The zero-rating of food items on its own will not be sufficient as poor households’ food basket currently costs R5 253 per month, which is undermining the efforts to achieve food security universally in South Africa.
This was said yesterday by Professor Maxwell Mudhara, an agricultural economist within the University of KwaZulu-Natal, who said there was a need for a more generalised effort to reduce the food price inflation through the Department of Agriculture.
“A more broad-based approach to harness national resources towards enhanced agricultural productivity and production is required. In addition to provision of water for irrigation and electricity, efforts to ensure that rural land and human capital are used optimally are required,” Mudhara said.
Climate-smart technologies should be used to ensure that the country mitigates and adapts to the challenges of climate change.
This comes as the Government of National Unity (GNU) has identified the need to broaden the range of zero-rated food items in South Africa, as expressed by President Cyril Ramaphosa in his Opening of Parliament Address last week.
Mudhara said a look at the list of food items currently listed as zero-rated shows that it excluded some basic food items that were critical to poor households’ food basket, which if included, would contribute to lowering the food budget for the poor and enhance food security levels.
“Examples of foods that are currently not included, and yet are regularly consumed by the poor, include butter and peanut butter, poultry products, e.g., chicken meat, eggs, chicken insides, beef offal, and polony and related products. These examples illustrate that there is ample space for SARS to increase the zero-rated products,” Mudhara said.
He added that Ramaphosa stated that South Africa should become a construction site as it sought to improve its infrastructure.
“One would expect that improved efficiencies emanating from modernised road and rail services will lower food prices, which will further reduce the food price inflation.”
The Pietermaritzburg Economic Justice and Dignity (PMBEJD) welcomed the announcement by the president of the five measures to be taken in order to deal with the high cost of living.
These include expanding the basket of food exempted from VAT, the review of administered prices including fuel price formulae, the extension of the social relief of distress (SRD) grant as an income support to unemployed persons in South Africa as well as creating jobs as a long-term sustainability option to alleviate poverty.
However, PMBEJD programme co-ordinator Mervyn Abrahams said just zero-rating VAT from certain foods in it itself will not be sufficient to eliminate the high cost of living as experienced by many households because these food costs intersect with other costs.
“So when electricity prices go up, money for food gets used to pay for those higher tariffs. When transport costs increase, it is the money from the food part of the budget that is used to pay for the extra costs,” he said.
Abrahams said they were surprised and dissatisfied that Ramaphosa did not mention anything on minimum wage.
“Even though it has increases above CPI inflation, over the past two years, when divided through a family of four, still is way too low to escape poverty,” Abrahams said.
“Divided in a household of four would essentially mean per person per capita, it is still then a poverty wage because it is still below the upper bound poverty line when divided in a households of four persons.”
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