Fuel hike to affect the new crop season

The announcement of fuel price hike by the Department of Minerals and Energy (DMRE) is expected to affect the new crop season.

According to FNB Agriculture, this announcement came at a worse time when farmers are busy delivering huge grain and oilseed crop of 17.07 million to the country’s silos.

 “The availability of fuel at the right time and price is critical for a successful operation across the agriculture value chain,” said senior economist at FNB Paul Makube.

South Africa’s fuel prices were adjusted on a monthly basis, normally informed by international and local factors.

“The average Brent Crude oil price increased from 73.00USD to 74.00USD per barrel during the period under review,” said the DMRE.

The high unexpected jump has set the two grades of petrol at R18.11/ litre (unleaded 93) and R18.30 (unleaded 95), which was 22% and 21% higher respectively year‑on‑year (y/y).

Gauteng seemed to be the worst affected region, as diesel was more expensive going between 20.31% and 21.13%, whole a litre of paraffin in the province was now 30.31% expensive.

According to the Automobile Association (AA), the last time fuel was priced above R17/l was in October/November 2018.

“At the time, the price reached R17.08 for 95 ULP in Gauteng. In the same months a litre of fuel was priced at R16,49 at the coast, the priciest it had ever been before.”

What does this all mean for farmers?

Makube adds: “not only fuel is impacted, but the cost of imported agriculture inputs such as fertilizer, pesticides, and herbicides will also increase especially given the recent constraints with availability of ingredients to produce certain fertilizers and the higher cost of shipping.”

Ronnie Mckenzie, Chairperson of Farmers United of South Africa (FUSA), said while being interviewed on Newzroom Afrika that smallholder farmers will bear the brunt and be left in a worse situation that before.

“The fuel price alone would be enough to collapse black farmers as input costs will also rise and farming operations will cease,” he said.

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