The slight drop in the price of fuel is good news for farmers who are busy harvesting, says Paul Makube, a senior agricultural economist at FNB Agri-Business.
Earlier this week, the price of petrol and diesel decreased by 9 and 31 cents per litre respectively. Experts say the adjustments are the result of a decrease in the Brent crude oil price and the slight appreciation of the Rand.
Makube says, “Fuel prices eased for the first time in 2021 on the back of a 2% decrease in international Brent crude oil prices and the Rand strengthening by 3% in April relative to the previous month.”
Although the fuel price decrease is still small, it is most welcome as farmers are busy harvesting the summer grains and oilseed crops and getting on with the planting of winter crops, believes Makube.
“Any reprieve at the pump is positive as we head into increased activity in the agriculture calendar with high demand and consumption of fuel. This will help prevent further escalation in input costs across the value chains with varying impact on planting, harvesting, distribution and packaging.
“It is important to note that closer to 80% of grain is transported by road from farms to silos, to the various harbours, as well as milling areas across the country. This has an impact of profit margins of grain producers and logistics companies in the agriculture value chain,” says Makube.
Impact on horticulture and live stock producers
According to Makube horticulture with citrus harvest in its infancy will also be affected in terms of distribution across the country and for exports. Also, livestock producers face cost pressures as they transport animals from production areas and finally to slaughterhouses.
“Moreover, the prices of inputs such as fertilizer, herbicides and pesticides are highly influenced by the levels of both the crude oil prices and the Rand exchange rate,” he says, further explaining the impact of the fuel price reprieve.
“It is hoped that the current developments of rand strength and easing of international crude oil prices would persist and provide the much needed relieve for farmers and consumers and further contribute positively to containing inflation.”