By Eamonn Ryan
The cold chain: a major but hidden cost.
For temperature-sensitive foods – such as dairy, meat, frozen goods and fresh produce – the cold chain is one of the largest contributors to shelf price inflation. Cold-chain costs can account for 10%–20% of the final shelf price, and sometimes more during periods of high energy costs or infrastructure stress.
These costs are driven by:
- High electricity prices and load shedding
- Diesel-powered backup generation
- Ageing or inefficient refrigeration systems
- Port congestion and extended cold storage
- Spoilage from temperature breaks
Food that spoils in the cold chain does not disappear from the balance sheet. Its cost is absorbed into the price of the remaining food, pushing prices higher for consumers.
Food loss is priced into everything
Globally, up to 30% of perishable food is lost due to poor cold-chain management. Even in more developed systems, single-digit percentage losses materially affect pricing.
Because logistics and cold storage make up such a large portion of food costs, small efficiency gains deliver outsized benefits. A 5% reduction in cold-chain losses can reduce total system costs more than a much larger drop in commodity prices.
Why efficiency matters more than commodity cycles
Industry estimates show that in products like bread, the raw wheat component represents only about 20% of the final price. In highly processed goods such as coffee or chocolate, the raw commodity share is even smaller.
This means global price cycles – whether in rice, maize or wheat – are no longer the primary driver of what households pay for food. Instead, energy, logistics, storage and cold-chain efficiency are becoming the dominant levers.
Cold chain reform as a cost-of-living solution
Unlike global commodity markets, cold-chain performance is something South Africa can influence directly. Improvements such as the following could lower food system costs by several percentage points:
- Energy-efficient refrigeration
- Renewable-powered cold storage
- Faster port turnaround times
- Smarter routing and distribution
- Digital temperature monitoring
- Reduced spoilage and shrinkage
Because logistics and cold storage account for such a large share of shelf prices, these gains would flow directly to consumers.
The new affordability equation
The global rice glut has shown that cheaper food at source is possible. But it has also revealed a deeper truth: Food affordability in South Africa is now driven less by what food costs to grow, and more by what it costs to store, move and keep it cold. Fixing the cold chain may prove to be one of the most effective – and underutilised – ways to reduce food inflation and ease the cost-of-living pressure on South African households.
Reference: Freight News