As the threat of food insecurity grows, a number of stakeholders across the food value chain are calling for the adoption of sachetisation to provide short-term relief, particularly for consumers, due to rapidly accelerating inflation and a hard-hit local currency eroding consumers' purchasing power, even for bare necessities like food.
Sachetisation is the process of repackaging commodities into smaller amounts (sachets, packs, and bottles) while maintaining quality. It is done mostly in reaction to a cost-induced drop in aggregate demand, offering cash-strapped customers more inexpensive choices.
Joe Jackson, Financial Analyst and Director of Business Operations at Dalex Finance, recently warned of impending home food restriction in an interview with the B&FT.
According to the report, the benefits to firms and consumers, who might otherwise be unable to buy some commodities, exceed any short-term costs.
"Given the current rate of inflation, sachetisation makes a lot of sense since it allows businesses to sell their products at a price point that consumers can afford without wasting any." "Because many producers bag their products locally and do not require further research and development, the transition may be made fast," he noted.
Mr. Jackson went on to say that the sachetisation approach should be applied to other areas, including financial services delivery, as a matter of expediency.
"From our viewpoint, this is a commercial issue, not a policy issue." In the midst of everything, individual firms should compare the pricing and sizes of their goods and services to the real, discretionary income of consumers," he said.
However, the AGI spokesperson was quick to point out that sachetisation is merely a band-aid solution, since increased prices would ultimately trickle down to the end customer, regardless of the size of the product eaten. He stated that efforts in food production and storage must be increased.
"The actual impacts of COVID-19 are now being felt. Many of our farmers did not fully engage in the planting season at the time, and we are now witnessing the consequences... "More has to be done to motivate them, and there should be a strong focus on food preservation because the uncertainties are still present," Mr. Akpeloo added.
A manager of a local Fast Moving Consumer Goods (FMCG) firm, who requested anonymity because he is not authorized to comment on the subject, praised the notion of enhanced sachetization, saying his company will seriously explore implementing it in the near future.
It will certainly bring respite in the near term, according to Maame Esi Ankrah, who sells consumer goods in Accra's Central Business District (CBD).
"Perhaps one and two kilograms of packed rice should be available, as many people cannot afford the five-kilogram sacks." "Occasionally, we see individuals contribute to the purchase of one of the little bags and then divide it among themselves," she stated.
Consumer prices rose 4.2 percentage points to 23.6 percent in April, the largest increase in in two decades and the eleventh straight monthly increase.
This was mostly due to rising transportation costs, which rose 16.1 percentage points to 33.5 percent in April and pushed food inflation to 26.6 percent.
blogpay
