Agribusiness chamber sees price relief ahead

Agribusiness chamber sees price relief ahead

FMCG SUPPLIER NEWS

Business Day - Jan 30th, 08:42

Expected higher agricultural product prices this season could bring about some relief for food producers, the Agriculture Business Chamber said last week.
 

Releasing the agribusiness outlook for this year, the chamber’s economic intelligence manager, Lindie Stroebel, said a major concern was that agriculture had shown signs of contraction since the start of last year. However, this was in line with the international economy remaining fragile, as the European Union’s sovereign debt crisis remained unresolved, and prospects still appeared gloomy.

As a result, the strength of the rand had been affected while developments in the US and European debt markets were likely to continue this year, "promising nothing but further uncertainty" for SA and developing markets.

Ms Stroebel said even though investors would again show faith in the e uro zone’s plans to address the debt crisis, interest in developing countries, including SA, would most likely continue throughout this year. "The cost of labour is increasingly obstructing business growth; higher wages are not necessarily the concern, but wages totally outweigh the productivity levels," she said.

Agriculture and agribusiness were traditionally major employers in SA and the government had identified the sector as key to economic sustainability through employment, particularly in the rural areas where agriculture and agribusiness have the biggest contributing effect.

The chamber’s outlook came barely a week after the International Labour Organisation (ILO) said in its annual report on global employment that the world needed to create 600-million new jobs over the next decade to sustain economic growth and maintain social stability.

"Despite strenuous government efforts, the jobs crisis continues unabated, with one in three workers worldwide — or an estimated 1,1-billion people — either unemployed or living in poverty," Juan Somavia, the ILO director-general, said.

The report, entitled Global Employment Trends 2012: Preventing a Deeper Jobs Crisis, said the world was facing the additional challenge of creating decent jobs for the estimated 900-million workers who subsist on less than $2 a day, most of them in developing countries.

Ms Stroebel said the lingering concern for the agriculture sector was "the cost of doing business" in SA, which included labour.

It was the most significant challenge and reflected directly on the bottom line of business.

She said administered prices and the cost of using national infrastructure, such as toll fees and port tariffs, were simply too high.

While celebrating high agricultural commodity and farm-gate prices’ advantage to producers and agribusinesses, the chamber said food affordability to consumers was becoming a big concern.