The impact of food prices on the welfare of households in South Africa
Date
2018
Authors
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Journal ISSN
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Publisher
AOSIS
Abstract
Background and setting: The global food price surge of 2006 to 2008 has negatively impacted South African households. Rising food prices adversely affect food security in South Africa.
The ever-increasing prices for food commodities and lack of access to finance make it very
difficult to strengthen food security amongst households in South Africa.
Aim: The aim of the study is to examine the impact of food prices on household welfare in
South Africa. Additionally, the study attempts to analyse the short- and long-run relationship
between food prices and household welfare in South Africa. This is done by determining how
real household welfare responds and/or reacts whenever there is a shock in food prices and its
fundamental determinants. Finally, the study attempts to distil recommendations toward a
conceptual framework for the mitigation of the impact of high food prices on households in
South Africa.
Method: The Vector Error Correction Modelling (VECM) technique is utilised to estimate a
regression model.
Results: The results reveal that a 1% increase in food prices would reduce household welfare
by 21.3%. The study, therefore, confirms a negative correlation between food prices and
welfare.
Conclusion: Short-run policy recommendations include: (1) subsidising staple food baskets
for households in South Africa, (2) reducing prices of staple foods through the reduction of
food tariffs and (3) reducing household expenditure on basic needs through subsidisation.
These policy options could lessen the burden on households when there is a rise in the
prices of staple food sources and therefore improve household welfare. Long-run policy
recommendations include: (1) improving the unemployment rate in South Africa and
(2) improving access to finance and credit for South African households. By addressing the
rising unemployment rates and improving access to finance and credit in South Africa through
job creation initiatives and improving micro-credit strategies, an environment can be created
where households improve their disposable income.
Description
CITATION: Van Wyk, R. B. & Dlamini, C. S. 2018. The impact of food prices on the welfare of households in South Africa. South African Journal of Economic and Management Sciences, 21(1):a1979, doi:10.4102/sajems.v21i1.1979.
The original publication is available at https://sajems.org/index.php/sajems
Publication of this article was funded by the Stellenbosch University Open Access Fund
The original publication is available at https://sajems.org/index.php/sajems
Publication of this article was funded by the Stellenbosch University Open Access Fund
Keywords
Food prices -- South Africa, Households -- Economic aspects -- South Africa, Food security -- South Africa
Citation
Van Wyk, R. B. & Dlamini, C. S. 2018. The impact of food prices on the welfare of households in South Africa. South African Journal of Economic and Management Sciences, 21(1):a1979, doi:10.4102/sajems.v21i1.1979