Summer crops enjoying rain, but fuel costs putting pressure on agri sector
Agricultural Business Chamber (Agbiz) says the planting season for South Africa's 2021/22 summer grains and oilseeds started positively in the eastern and central regions.
The season has been met with favourable rains that naturally improve soil moisture.
The weather outlook for the coming months is also positive, with prospects of above-normal rainfall, which should support the crop in this new season.
Agbiz, however, warns that farmers currently have to contend with rising input costs.
For example, fertiliser and agrochemical prices were more than 40% higher in October this year, compared with October last year.
Rising fuel prices are also a significant cost for farmers and agribusinesses.
Preliminary estimates from the Central Energy Fund suggest that petrol and diesel prices could increase by R0.98/l and R1.41/l, respectively, on November 3.
This adjustment means the retail price of petrol could increase to R19.31/l from the current level of R18.33/l.
Simultaneously, the wholesale diesel price could rise to R17.12/l from R15.71/l.
The key factors sustaining fuel prices at these higher levels include the somewhat weaker rand to the dollar, combined with rising Brent crude oil prices.
For context, fuel generally accounts for between 11% and 13% of grain and oilseed production costs.
The consumption is usually moderate throughout the year, with the highest periods being during planting and harvesting and Agbiz says “we are in such times at the moment”.
In terms of yearly fuel use, it is worth noting that South Africa transports about 81% of its maize, 76% of its wheat and 69% of its soybeans by road.
On average, 75% of national grains and oilseeds are transported by road.
In conclusion, although the 2021/22 summer crop planting season is enjoying good weather, the industry will remain under pressure amid the rising fuel costs.
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