According to the Food and Agriculture Organisation of the United Nations (FAO), food security exists when all people, at all times, have physical, social and economic access to sufficient, safe and nutritious food that meets their dietary needs and food preferences for an active and healthy life.

An adequate supply of food at the national or international level does not in itself guarantee household level food security. Concerns about insufficient food access have resulted in a greater policy focus on incomes, expenditure, markets and prices in achieving food security objectives, in a nutshell, economic access to food.

Economic access to food, in particular food price, is currently a topical issue in South Africa. This is understandable, considering that the 2015/16 El Niño induced drought led to a 23% year-on-year (y/y) decline in total summer crop production, to 9.2 million tons in 2016. This is exacerbated by the fact our food security situation was coming from a low base, since 2015 crop production was already 28% lower y/y, a decrease of 11.9 million tons from a normal production level of 16.5 million tons realised in 2014.

As a result, food inflation has maintained an upward trend, with the August 2016 reading at 11.6% y/y according to data from Statistics South Africa (Stats SA). Agbiz estimates that this could peak at 12% y/y in the fourth quarter of this year, and then decelerate in 2017 to a single digit. This is based on the assumption that agricultural production is expected to recover in the 2016/17 production season, as weather forecasters continue to suggest a possibility of above normal rainfall this summer.

If this materialises, the International Grains Council estimates that crops such as maize could recover to roughly 12.9 million tons – which would be a 72% y/y rebound. In addition, industry estimates for South Africa’s 2016/17 maize production (currently) vary between 11.8 million and 13.0 million tons, all underpinned by an assumption that climatic conditions could normalise this summer.

With the early harvest expected to be realised around April 2017, consumers could start to see real benefits of expected crop recovery around the third quarter of 2017. These are likely to materialise in grain related food stuffs, milk and eggs.

Contrary to plant food products, meat prices could increase or remain high next year. In fact, meat prices could remain high throughout and beyond 2017, as farmers continue to rebuild their herds. This comes after slaughtering rates doubled in 2016. According to data from the Red Meat Abattoir Association, in 2014, the average weekly cattle slaughtering rate in South Africa was roughly 6 500 head of cattle and this figure went up to average levels of 15 000 head per week in 2016.

The increase in slaughtering rate created a supply glut which kept prices under pressure throughout 2015 and for most of 2016. The yellow maize price, as a key feed ingredient for the livestock industry, usually serves as a guide for potential meat price trends, i.e. a decline in yellow maize prices suggests that meat prices would likely follow a similar trend, albeit with a lag effect. Yellow maize prices increased by levels of 60% y/y for most of 2016, whereas meat prices saw only a moderate increase mainly due to the supply glut.

However, prices are expected to increase strongly in the last quarter of 2016 and they could get support for the next two or three years as farmers rebuild their herds. The expected decrease in plant food prices would, ideally, lower the overall food inflation. However, meat could overshadow some benefits of this expected decrease because of its higher weighting. Within a general consumer price index (CPI) headline food basket of 15.41%, meat constitutes a third of that food basket at 30%.

Due to the high weighting of meat in the food basket, it is of particular concern to what extent the 2015/16 drought caused permanent damage within the livestock industry. More information on this will become available as the season progresses.

Weather forecasts present a promising picture for the coming season and crop production is expected to recover. However, the aftermath of the 2015/16 drought will be with us for years to come. For those participating in food retail, higher meat prices are likely to cause a greater challenge over the coming months and compromise household food security.

Overall, weather remains a key risk factor, if the expected normalisation or above normal rainfall does not materialise, the outcome would be disastrous for the South African agricultural sector and household food security.

*This article first appeared on Business Day Newspaper on the 13th of October 2016