Picture: THINKSTOCK
Picture: THINKSTOCK

CONSUMERS already burdened with rising costs should prepare for higher food prices as the long-term price pressures on agricultural products continue to soar, FNB head of agriculture information Jan van Zyl said during a briefing on agri-business on Wednesday.

Consumers have driven economic activity through their spending in the past two years, which is expected to slow this year as incomes increasingly come under pressure from higher food, fuel and energy costs.

"There is pressure on the available production of agricultural commodities, which will over time translate into food inflation," Mr van Zyl said. "Over time, food will unfortunately become more expensive."

Global food prices rose particularly in the second half of last year, following drought and floods which caused declines in supply in major food-producing countries including the US.

South Africa has not escaped the higher international food prices, with domestic food inflation at times being among the largest contributors to headline inflation which started rising towards the end of last year.

The Reserve Bank has also warned that food is among factors it sees adding upward pressure on inflation in coming months.

Higher food prices are seen by analysts as not only worrying because of the inflation implication, but what they mean for food security. More than 11-million people are reported to be food-insecure.

Farmers are despondent about the new R105-a-day minimum wage that becomes effective next month, saying it could lead to job losses.

FNB chief economist Sizwe Nxedlana said a government subsidy to farmers who could not cope with the new minimum wage would "tame" that negative sentiment.

Labour Minister Mildred Oliphant has already said that an exemption would be available to farmers who could prove that they would be forced to close shop if their wage bill rose.

ETM Analytics economist Jana le Roux said the new minimum wage was bound to see fresh challenges to job creation arise.

"Wage hikes, which may not be economically practical, run the risk of forcing employers to alter production processes by means of mechanisation in order to keep unit costs competitive," Ms le Roux said.