Article: Matshediso Motshabi
With the onset of the Coronavirus epidemic in 2020, the word “food inflation” gained popularity once more, and we haven’t stopped hearing it in the media since. But what is food inflation exactly? The rise in prices that, over time, reduces the ability of the consumer and producer to buy goods while all other variables remain constant is what is generally referred to as inflation. Food inflation (FI) is the rate of price growth for food products, which is influenced by a variety of factors that both affect the availability of food and its price.
As of November 2022, the Central Statistics Office of Botswana reported that the country’s FI climbed to 16.30% from 15.80% in October 2022. Given the current state of affairs, it appears that food costs will continue to climb, causing the main global communities to experience inflation and an impending economic downturn. Another question is, what causes FI? There are several aspects and important players involved. The first factor is COVID-19’s aftereffects. The food supply chain had numerous disruptions both during and after the COVID-19 pandemic, making it difficult for producers and manufacturers to obtain the inputs they required. Due to these disruptions, a lot of agro-processing facilities and manufacturers had to shut down for an extended period of time or permanently, which is why there was a shortage of agro-produce on retail shelves. Farm produce, especially perishables, had gone to waste because they were not transported to factories for processing and to the market on time. Developing and landlocked nations like Botswana suffered greatly as a result. This is why the government decided it was appropriate to pass legislation supporting the expansion of the agricultural value chain while also promoting local production.
Furthermore, the rise in food prices has been affected by a lack of agricultural workers. Operators find it challenging to deliver the same level of service they did before the pandemic because there are fewer workers picking vegetables, working at processing facilities, driving trucks to carry perishables, and acting as customer support representatives. Higher staff wage rates also frequently result in increased food retail costs and menu pricing, straining client relationships and business operations. Extreme weather is the main cause for concern because it has a major impact on the production process right away. Natural occurrences are unpredictable, can harm crops, and inadvertently reduce the overall supply. The lack of fertilizer has a negative effect on both the quantity and quality of agricultural produce. With lower-quality products, farmers and manufacturers ultimately had either a smaller supply or a moderate supply that was insufficiently packaged for sale. Even higher prices result from a smaller product range. The final point is that certain nations, particularly in the western world, have implemented export limitations to keep their economies on track in order to combat import restrictions, prevent supply shortages, or defend domestic businesses from more potent international competition.
Based on a Statistics Botswana study, the majority of the percentage of FI is made up of bread and cereals, oils and fats, meats, fresh vegetables and fruits, as well as dairy products. Future forecasts also indicate that by the end of 2023, the FI rate may approach 20%. Higher food inflation would make things worse for African nations already struggling with food shortages and insecurity, having a disproportionately negative impact on poor households, placing a strong emphasis on rural dwellers. There are several strategies to combat food inflation, including government incentives that reduce market vitality, support small-scale farmers (via the provision of inputs), strengthen food assistance for the poor, improve biofuel regulations, and promote value chain addition.
