“The South African Human Rights Commission (SAHRC) has launched the third phase of its National Food Systems Inquiry, focusing on supermarket pricing, market concentration, supplier relationships and consumers’ access to affordable food. The investigation aims to understand why hunger persists in a country with substantial food-production capacity and how economic and structural barriers affect household access to essential groceries.”
South Africa examines supermarket competition as food affordability remains a concern
Introduction: Food affordability becomes a central economic issue
South Africa’s food market is facing renewed scrutiny as the South African Human Rights Commission (SAHRC) examines the relationship between supermarket pricing, competition and household access to essential food. Announced on 16 October 2026, the third phase of the commission’s National Food Systems Inquiry places major retailers and other food-sector participants under the spotlight as the country continues to confront food insecurity.
The development is significant from a microeconomic perspective because it concerns the decisions made by consumers, retailers, suppliers and producers in individual markets. These decisions influence the prices households pay, the products available on store shelves and the ability of smaller businesses to compete.
According to The Citizen, the commission wants to understand the commercial and structural factors affecting food prices, relationships between suppliers and retailers, and consumers’ ability to obtain adequate food. The inquiry follows complaints about persistent barriers to accessing food, despite South Africa’s capacity to produce sufficient supplies.
The investigation does not establish that supermarkets have unlawfully inflated prices. Instead, it seeks evidence about how the food system operates and why adequate national production does not necessarily translate into affordable food for every household.
1. Understanding the microeconomics of food prices
Microeconomics examines how individual consumers and businesses make decisions when resources are limited. In the food sector, these decisions include how much farmers produce, what processors charge, how supermarkets set retail prices and which products consumers can afford.
Food prices are determined by several interacting forces. Production costs, transport expenses, electricity charges, storage requirements, wages, demand and competition can all affect the final price of groceries.
For example, a farmer growing maize must pay for inputs such as fertiliser, seed, machinery and labour. The harvested crop may then pass through transporters, processors, wholesalers and retailers before reaching consumers. Each stage introduces costs and potentially different margins.
Consequently, the retail price of a basic staple does not necessarily reflect only the original cost of producing it. Distribution expenses and the commercial arrangements between participants in the supply chain also matter.
However, the existence of these costs does not automatically explain every price difference. A detailed examination of the market can help establish how much different factors contribute and whether consumers benefit when underlying costs decline.
This is where the SAHRC inquiry has economic relevance. By examining market structures and pricing dynamics, it could help clarify the factors that determine affordability across the food value chain.
2. Market concentration and supermarket influence
One of the inquiry’s central issues is market concentration, which describes a situation in which a relatively small number of businesses account for a substantial share of economic activity in a market.
In grocery retail, large supermarket groups may benefit from economies of scale. They can purchase products in large quantities, distribute goods through extensive logistics networks, invest in technology and negotiate commercial terms with suppliers.
These advantages can reduce operating costs and sometimes allow large retailers to offer lower prices than smaller competitors.
Nevertheless, concentration can raise questions about the bargaining power of retailers and the opportunities available to suppliers and competing businesses.
If a small number of buyers account for a large proportion of a supplier’s sales, that supplier may have fewer alternative customers. Smaller farmers and food manufacturers can therefore face difficulties negotiating prices, payment terms, promotional contributions and shelf access.
The impact depends on the specific market, the availability of alternative buyers and the commercial arrangements involved. Market concentration alone does not prove that competition is ineffective or that prices are excessive.
For consumers, the critical question is whether competition encourages retailers to offer attractive prices, good quality, adequate product choices and reliable service.
The commission’s investigation could provide a more detailed understanding of how large retailers influence the broader food market and whether existing arrangements create barriers for smaller participants.
3. Why hunger can persist despite food-production capacity
A central concern highlighted by the SAHRC is the coexistence of food-production capacity and persistent hunger.
From an economic perspective, producing sufficient food nationally does not guarantee that every household can obtain enough of it. Access depends on income, employment, prices, transport, distribution networks and the availability of appropriate products in local communities.
A household may live near a well-stocked supermarket but lack sufficient disposable income to purchase a nutritious basket of groceries. Another household may have the money to buy food but face limited access to affordable shops because of transport costs or the location of retail outlets.
