THE EFFECTS OF HIGH FOOD PRICES ON THE POOR

1. THE EFFECTS OF HIGH FOOD PRICES ON THE POOR Presenter: M J MOLAPISI SANGOCO

2. Economic conditions • The international environment is increasingly uncertain • Real retail sales have trended down since 2007. • Credit extension to private sector has moderated further. • Growth in household consumption expenditure in also expected to dampen by negative wealth effects. • The risk to output growth appear to be on the downside and this is likely to be reinforced by electricity supply disruptions.

3. Inflation risk • The main upside risks to the inflation outlook remain food and energy price prospects. • The more favourable weather conditions and lower futures prices for maize have reinforced a general expectation of some moderation of food price inflation during the course of this year. • The threat posed to the inflation outlook by higher electricity prices remains. Eskom has been granted an average tariff increase of 14.2% from July. The precise increase that will be faced by households may be higher. The average wage settlement for 2007 was 7.3% compared to 6.5% in 2006. • The rand exchange rate has depreciated in recent weeks following a period of relative stability. On a trade-weighted basis, the rand has depreciated by around 7% since the beginning of 2008. • The recent forecast of the reserve bank indicated a further deterioration in the inflation outlook in the short term.

4. Food crisis, unemployment and growing population • Higher child mortality rate: five deaths a day through malnutrition. (Stas SA:1906/YEAR: 2005) • UN: Report: 75000 children who die each year before age 5, 1/3 were severely malnourished and more than 60% were underweight for their age. (report: The Times: 3/7/2008) • There is a direct relation between poverty and poor health. • The conditions as we have them now are deepening poverty. • We reversing the gains achieved since 1994 of ushering a democratic dispensation.

5. HEALTH • Poor access to affordable health care makes individuals less resilient to economic hardships. • Inadequate nutrition undermines the ability of individuals to develop their full human capabilities. • Diseases, especially of poverty: AIDS, malaria and tuberculosis turn to be prevalent in these conditions. • There is an increase in street children • There is increase in homelessness • There is increase in drug abuse

6. POULATION • The province has witnessed significant population growth. In 1991 the population of the province (based on the old PWV boundaries) stood at roughly 6,36 million, growing to about 8,8 million in 2001. In 2004 it is expected that the total population of the province will have grown to over 9 million. • Close to 30% of the increase between 1996 and 2001 is attributable to net migration into the province (see Figure below). It is not surprising then that Gauteng is the highest net recipient of in migrants of all the provinces

7. POPULATION

8. POPULATION (cont.) • Gauteng is the highest net recipient of in migrants of all the provinces. However, the total number of migrants (403,309) represents only about 5% of the total population. While the majority of migrants are from other provinces (especially Limpopo, K • Kwa-Zulu Natal and Eastern Cape), a significant number also come from the SADC region and Europe. • Mainly due to the impact of the HIV/AIDS epidemic, infant mortality increased from 36 to 46 per 1000 live births between 1998 and 2002 while life expectancy declined by approximately three years between 1996 and 2002.

9. GAUTENG ECONOMIC STRATEGY • The realignment of the manufacturing sector away from traditional heavy industry input markets and low value added production towards sophisticated, high value added production, as well as the development of other high value added production activities in the agriculture and mineral sectors. • Geda's activities take their lead from three approaches that form the basis of the Gauteng government’s economic strategy. These are: • The development of the province as the smart centre of the country with specific emphasis on information technology, telecommunications equipment, research and development and bio medical industries. • The development of the finance and business service sector with specific emphasis on financial services and technology, auxiliary business services and technology, corporate head office location and business tourism. • Geda • Food, food processing and beverages make up around R9.9-billion of the province's economy, with half of South Africa's agriprocessing companies operating in Gauteng.

10. AGRICULTURE • Gauteng’s agricultural sector is geared to provide the cities and towns of the province with daily fresh produce. A large area of the province falls within the so-called Maize Triangle. The districts of Bronkhorstspruit, Cullinan and Heidelberg hold important agricultural land, where ground-nuts, sunflowers, cotton and sorghum are produced. • Food, food processing and beverages make up around R9.9-billion of the province's economy, with half of South Africa's agriprocessing companies operating in Gauteng. • New and competitive niche products under development include organic food, essential oils, packaging, floriculture, medicinal plants, natural remedies and health foods

11. IMPACT • PRECARIOUS LIVELIHOODS • EXCLUDED LOCATIONS • PHYSICAL LIMITATIONS • GENDER RELATIONS • LACK OF SECURITY • ABUSE BY THOSE IN POWER • DISEMPOWERING INSTITUTIONS • LIMITED CAPABILITIES • WEAK COMMUNITY ORGANIZATIONS.