Categories: South Africa

‘Farmers will feel delayed impact of fuel price increases’

For many farmers, the impact of the current fuel price increases will be delayed, given that many producers who are in the process of harvesting…

For many farmers, the impact of the current fuel price increases will be delayed, given that many producers who are in the process of harvesting and planting would have already stocked up on fuel for the season, according to Pertunia Setumo, agricultural economist at FNB Agribusiness.

Effective from Wednesday, 3 June, 93 and 95 octane petrol will increase by R1,18/ℓ; 0,05% diesel by 22c/ℓ; 0,005% diesel by 21c/ℓ; and Illuminating paraffin by 40c/ℓ.

Despite these increases, the price of petrol was still on average R2/ℓ lower than it was at the beginning of the lockdown period, which took effect in March to slow the spread of the coronavirus disease (COVID-19) pandemic, according to a statement released by the Department of Mineral Resources and Energy.

Setumo said decreases in fuel prices during the past two months had offered farmers an opportunity to stock up on diesel for the summer crop harvesting season, as well as for the planting of winter crops.

‘’However, there remains an upside risk to prices and possible further increase as the benchmark Brent Crude [oil] price recovers on the back of slow recovery in demand, as [countries] ease lockdown regulations. This will push up input costs such as fertilisers and pesticides,’’ said Setumo.

Dr Thulasizwe Mkhabela, an agricultural economist and group executive for impact and partnerships at the Agricultural Research Council, said fuel costs were a significant contributor to overall farming costs.

For example, diesel costs accounted for approximately 11% of the total production cost of grain farming.

“Given that the price increase for diesel is small, it is not expected to have a huge bearing on the farming sector, especially given that most of the summer rainfall areas are only focussing on harvesting activities,” he said.

Mkhabela said most farmers had fuel/diesel storage facilities on-site, and thus bought diesel in bulk, and in advance.

“Most will feel the pinch once their [stored reserves] run dry and have to [be refilled],” he added.

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Published by
Siyanda Sishuba

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