The increasing fuel prices are an additional cost that farmers and agribusinesses currently face. However, the planting season for South Africa’s 2021/22 summer grains and oilseeds started positively in the eastern and central regions, with favourable rain that improved soil moisture.
The weather outlook for the coming months is positive, with prospects of above-average rainfall, which should support the crop this upcoming season. The one concern that farmers currently must contend with, is the rising input costs. Agbiz recently wrote about the fertiliser and agrochemicals prices which, in October, were over 40%, compared to 2020 levels.
The preliminary estimates from the Central Energy Fund suggest that petrol (95 ULP inland) and diesel (0,05% wholesale inland) prices could increase by 98 cents per litre (c/l) and R1,41c/l, respectively, on 3 November 2021. This adjustment means that the retail price of petrol could increase to R19,31 per litre from the current level of R18,33.
Simultaneously, the wholesale diesel price could rise to R17,12 per litre from R15,71 in October. The key factors sustaining fuel prices at these higher levels are the somewhat weaker South African rand/United States (US) dollar, combined with the rising Brent Crude oil prices.
For context, fuel generally accounts for between 11 and 13% of grain and oilseeds production costs. The consumption is usually moderate throughout the year, with the highest periods being during planting and harvesting, and we are in such times at the moment.
In terms of annual fuel usage, it is worth noting that South Africa transports roughly 81% of maize, 76% of wheat, and 69% of soya beans by road. On average, 75% of national grain and oilseeds are transported by road. – Press release, Agbiz