri workers shine at Western Cape awards
Lindie-Alet van Staden, a garden and olive orchard manager at L’Ormarins Wine Estate in Franschhoek, was crowned as the Western Cape Prestige Agri-Worker of 2024 at a gala event recently held near Paarl.
Small and large farmers recognised at grain awards
The annual Grain SA/Syngenta awards ceremony bears testimony to the quality of farmers in the grain industry.
Growing partnerships: Fedgroup's flexible and innovative approach
Janine Ryan spoke to Warren Winchester, general manager of impact investing at Fedgroup, about why the company became involved in agriculture, and what it offers farmers and their immediate communities.
Why fish farms fail, and how to avoid becoming a statistic
The popularity of launching fish farms is not matched by their success. Leslie Ter Morshuizen, owner of Aquaculture Solutions, explores the factors that cause most of these businesses to go under.
Where history and modernity meet in a luxurious setting
Brian Berkman kept his eyes peeled for ghosts in the oldest continuously run hotel in South Africa, but all he found was a fabulous two-night stay.
THE HITCHING POST
I'm a stylish elderly lady with a radiant glow and a good sense of humour that keeps me young at heart.
Cutworms: check the weeds on your fields!
Zunel van Eeden explains why understanding the ecological interplay between cutworms and weeds is crucial for effective pest management. Producers should disrupt the life cycle of cutworms to minimise crop damage.
Does high-density grazing mimic grazing patterns of game?
In their paper on high-density grazing in Southern Africa, professors Angelinus Franke and Elmarie Kotzé from the Department of Soil, Crop and Climate Sciences at the University of the Free State say high-density grazing systems may not accurately reflect natural ecosystems. Roelof Bezuidenhout reports.
Global grain outlook: 2024/25 marketing season
In its latest summer crops report, the Crop Estimates Committee says South African farmers intend to plant 4,47 million hectares of summer grains and oilseeds in the 2024/25 season, up 1% from the previous season. As South Africa exports maize and soya bean, Annelie Coleman reports on the latest trends in the international grain and oilseed markets, amid fluctuations in weather conditions and ongoing armed conflicts.