These problems demonstrate the difference between the physical availability of goods and effective demand.
In economics, effective demand refers to a desire to purchase that is supported by the ability and willingness to pay. A household experiencing severe financial pressure may need more food but be unable to express that need through market purchases.
Consequently, food can exist in the wider economy while vulnerable households remain food insecure.
Income inequality and unemployment can intensify this problem. When households spend a substantial share of their earnings on necessities, even modest increases in grocery prices can force difficult choices involving transport, electricity, healthcare and education.
The inquiry’s emphasis on structural and institutional barriers is therefore important. Food affordability cannot be understood by examining supermarket shelf prices alone; household purchasing power and the wider distribution system also matter.
4. Supplier relationships and the cost of bringing food to market
Another important area is the relationship between retailers and their suppliers.
Supermarkets rely on a network of farmers, processors, manufacturers, distributors and logistics companies. The terms negotiated between these participants influence investment, production planning and the final prices consumers encounter.
Large retailers may use their purchasing volumes to negotiate favourable wholesale prices. This can benefit shoppers when lower procurement costs are passed through to retail prices.
However, suppliers may face financial pressure if contractual terms are difficult to meet or if access to major retail channels requires substantial investment in packaging, quality control, delivery and promotional activities.
Smaller producers may also struggle to satisfy large-volume orders consistently. Seasonal output, weather conditions, limited storage facilities and financing constraints can make it harder for them to compete with established suppliers.
These challenges matter because suppliers need sufficient returns to maintain production and invest in future capacity.
If commercial arrangements discourage investment or make market access difficult, the longer-term effects could include fewer suppliers, reduced product diversity or greater dependence on established producers. Whether such outcomes occur must be determined using evidence rather than assumptions.
By encouraging retailers to participate in the inquiry, the commission is seeking a broader account of how the food system functions and how supplier relationships influence consumer access.
5. Competition and its potential benefits for consumers
Competition is an important mechanism for improving market outcomes.
When several businesses compete effectively for customers, they have incentives to control costs, improve product quality, introduce new services and offer attractive prices. Consumers can compare alternatives and switch suppliers when they find better value.
In the grocery sector, competition may take place through direct price reductions, loyalty programmes, discounts, private-label products, product selection and convenient store locations.
Different retail formats can also serve different customer needs. Large supermarkets may offer broad product ranges, while discount retailers, independent shops and informal traders can compete through location, specialised products or flexible operating models.
However, competition is not determined by the number of shopfronts alone. Relevant questions include whether customers can realistically switch retailers, whether suppliers can reach alternative buyers and whether new businesses can enter the market without facing unreasonable obstacles.
The costs of establishing a retail operation can be substantial. Businesses may need suitable premises, refrigeration, stock financing, reliable electricity, transport and compliance systems.
Smaller firms may also have difficulty matching the purchasing power and distribution efficiency of large chains.
Where entry barriers are significant, potential competitors may find it difficult to challenge established firms. That can weaken competitive pressure, although the actual effect depends on local conditions and the structure of each market.
The SAHRC inquiry provides an opportunity to investigate these issues as part of the wider question of food affordability.
6. Household budgets and the cost of essential groceries
Food is a basic necessity, which means consumers cannot simply stop buying it when prices increase.
Households can respond by changing brands, purchasing smaller quantities, choosing cheaper alternatives or reducing spending on other goods. However, these adjustments can carry consequences for nutrition, household welfare and overall living standards.
Consider a family whose monthly income remains unchanged while the cost of its regular grocery basket rises. The family may have to spend more on food and reduce expenditure elsewhere, or purchase less food to keep within its budget.
Lower-income households can be particularly exposed because they generally have less financial room to absorb unexpected expenses.
Price differences between products also matter. Consumers may switch from a branded product to a cheaper alternative when the products meet similar needs. However, substitution becomes more difficult when affordable alternatives are unavailable or when households have limited access to stores.
For policymakers, this makes it important to distinguish between overall food inflation and the prices of individual essential products.
Average inflation figures can conceal substantial differences between products, regions and household spending patterns. A household’s experience depends on the composition of its shopping basket and the share of income devoted to food.
