For 12 years since the 1994 elections, this billboard outside Aliwal North in the Eastern Cape stood bare. That was until local Bonsmara farmer David Cook bought it from the Johannesburg company that had used it to advertise the first democratic elections. “They’d tried to sell advertising space on it afterwards, but it was too expensive for the locals,” said Cook, who bought the billboard two years ago. It now boasts a larger-than-life image of one of his and his wife Tersia’s Tempevale Bonsmara stud bulls. Cook gets many phone calls, but said it’s difficult to measure the impact on his bull sales. – Photo: Greg Miles
‘Nationalise’ Sasol!
A fuel company Sasol could hold THE KEY to government’s ability to deal with escalating food costs as a result of rising crude oil prices, according to political analyst Prof Dirk Kotzé. He was reacting to comments by finance minister Trevor Manuel that government could do very little to protect consumers from the rising oil price.
“The percentage of fuel Sasol produces is significant and a call has already been made to nationalise it,” Kotzé said, explaining that since is independent of the international oil price, government should use it to cross-subsidise fuel costs. T his could defuse the feared social unrest that ANC president Jacob Zuma referred to at the World Economic Forum in Cape Town recently. Citing the high oil price, which recently tipped to US$139/barrel (R1 108/barrel), as one of the main contributors to rising food prices, Zuma said there was little government could do because it was an international phenomenon.
He called on international organisations to address the issue and said that the government’s hands were tied because it wasn’t part of the companies that influenced the increasing prices. World Bank vice president for Africa Obiageli Katryn Ezekwesili disagreed, saying the solution did lie with government, but that it shouldn’t succumb to populist measures such as subsidies and market controls. She said rising food prices were a long-term opportunity for farmers, but current shocks should be managed by governments, civil society and aid agencies. – David Steynberg
Ocean freight costs to hit SA exporters
The rising cost of crude oil will have severe financial implications for many local farmers who export by ocean freight, warned Daan Louw, director of Optimal Agricultural Business Systems.
On top of escalating fuel costs, he said, many shipping companies are revising engine and fuel standards to reduce carbon emissions. Mark Cairns from Maersk Line SA added that the high cost of low-sulphur fuels is a particular obstacle, as they cost almost twice as much as bunker fuel.
Bunker costs – that is, the costs of all fuel and oil used for shipping – are measured in US dollar per ton unlike crude oil, which is measured in dollar per barrel. Bunker oil is a refined product and prices are therefore driven by competition for raw crude oil. The price for bunker oil has increased by 230% since 2004.
“Rising fuel costs are taking their toll on shipping companies, with fuel costs representing as much as 50% to 60% of total ship operation costs,” Cairns said at the Cape Pomological Association’s symposium in Stellenbosch. But shipping companies were already implementing plans to reduce costs, he said. One way to curb price volatility was through the introduction of fuel surcharges. “Shippers accept and pay variable or floating adjustments for transportation every day,” he explained. “advantage is accurate pricing.
This means the overall cost of transportation is directly affected by market factors, without singling out a particular segment of the supply chain to bear the brunt of volatility or adverse increases.” he increased cost of shipping has also resulted in operational changes. Shipping companies are redeploying vessels to optimise utilisation, consolidating services and routes and revising schedules to allow for slower sailing speeds.
Hull and propeller conditions are also being monitored to reduce resistance. Nevertheless, according to Cairns, ocean shipping is still the most energy-efficient form of transportation, 17 times more fuel-efficient than air and 10 times more efficient than road transport. – Glenneis Erasmus
