Small-scale black farmers and informal traders are bearing the brunt of Covid-19 lockdowns on the food chain, and regulatory changes are essential if the government is serious about supporting SMMEs.
According to a seminar held this week on the impact of the pandemic on food systems, it is a very different picture for multinational food companies and retailers, which have reported more profits during the pandemic, unlike their small business counterparts.
One of the main reasons is that big businesses increased their food prices, while SMMEs have kept their costs down so that they do not lose customers, according to University of Pretoria Development Studies Coordinator Marc Wegerif. He was participating in a #FoodTalks webinar hosted by FSNet-Africa, the DSI-NRF Centre of Excellence in Food Security, and the Department of Anthropology and Archaeology at the University of Pretoria.
To make matters worse, food prices have increased way above core inflation during the pandemic, which has had a detrimental impact on small-scale farmers and informal traders, who mostly serve South Africa’s poor, whose wage increases, and social grants, are based on inflation. Wegerif said that government interventions during the pandemic instilled the country’s inequality gap, high unemployment levels and food insecurity.
“The Covid-19 interventions from the state first of all just stopped informal food traders, although food trade was allowed to continue in supermarkets… This was a disaster for many of them who are still trying to recover from the debt they got into at that time,” he said.
Another issue was that permit requirements also became more difficult for small-scale farmers and informal traders to comply with. “So, in short, what we can say is that incomes went down, and food prices went up and that, of course, is resulting in increased food hunger and insecurity,” Wegerif said. He cited Tiger Brands and Shoprite as examples of big businesses which had managed to make a profit while increasing their prices.
Tiger Brands, which is the biggest food company in the country, increased its grain revenue by 10%, despite a decline in volume. It increased its grain prices by 14%, while inflation was around 3%. “To me, this explains a lot of why we have increased food prices as well as other factors such the exchange rate…,” Wegerif said.
“On the other side, small farmers suffered from disruption to their inputs, price increases to their inputs, also disruption to their markets, loss of demand especially when they were selling to poorer communities who also lost incomes.
“It is very important to note that the loss of incomes… under Covid has hit the poorest the hardest by far. The top 25% of income earners in South Africa have hardly seen any changes to their incomes, but the bottom 50% have seen a massive change in their incomes,” he explained. He said that while there were successes in exporting products such as wine, citrus and maize, it was commercial farmers who had benefited.
He said more needed to be done to “open up production opportunities for more people”.
This included building a more decentralised and equitable food system, introducing more local markets, protecting farmers from international competitors, a right to land for small-scale farmers, and a right to trade and create public markets for small-scale traders.
“We are far too over-regulated at that lower rank… where the person with a trolley has their stuff confiscated and we are far too unregulated or we rely on self-regulation of the big supermarket groups and food companies which have the largest impact,” Wegerif said. “So, we’ve got this the wrong round. We should be opening up for people’s entrepreneurship on the ground and we should do be doing far more to ensure that the food companies are meeting the food needs and also creating more livelihoods, rather than shedding jobs in order to cut costs and increase profits.”
