Industry organisation the South African Canegrowers Association (SA Canegrowers) has welcomed the extension of the reduced fuel levy for another two months.

National Treasury and the Department of Mineral and Petroleum Resources (DMPR) on April 28 announced that the reduction in the fuel levy, implemented in early April to help consumers amid a sharp increase in fuel costs as a result of the conflict in the Middle East, would remain in place for now.

As such, the general fuel levy for petrol will remain at R1.10 a litre until June 2, while the temporary relief for diesel will be increased by 93c a litre to R3.93 a litre, reducing the levy to zero, from May 6 to June 2.

In June, the price relief will be halved, with the general fuel levy for petrol increasing to R2.60 a litre and the general fuel levy for diesel increasing to R1.97 a litre.

From July 1, the general fuel levy for petrol will return to R4.10 a litre and the general fuel levy for diesel to R3.93 a litre.

SA Canegrowers points out that diesel is a key cost driver in agriculture, with the expected price shock of an estimated additional R7 a litre for May putting many of South Africa’s small-scale canegrowers at risk.

The combined cost of on-farm fuel and transport for South Africa’s sugarcane growers amounts to between 17% and 29% of their total costs, depending on how far they are located from their nearest mill.

The South African Revenue Service has increased the rebate on diesel for primary sector agricultural users to 100% from April 1, which allows growers to claim back general fuel levies and the Road Accident Fund levy on qualifying farming activities.

However, this will not translate into immediate relief at the pump, as diesel prices continue to rise, SA Canegrowers notes.

The organisation points out that, despite the R3 a litre reduction in the general fuel levy for April, diesel prices still increased by R7.30 a litre.

Further, the continued elevated oil price and weak rand:dollar exchange rate mean that the diesel price might again increase by about R7 a litre for May.

Extending the fuel levy reduction is not just short-term relief, but is essential to protect jobs, sustain rural economies and ensure the continued viability of South Africa’s sugar industry, says SA Canegrowers chairperson Higgins Mdluli.

Fuel is one of the biggest input expenses in the sector and another sharp increase could push many growers, particularly small-scale farmers, beyond breaking point. A surge in imported sugar and persistently low global prices have significantly eroded margins, leaving growers with very little room to absorb additional costs, he says.

Meanwhile, South Africa has a clear opportunity to reduce its reliance on imported fuels by creating an enabling environment for bioethanol produced from agricultural feedstocks, such as sugarcane.

With the right policy certainty and investment framework, the sugar industry can play a meaningful role in supporting energy security, driving rural development, and diversifying farmer incomes in a sustainable and realistic way over time, he says.

“Sugarcane is an ideal feedstock for bioethanol and, by investing in this diversification, South Africa can reduce reliance on imported fuels while safeguarding existing agricultural jobs and creating new opportunities in green industrialisation.”