Fertiliser prices hit a two-year high internationally during the month of March. This, paired with the recent increase in crude oil prices, is hitting Mzansi farmers where it hurts.
Local farmers are not getting a break in 2021. First the record-high prices of fuel hit them all along the value chain, and now the soaring price of fertiliser is negatively impacting their bottom lines.
International fertiliser prices, except for potassium chloride, were at their highest price points in more than two years during March, according to Ikageng Maluleke, an agricultural economist at Grain SA.
“Fertiliser had a price increase of almost 30%, where we normally escalate it on 10% increase annually,” says Alfreda Mars, a commercial grain and sheep farmer in the the Western Cape’s Swartland region.
She had already completed her budget planning for 2021 in November 2020, and is now caught off-guard by the increases. According to Mars, this will deeply impact her cash flow for the year.
“Profit margins are very low and with no change in the transport differential on grain we will not be sustainable,” she says.
“Our input costs have increased greatly, and it does affect our profit margins,” confirms another crop farmer, Buchule Pama, from the Free State.
In the end, farmers are going to be hard-pressed to cut costs elsewhere or suffer heavy losses.
“Bottom line is you need to cut and take losses on your budget with other production cost because fertiliser makes up 60% of your budget,” says Mars.
According to Mars the same thing happened with chemical prices in 2020.
“And as new era farmers, along with the drought we had, there is no way to be in the frontline anymore,” she says.