There are food protests in our future

Warning: The poor may resort to street protests for nothing else but to have food to eat.

This is according to the Pietermaritzburg Agency for Community Social Action (Pacsa), a social justice and development nongovernmental organisation which collects and analyses data on the impact of food prices on low-income households.

Pacsa has accused government of being reckless by increasing value-added tax (VAT) to 15% on food, because it does not regulate prices and therefore cannot accurately predict the negative impact it will have on poor households.

The increase came into effect last Sunday, and is government’s attempt to boost its coffers by at least R22.9 billion after the SA Revenue Service announced a tax collection shortfall of R48.2 billion.

The VAT increase, coupled with the 52 cent per litre hike in the fuel levy, is exacerbating the dire situation the poor already face.

A fuel price increase always has a ripple effect on the price of goods and services. In addition, government cannot regulate oil prices.

Pacsa’s advocacy and research manager, Julie Smith, said women in particular were absorbing much of this expensive food stress in their bodies, because they gave what they should be eating to their children and were falling ill due to malnutrition.

“When we see service delivery protests, they’re not around food costs, but water, electricity and other government services. But, we’ll see more overt protests about putting food on our tables. There will be a point when people react because wages are not increasing, there are no jobs and the social grants are just not enough,” she said.

Although government seemed to be bowing to civil society pressure when it announced it would be reviewing the list of VAT-exempted foods, must-have items such as school uniforms, sanitary products, soap, medicines, electricity and airtime are unlikely to become zero-rated.

Currently on the list are 19 food items, including mealies, rice, brown bread, eggs, milk, vegetable oil, lentils and tinned pilchards.

Not included are polony, chicken, tinned foods and flour, which are staple foods for many.

Isobel Frye, director of the nonprofit Studies in Poverty and Inequality Institute, supported Pacsa’s statement about the likelihood of food protests.

REVOLTS

“Globally, revolts around food prices have started,” she said.

“There are devastating reports indicating that poverty increased significantly in South Africa between 2011 and 2015,” said Frye.

“One in four people cannot afford to buy food and this indicates that poverty isn’t the priority in the country. What do we mean when we say we’re serious about resolving poverty?”

In its report dated March 5, Pacsa states: “The South African government does not regulate food prices, nor does it control the crude oil price. It should not tax what it cannot control.

“In this context, instituting an increase in VAT on a good that government has no control over – and which in the past three years has proved to be highly volatile, if not wildly unpredictable (and damaging), and given the special and critical role food plays in our health and for all our developmental outcomes and social stability, more so in the context of rising poverty and substantial underspending on food – is very reckless.”

Pacsa said it had been warning over the past few years that South Africa was fast approaching a tipping point where widespread hunger riots and food protests could emerge.

According to the report, the food value chain is controlled by few oligopolies who do not compete on prices, which therefore remain high.

It states that government’s limitation in controlling food prices is due to the fact that the agriculture industry is exposed to droughts, biological and environmental risks and is in the hands of few farmers who are generally indebted.

Low-income-earning households, says Pacsa, are not going to be able to cope and escape the VAT increase because the fundamental problem is that food is expensive and South Africans face a “food affordability crisis”.

Before the VAT increase, households were not prioritising buying food in order to make ends meet. They are differentiating between non-negotiable expenses and those expenses they have some measure of control over.

For example, households prioritise:

. Transport (to get to work to earn a wage and to take children to school);

. Electricity (most staple foods need to be cooked, to keep the lights on, to keep warm and, very important in South Africa, for security);

. Education (so children can have a brighter future);

. Burial insurance (so that at least in death there can be a semblance of dignity); and

. Repayment of debt as this is essential for securing credit in future.

“Food is not prioritised. The food budget arises out of the money left over only after other non-negotiable expenses have been paid,” Pacsa says in the report.

This means that, for many households, the food budget is low and households underspend on this category.

Food often runs short before the end of the month and women absorb these shortfalls by taking on more debt.

Pacsa tracked 38 food items that working class households identified as those they would buy should they have enough money to do so.

It found that 20 out of the 38 foods were not VAT exempted. The remaining 18 were zero-rated.

“Of the total cost of the food basket of R3 129.84, a 15% VAT component is R221.59. The total contribution of VAT to the overall Pacsa food basket is 7.08%. Vatable foods contribute R1 698.87 or 54% to the total cost of the Pacsa food basket. The trend, therefore is that as food prices increase and the affordability crisis deepens, foods subject to VAT make up a larger portion of the monthly household food basket.”

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