Farming Retailers Face Hard Times

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By Desie Heita

Windhoek

Retailers in agricultural and farming products say this year is likely to be a difficult trading year for both themselves and farmers.

Prices of animal feeds and lickers are already skyrocketing as demand outstrips supply. The escalating costs of fuel, high inflation and interest rates have put a strain on agricultural retailers who have to pass on the costs to farmers.

Demands for products such as phosphorus acid, mainly used in animal licks and other animal feeds, has gone up because of global changes in prices, as well as demand.

As a result, manufacturers in South Africa, from where Namibia buys licks and animal feed, can no longer keep up with demand. The prices have also gone up because of the demand.

Farmers especially are in for a tough ride as they are likely to get lower prices for their products, and animals, which make it difficult for them to sufficiently purchase the needed agricultural inputs.

Comment by retailers came after the Executive Committee of the Namibia National Farmers Union expressed concern over the high inflation and prices of food in the country.

Availability of products from suppliers has dropped to between 40 and 45 percent instead of the normal trend of between 90 and 94 percent.

“Namibia is no longer operating in isolation, we have become part of the global village. Anything happening in the world, ultimately does has an effect on our prices,” said Arnold Klein, the General Manager for the Retail and Wholesale Division at Agra.

Klein said when his division looked at various products it saw a notable increase in the current prices compared to those of the past year. The increase is not only on what they charge, but also on what suppliers charge his division for those items.

Fuel costs are the main contributor to the increases, as the suppliers have to transport products from South Africa to the point of destination in Namibia.

Naturally, the transport costs could also be felt on prices of commodities such as maize and wheat since Namibia is an importer of maize and wheat from South Africa.

Compounding the higher prices is the influence of supply and demand on South Africa’s Future Exchange (SAFEX). SAFEX is an equivalent of the stock exchange that trades on commodities such as wheat, maize and sunflower.

The produce prices in Namibia are derived from SAFEX plus the import parity.

But it is not all doom and gloom, says Klein. “I would not say the agricultural sector is doomed. It is not as though we have not had difficult times in the past. As humans, we have always adapted,” said Klein.

To survive retailers in agricultural and farming items, such as Agra, are implementing efficient management systems including strict stock control over stock losses, improved negotiation and procurement strategies, tighter debt control and good customer service and relations.

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