eBusiness Weekly
Nembula
In our township communities, most people enjoy a cooked meal only once a day. The decision as to what that all-important meal should be, and where to eat it, is determined by what is affordable, what is filling, and what is available at home.
Fried chips have become a staple part of that cooked meal.
When you order a plate of food at Nembula’s Place, my restaurant in Esikhawini township, close to Richards Bay, every order arrives at the table with a plate of fried chips. There are chips and ribs, chips and chicken wings, or a combo of chips, ribs and chicken wings. Chips are a staple on both mine and every township menu, with vetkoek and chips sold on every street corner. This is because they are affordable, filling and delicious.
But I have seen the price of chips rise steadily over the last year, which is a big concern. Where a vetkoek and chips sold on the street corner a short while ago for R5, it is now R10. A 100 percent increase on a meal that costs R5 may look insignificant to some, but for someone living in a township, with limited or no money to buy food, this increase is huge.
The same goes for the chips that I sell on my menu. I have watched the price climb each week as I place an order with my distributors. I have been running my restaurant for over 20 years now, and have never seen such a drastic increase in the price of frozen chips.
While I’m trying very hard to keep the cost down for my customers, it is getting to the point where I will need to increase the price of a plate of food. When that happens, my customers are going to be unhappy, and possibly stop supporting me.
The truth is that I have no choice but to increase prices. The price of frozen french fries has increased by 88 percent this year.
I have to decide now whether to increase my prices or reduce my chips — but, whatever I do, I’m going to make people unhappy and I’ll lose customers. They see what potatoes cost in the shop, and do not understand why the cost of chips has doubled.
So why are the prices of fried chips climbing? I was so concerned about this, and the impact it would have on my business, that I asked my distributors why prices were climbing so steeply. According to them, it’s a combination of scarcity and import tariffs. Currently, South Africa has a shortage of the kind of potatoes needed to make frozen chips, as well as not enough fries processing capacity. When you have a shortage of a product, the price goes up. It’s basic supply and demand.
Because there is a shortage locally, manufacturers and distributors are having to import frozen fries from overseas to meet local demand. But on top of this, the government recently levied a massive 180 percent duty on imported frozen chips.
The question I have for the government is if duties are the correct strategy. I know that local manufacturers often go to them, asking them to bring in duties against imported products, but when there isn’t enough frozen chips to supply businesses like mine, what must distributors do? Of course they have to import these products so that I can continue to serve fried chips on my menu.
My second question for government is this: isn’t it time you put the needs of the South African public ahead of the needs of big business? All you have to do is to remove the duties on imported chips until the shortage is over. That way, customers and the public can continue to afford to buy fried chips, as small businesses operating in our country’s townships, we will be able to continue to serve them, and the demand for chips in South Africa is managed. For me, this is a no-brainer.
I also understand that there is no VAT charged by government on chips, or potatoes. The only reason for removing 15% VAT on a product is to make sure that a basic food remains affordable to the poorest people. It’s worth noting that no VAT is charged on brown bread, maize meal, samp, mealie rice, tinned pilchards, and vegetables.
There’s also no VAT charged on vegetable oil, a critical product used in making fried chips. So if you want to keep a product affordable so badly, that you exempt it from 15 percent VAT, why would you then add on a 180 percent import duty? It’s just adding another tax on to consumers, and driving up the price.
Our businesses suffered tremendously over the last two years. Government will never fully comprehend the hardship suffered by those who had to close during the pandemic, or whose businesses, like mine, were destroyed during the 2021 riots. If they had a thorough understanding of this, they would do all they can to assist small township businesses, and remove these tariff taxes once and for all. It is the very least they can, and should, do.
Nembula is the owner of Nembula’s Place, a restaurant in Esikhawini township, close to Richards Bay. Fin24
