Why SA potato prices exploded by 140% in just four months
South Africa has seen a massive surge in potato prices in recent months, after an unusually cold winter in Limpopo hurt the early part of the province’s harvest.
This month, the average market price of a bag of 10kg potatoes in South Africa (across all classes and markets) reached an eyewatering R83. As recently as June, the average price was R34.40, according to data from Potatoes SA. This means an increase of 140% in four months.
Potato prices in the period since mid-June have been 46% higher than in the same period last year, says Dr André Jooste, CEO of industry association Potatoes SA. The recent price surge has surpassed the previous highs seen at the beginning of 2016, at the height of the drought. At the start of 2016, potato prices across all classes and markets reached R63 per 10kg bag.
This year’s price spike is due to a weaker potato harvest from Limpopo, the nation’s biggest producer this time of the year. A particularly cold winter hurt the early harvest, says Jooste.
The first potato harvests from Limpopo usually land in June and July, with the main harvest coming to the market in August to November.
Jooste believes the main harvest should be relatively unaffected as temperatures stabilised, depending on the cultivar. But a surge in temperatures could spell danger for the rest of the season. “If it gets too hot, the potato plants stop growing.”
The supply of potatoes on domestic fresh-produce markets is currently 17% smaller than a year ago.
“A small change in supply can mean a big change in potato prices,” says Jooste. As a primary agricultural product, the demand for potatoes is relatively inelastic – even amid the fallout of the pandemic.
While household incomes have been squeezed by the pandemic, and fast-food outlets – a main consumer of potatoes for chips - were forced to close during the initial part of the lockdown, demand for potatoes has recovered in recent months.
South Africa exports around 8% of its potatoes to neighbouring countries, but also imports a relatively large quantity of French Fries from European producers like the Netherlands and Belgium. While South Africa already imposed anti-dumping duties on these imports from certain European producers, local producers will have to be diligent in coming months, says Jooste. He says European producers – also hit by wilting demand due to the pandemic in their home markets – are looking for alternative markets.
Sweet potato prices have seen a similar surge as potatoes – prices are 168% higher than a year ago, according to the agricultural market information source AMT.