By Eamonn Ryan
Cheaper commodities, stubborn shelf prices.
Global food commodity prices are falling, yet South African consumers are only seeing limited relief at supermarket shelves. The disconnect lies in a critical but often overlooked reality: the raw foodstuff now makes up a relatively small share of the final shelf price.
Rice provides a clear illustration of this trend
International rice prices have dropped sharply over the past 18 to 20 months, declining from around USD600 a tonne to approximately USD350–360. This correction has been driven by oversupply, strong monsoon rains and the lifting of export restrictions by India, one of the world’s largest rice exporters.
South Africa, which imports 100% of its rice requirements – typically between 1.2 million and 1.3 million tonnes a year – has benefitted from this global shift. Wholesale rice prices locally have declined from about R7 000 a tonne to below R6 400, and major retailers are offering more frequent promotions, but only promotions not the regular price.
Yet the drop in global prices has not translated proportionally into cheaper shelf prices.
The real cost drivers behind food prices
By the time food reaches a consumer’s trolley, the price reflects far more than the cost of the crop itself. Across staples and processed foods, typical shelf-price composition looks roughly like this:
- Raw commodity or foodstuff: 15%–30%
- Logistics, transport and storage: 25%–40%
- Processing and packaging: 20%–30%
- Retail overheads and margins: 10%–20%
- Taxes, port charges and regulatory costs: rising and variable
In other words, 70%–85% of what consumers pay has nothing to do with the farm-gate price.
Why imports amplify logistics costs
South Africa produces no meaningful volumes of rice locally, largely due to water constraints. Imported rice enters mainly through Durban harbour before being transported inland, adding layers of cost related to port handling, storage, fuel, insurance and time delays.
These logistics costs escalated during Covid and have remained structurally higher, meaning the flow-through of lower commodity prices to consumers is slow and incomplete.
This same pattern is visible across maize, wheat and other imported food commodities: the price of moving and managing food now outweighs the price of producing it.
Reference: Freight News