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No relief for Nam consumers despite good rains

Fri, 20 January 2017 15:40
by Michael Uugwanga
Business

Namibian consumers will still have to continue to dig deep into their pockets to buy food despite the fact that the country experienced normal rainfall during the past three months of the rainy season.
In contrast in neighbouring South Africa food prices are expected to drop sharply over the course of 2017 due to high rainfall received in that country and thus alleviate pressure, especially on low-income consumers further down the line, according to a Fin24 report.
The challenging economic times are, however, expected to linger on for some time even in South Africa, just like in Namibia but the “good news for lower income groups in 2017 would be an alleviation of drought conditions and a meaningful slowing in food price inflation’ according to the Fin24 report.
According to reports in South Africa, prices of food such as maize meal, sugar, milk, eggs and flour in retails are expected to drop this year due to good higher rainfall experienced in that country, but this is not likely to happen in Namibia according to a local economist, Purvance Heuer.
On average a 2.5 kg bag of top score maize meal will cost you more than N$30 dollars, while a 2kg bag of marathon sugar will cost you nearly N$28 dollars and a 2 litre fresh milk will cost you nearly N$27 dollars.
Namibia has been experiencing a severe devastating prolonged drought for the past three years due to poor erratic rainfall that affected both commercial and communal farmers.
More than 729 000 people in the rural areas have been affected by the current drought alone, accounting for about 57 percent of the rural population.
The current recorded rainfall for Namibia between October last year to December is 4 057 mm.
Namibia is expected to receive more rains, with the prospects particularly good for parts in the north and south of the country.
Speaking to The Villager, Heuer said that the reason why food prices will remain unchanged is mainly due to the persistent drought situation.
“Have you ever seen a drop in food prices in the country before? Farmers were affected by the drought for the last four years and are still producing to make up for the loss of crops in the previous years. Drought is a global problem and not only for Namibia,” Heuer said.
According to the Meteorological Service, Namibia is expected to receive more than 400 mm of rain in the next few months, which will be a relief to farmers, especially commercial farmers but there is no indication that this will also translate into good news for consumers.
‘’This will only benefit producers (commercial farmers) and not the man on the street, because retail shops will buy on lower prices, but still sell at a higher price. Food prices are mostly determined in Texas (USA), and this could have a negative impact due to a possibility of an economic crisis in America,’’ said Heuer.
Simonis Storms, which is a reputable stock broker, wealth management firm and a member of the Namibia Stock Exchange (NSE), in its statements for 2016 and 2017 predicted a growth in the economy of 2.8% in 2017, only if the country experienced a normal rainfall at capacity.
“We can expect to see the economy growing significantly faster. We anticipate inflation to average  6.8% in 2017 before moderating to 6.1% in 2018,’’ reads the statement.
A local commercial farmer and an executive manager of the Namibia Agricultural Union (NAU), Sakkie Coetzee said that prices of food will only be determined after the rainy season.
Goetzee, however, noted that he will not be surprised if food prices goes up in the near future.
‘’Food prices might even go up depending on the availability of the rainfall. The prices will only be determined after April because it is very difficult to speculate on that now as people only planted their seeds in December,’’ he said.
Meanwhile, Prime Minister Saara Kuugongelwa-Amadhila last year said that Government needs to raise N$659 million for the drought relief programme from 1 August last year until March 2017 for food security.