A careful investigation should therefore consider not only how prices change, but also who bears the greatest burden.
7. The importance of evidence-based oversight
The SAHRC’s third inquiry phase builds on two earlier stages.
According to The Citizen, the first phase, held in March 2026, considered structural and economic factors contributing to hunger and exclusion. It also addressed concentration of power across the food value chain, land access, tenure security and challenges facing women, smallholder and communal farmers.
The second phase, held from 6 to 10 July, involved private-sector stakeholders across the food value chain, including agricultural input distributors, farmers, agricultural organisations, food processors and retailers.
The third phase renews engagement with supermarket groups and other retail-sector stakeholders, particularly those that did not participate in the second phase. At the time of publication, the commission had not yet announced the date, venue or final programme for the next stage.
Participation matters because different participants experience the market differently.
Retailers can explain operating expenses, procurement arrangements and pricing decisions. Farmers can describe production costs and market-access challenges. Processors and distributors can provide information about manufacturing and logistics. Consumers and civil-society organisations can explain how food prices affect household welfare.
Comparing these perspectives can help investigators separate verified market problems from general perceptions.
Useful evidence could include product-level price movements, supplier contracts, distribution costs, margins, barriers to entry and differences in the availability of essential products. Any conclusions about unfair conduct would require appropriate supporting evidence.
8. Possible implications for businesses and consumers
The inquiry could have several implications, depending on the evidence gathered and any subsequent recommendations.
For supermarkets, closer scrutiny may increase the importance of explaining pricing practices, supplier arrangements and measures intended to improve affordability.
For smaller producers, greater understanding of market-access barriers could help inform proposals for more inclusive participation in formal retail channels.
For consumers, the potential benefit lies in identifying practical ways to improve access to nutritious food. This could involve competition-related measures, better market information or broader changes to the distribution system, depending on the findings.
However, the inquiry should not be interpreted as proof that a particular retailer is responsible for hunger or that reducing supermarket margins alone would resolve food insecurity.
Food affordability is influenced by multiple factors, including household incomes, agricultural productivity, transport costs, market structure and access to retail services.
Interventions must account for these relationships. For example, a measure that reduces one business expense might lower prices, but its effects would depend on how firms respond and whether the savings reach consumers.
Likewise, measures intended to support smaller suppliers should consider their ability to meet quality standards, maintain reliable deliveries and expand production sustainably.
The objective should be to improve market outcomes without overlooking the economic conditions required for businesses to remain viable.
9. What to watch next
The next important development will be the SAHRC’s announcement of the third phase’s programme and the evidence collected from supermarket groups and other retail-sector participants.
Observers should look for clear findings about pricing dynamics, supplier bargaining power, market concentration and barriers that prevent households from accessing food.
It will also be important to distinguish the commission’s findings from any subsequent policy proposals or enforcement actions by other relevant authorities. These processes may have different mandates and evidentiary requirements.
For consumers, the most meaningful outcome would be a clearer understanding of why essential groceries remain unaffordable for some households and which interventions could improve access in a sustainable way.
For businesses, a transparent evidence base could help clarify legitimate operating-cost pressures and identify practices that may unnecessarily restrict competition or supplier participation.
For policymakers, the challenge is to balance competitive markets, viable food production, efficient distribution and the fundamental importance of household access to adequate nutrition.
Conclusion: Food affordability requires more than adequate supply
The SAHRC’s investigation into supermarket pricing and food affordability brings an important microeconomic question into focus: why can a country with food-production capacity still have households that struggle to obtain adequate food?
The answer is unlikely to rest on a single factor. Prices reflect production and distribution costs, competition, business decisions and market structure, while household access depends heavily on income and purchasing power.
By examining supermarket influence, supplier relationships and barriers across the food value chain, the commission aims to develop a broader understanding of these interconnected problems.
The investigation’s value will ultimately depend on the quality of the evidence gathered and whether the resulting findings lead to practical improvements.
For South African consumers, the central issue is straightforward: an effective food system must do more than produce enough food nationally. It must also support a market in which essential products can reach households at prices they can afford.
