Competition watchdog defends high food prices

The local competition watchdog, the Namibian Competition Commission (NaCC), says local food prices are not driven by anti-competitive conduct but are rather driven by other internal and external factors.

For the past ten years, NaCC only investigated two cases of anti-competitive behavior relating to food prices.

Taking into consideration that most of the local food retailers are South African franchises, Fin24 recently the South African Competition Commission in a study found that food is more expensive than it should be – due in part to large profit margins among retailers and producers, along with a lack of competition.

This created suspicions of possible anti-competitive conduct by local food retailers.

Responding to a Market Watch enquiry, NaCC spokesperson Dina //Gowases noted that food pricing is a complex issue in Namibia, which has always been influenced by a combination of internal and external factors. The country heavily relies on importing food products from South Africa, which results in consumers incurring additional costs due to price fluctuations and high transport costs.

Be as it may, NaCC always strives to uphold its mandate of the Competition Act of 2003, which also includes enabling consumer welfare. The Commission recently probed food prices in two cases.

Covid-19

Firstly, //Gowases referred to an investigation that was self-initiated by the Commission after numerous complaints from the public of excessive pricing of essential food prices due to the Covid-19 pandemic which included South African franchised supermarkets. After a thorough cost-benefit analysis and sensitivity analysis given the prudent business conditions caused by the pandemic, the Commission found that the profit margin was subsequent to the cost incurred by retailers due to the supply shock posed by the pandemic in regions where the concerned products were imported from.

Secondly, the Commission received a complaint of an alleged over pricing of certain food products and the Commission subsequently probed the allegations. The Commission once again found that price increases in the domestic economy were influenced by increases in foreign markets where these products are sourced.

Notwithstanding the results of the Commission’s assessments, NaCC is of the view that continuing price increases including of other commodities such as fuel, are detrimental to consumer welfare, as consumers are now more than ever, required to spend a large portion of their incomes on the affected products, than before, //Gowases said.

Figures

Meanwhile, big fuel price hikes are expected in South Africa for the month of October, Fin24 reported. According to the Namibia Statistics Agency (NSA), the domestic import bill stood at N$11.9 billion in July, of which South Africa accounted for 37.8%.

The food and non-alcoholic beverages category was the main driver of the 4.7% inflation rate recorded in August.

The category carries the second largest weight of 16.45% in the Namibia Statistics Agency consumer basket. The food and non-alcoholic beverages category recorded an inflation rate of 10% in August.

The Agricultural Bank of Namibia (Agribank) recently urged relevant stakeholders to safeguard food security by standing together and creating a more resilient and sustainable food supply [email protected]