South Africa’s winter crop producers could experience higher input costs this year, as was the case for the 2021/22 summer crop planting season. This according to Wandile Sihlobo, chief economist of the Agricultural Business Chamber of South Africa (Agbiz).
In Agbiz’s weekly agricultural market viewpoint, Sihlobo points out that the higher input costs, which have been the dominant feature of South Africa’s agricultural sector over the past year, will likely prevail in the coming months, with negative effects on farmers’ financial condition.
Summer crop producers have already incurred these costs as the crops are now in the ground.
Sihlobo says, “The primary focus for the coming month is the winter crop growers, mainly for wheat, canola, barley and oats, where planting for the new season crop will begin at the end of April.”
Evidently, profits will be squeezed by the high input costs in the upcoming production season.
Livestock and poultry inputs
Agbiz sees similar cost pressures for the livestock and poultry industries.
According to Sihlobo, while the heavy rainfall of the past few months may have improved the grazing conditions in South Africa, oilseeds and grains prices have remained elevated. As a result, input costs for farmers, specifically poultry producers, have been boosted.
Most of the blame for these price hikes in the past few months can be placed on poor crop conditions in South America, strong demand for oilseeds in China and India, poor palm oil harvest in Indonesia, and recently the Russia-Ukraine tension.
This has, in turn, influenced the price dynamics in South Africa and the costs of feed for the livestock and poultry sector, Sihlobo says.
“Only a downward price change in vegetables oils and grains would provide much-needed relief in the livestock and the poultry industry.
“The interplay of a potential recovery in stocks and consumption levels and ultimate harvest size in South America will be the main determinants of these prices in the coming months,” he explains.
Supply constraints in critical fertiliser-producing countries, mainly China, India, the US, Russia and Canada have also been one of the factors behind these sharp input cost increases.
Other factors include rising shipping costs and oil and gas prices, along with firmer global demand from the growing global agriculture.
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