Following the recent announcement by the finance minister, Enoch Godongwana, and the minister of mineral and petroleum resources, Gwede Mantashe, to extend the temporary fuel levy relief, the agricultural sector has been hit with a reality check, as massive pump price hikes are set for tomorrow.
The intervention, which keeps the petrol levy reduced by R3 and zero-rates the diesel levy at R3.93 per litre for May, was intended to shield households and producers from the fallout of the Middle East conflict. However, the reprieve has been quickly swallowed by global market volatility.
Petrol prices will increase by R3.27 per litre, while diesel will see a staggering climb of R6.19 per litre. These hikes follow a breakdown in ceasefire talks and a United States (US) blockade in the Strait of Hormuz, which pushed oil prices back above $100 a barrel. Locally, a R14 billion negative slate balance has further burdened the price structure with an additional 122.70 c/l levy.
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Economists warn of knock-on impact
This sudden surge in fuel prices follows relief measures announced by Godongwana and Mantashe. While the general fuel levy for diesel has been reduced to zero for the month, the market-driven increase of R6.19 per litre means costs will still rise significantly.
Senior economist at National Agricultural Marketing Council (NAMC), Thabile Nkunjana, said the anticipated price shock puts many farmers, particularly small-scale producers, at risk.
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“Diesel is a major cost driver in agriculture. When fertiliser expenditures are included, the combined cost of transportation and on-farm fuel for farmers ranges from 15% to 50% of their overall expenses on inputs,” he said.
Senior economist at Nedbank, Isaac Motshekgo, agreed that while the savings are helpful, the broader outlook for food prices is concerning.
“Food inflation will increase due to the effects of foot-and-mouth disease, higher diesel prices and the increase in fertiliser costs. We could see inflation of more than 6%,” he noted.
Supply disruptions hit winter crops
While the levy reduction offers temporary breathing room, industry bodies AgriSA and Agbiz cautioned that the intervention, while necessary, does not fully offset the deeper structural pressures.
“The relief, while necessary, does not fully offset the deeper structural pressures facing the agricultural sector, particularly fuel availability constraints, rising input costs, and the renewed spike in global oil prices linked to the ongoing Middle East conflict,” the organisations stated.
Reports from the supply chain point to ongoing disruptions, including delayed deliveries and allocation limits. The timing is particularly concerning as the winter crop season is underway, with wheat plantings for the 2026/27 season expected to decline by around 6% to the lowest level in 12 years.
“Continued fuel supply disruptions and cost volatility, now amplified by higher global oil prices, pose a material risk to the 2026/27 summer crop season. This is despite a strong current outlook, with South Africa expected to harvest a record 20.8 million tonnes of grains and oilseeds in the 2025/26 season,” AgriSA and Agbiz warned.
Paul Makube, senior agricultural economist at FNB Commercial, added, “We have entered the period of heightened fuel demand in the agriculture activity calendar with the onset of winter crop plantings, the summer crop harvest, and citrus export season, and the elevated costs threaten the profitability of these industries.”
He explained that fuel is critical in the planting and harvesting processes within the grains and oilseed sector, where it accounts for approximately 13% of input costs. Makube further noted that fuel is central to farm logistics, specifically for transporting agricultural produce to markets and moving various inputs from suppliers.
Impact on input costs and consumers
“On the consumer front, higher fuel means a further erosion of disposable incomes due to added costs such as transport fees, increases in prices of various food commodities due to distribution and associated costs of landing the products for consumption.
“Nonetheless, we are hopeful of a settlement in the medium term, which could see a full reversal in the international crude oil price trajectory. This means farmers may not face catastrophic input price increases at the onset of the 2026/27 crop season in six months’ time,” Makube said.
For producers currently in the middle of critical seasonal work, the zero-rated levy is a welcome but thin cushion against a tide of rising overheads.
Mpumalanga crop farmer Nompumelelo Nkosi said the diesel levy cut is a welcome relief during land preparation and irrigation, but noted it won’t drastically reduce overall planting costs.
“Fuel is just one part of a much bigger cost structure that includes inputs like fertiliser, seeds, and labour. The levy relief alone is unfortunately not enough to fully prevent price increases later on,” she said.
Nkosi warned that with other costs continuing to rise, the relief may only slow down potential price hikes rather than eliminate them. “Long-term sustainability in farming will require more comprehensive support measures that address the full range of rising input costs,” she added.
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