Are South Africa getting poorer? — Implications for food demand

Source: Prof Johan Willemse, SAPPO News August, 2021, Photo credit: Gulf Coast State College

Thinking about possible economic scenarios for South Africa and how it will affect food demand in future, a number of issues come to mind. First of all, economic growth, markets, prices and even weather patterns move in cycles.

Therefore, when one thinks about the future, it is worthwhile to think in terms of the cycles in the industry you operate in. Economic growth is cyclical, maize and feed prices are cyclical and so are the pork price.

We farm and do business to make a profit, by selling products and services that customers need and are willing to pay for at a specific price. In making these choices, including for food, it is a trade off between the money you have available and what is the best choices/value for money.

It is also well known in the food market, that the market is normally analysed in terms of income groups and how they make choices to buy food. There are then two issues that come to mind. The first, is my customer getting richer (i.e. is the economy growing) and how will this affect food choices and in this regard, what meat to buy?

Secondly, what does this mean for the product I produce?

The graph below shows the GDP per capita of South Africa, over the past ten years. The trend is very clear since the so-called “Zuma Era”, the country is getting poorer and the population is getting poorer. We produce less per person than what we did ten years ago. The population also increased by 10 million people (official stats) during the past ten years.
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The South African Pork Producers’ Organisation (SAPPO) coordinates industry interventions and collaboratively manages risks in the value chain to enable the sustainability and profitability of pork producers in South Africa.