No relief from high diesel price until February

The price of fuel continues its upward march with diesel increasing 36c/â„“ and petrol 23c/â„“ in November.

The price of fuel continues its upward march with diesel increasing 36c/â„“ and petrol 23c/â„“ in November. The weaker rand/US dollar exchange rate and the higher international oil price have helped push prices up.

However, the biggest contributing factor has been winter conditions in the northern hemisphere, which have created higher demand for diesel. “The wholesale price of diesel rose by 36,1% from R7,35/â„“ to R10,01/â„“ from November 2010 to November 2011, which is R2,66/â„“ more,” said Petru Fourie, Grain SA agricultural economist.

“We don’t expect the price to decline in the short term, as the northern hemisphere is entering winter and demand for fuel will rise.” Fourie said the increase had a significant impact on producers’ fuel and production costs.

It also doesn’t bode well for the price of transport, planting and harvesting. While farmers and foresters qualify for a fuel levy refund, this will not be increased for some time yet.

Adrian Lackay, spokesperson for the South African Revenue Service (SARS), said any increase will be announced in the national budget speech in February. “Every year, the rebate has been increased as the Fuel Levy and the Road Accident Fund are increased,” he said.

“The increase is determined by the National Treasury and SARS administers it. Thus all representations for an increase of the refund should be submitted to the Treasury.” Currently, the farming, forestry and mining on land sectors qualify for a 62c/l fuel levy refund, based on 80% of eligible purchases, plus an 80c/l Road Accident Fund rebate, based on 80% of eligible purchases. The total refund is 142c/l on 80% of the total eligible purchases, Lackay said.

Johannes Grobler, technical manager of ZZ2 tomato producers in Mooketsi, said his company can’t always recoup fuel price hikes as its tomatoes are sold on the market, where prices are determined by supply and demand and are not based on production costs.

Although ZZ2’s trucks travel about 20 000km a month, Grobler said the petrol price wasn’t currently a threat to the business. He advised farmers to take a pro-active approach to petrol prices. “You must be sharper and ensure your production is higher so you can absorb the cost.

“We budgeted for the increases during the year and have taken several steps to reduce the diesel bill, such as investing in better, more fuel efficient trucks and fitting aerodynamic kits. It costs money but in the long run it’s worth it.” – Robyn Joubert