The expected price drops are yet to be confirmed by government, but at the time of going to print, economists expected the petrol price to go down by about 56c/l and diesel to be about 20c/l cheaper. Bennie van Zyl, general manager of TAU SA, said that every time fuel prices drop, input costs drop, and for this farmers are grateful.
“But it’s still very difficult for farmers to budget accurately, because of the variability of fuel and inputs prices from month to month,” added Van Zyl. “Farmers are mostly price-takers and their profit margins are often so small that they appreciate any cost benefits that they can get.”
South Africa’s summer grains harvesting season is in full swing and farmers who had to buy bulk diesel ahead of the unexpected fuel price cuts stand to lose out on a savings of R1 000 for a 5 000l if economists’ predictions come true in early June. “The cumulative effect of farmers’ input costs all added together is very high,” said Van Zyl. “It’s unfortunate that there were big fuel increases ahead of last year’s planting and this year’s harvesting.”
While SA Canegrowers wasn’t willing to comment on speculation of a fuel price drop, spokesperson Jayne Ferguson said: “With fuel and lubricants accounting for approximately 7% of the cost of production of cane, any cost cutting measures will be welcomed by cane growers.” Dawie Maree, Agri SA’s economist, said he hopes the fuel price drops materialise, despite the recent weakening of the rand against the US dollar, so that both farmers and consumers can benefit.
“It’s difficult to say though if these lower fuel prices will last,” continued Maree. “It depends on factors like the international geo-political situation, the fact that the northern hemisphere is in its summer – and using less oil – and what’s going to happen with the exchange rate. “I’d like to see positive things coming from the diesel price for the next three or so months, and not for just one month,” added Maree.