CompCom releases Essential Food Pricing Monitoring report

Photo by Erol Ahmed on Unsplash

In this edition of the EFPM report, the CompCom observes that some of the prices of the foods tracked have started falling, albeit modestly. Nevertheless, monitoring remains necessary to ensure that as costs decline upstream, those are passed through quickly and proportionately to retailers and subsequently consumers.

The Commission’s continued essential food price monitoring efforts support transparency regarding the margins earned by producers and retailers of products that include sunflower oil, brown bread, canned pilchards, and individually quick frozen (IQF) chicken.

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At the retail level, CompCom analysed the aggregate spread between retail and producer prices. For its analysis, the spread is the percentage difference between the producer price of goods and the retail price.

Importantly, the analysis of spreads is based on publicly available information and not intended to make inferences of anticompetitive conduct by individual firms whether acting alone or with competitors.

Rather it is used to assess price transmission through the value chain and to show where spreads are expanding and contracting.

In this edition of the EFPM report, the Commission’s observations include:

• Despite better and more responsive price transmission for sunflower oil, the producer to retail spread of sunflower oil remains at its highest level since 2021.
• The producer-to-retail spread of canned pilchards has been on a downward trend in the last six months. This illustrates the restraint shown by producers and retailers in their pricing behaviour for canned pilchards continues.
• Egg producer prices are currently cheaper than they were in November 2023. This suggests recovery in the sector enabled by various private and public measures including biosecurity protocols and monitoring programmes, import of fertilised eggs, and tariff rebates.
• CompCom also have observed lower average retail prices for brown bread during the time under review.

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The report also explores supply and demand dynamics in the market for South African white maize in the 2024/25 maize marketing season.

The analysis of the dynamics in this market is important for a competition regulator and deepens our understanding of whether the abuse of market power or collusive activity may have driven prices to current levels, or if markets are inefficient including whether speculative trading moves the prices away from supply and demand fundamentals.

The 2024/25 maize marketing season has been particularly challenging for Southern Africa because of the midsummer dryness experienced between February–March 2024, a valuable time for the development of the next season’s crops.

The impact of this period was felt regionally resulting in increased demand for South African white maize by our major export markets. At the same time, local demand by processors remained robust.

The consequence has been white maize prices trading above import parity prices compared to good seasons when prices are often at export parity levels. Import parity prices refer to the price at which a product is imported, including the cost of transport and tariffs, whilst export parity levels refer to the price at which that product is exported.

Despite these pricing dynamics for white maize, the analysis shows that higher prices have not been fully transmitted to the producer and retail prices for maize meal due to ordinary lag effects, higher stocks held by processors at the start of the seasons, and higher processing and supply to downstream maize meal markets.

This report highlights the regionalised impact of adverse climate events and the important role that timely information plays in the functioning of domestic and regional food markets.

The complete report can be accessed on the Commission's website.