Experts warn that Wednesday’s fuel price hike will have a severe impact on farmers.
FNB corporate affairs warned on Monday that the big fuel hike expected from Wednesday will have a severe impact on the cash flow of farmer.
Motorists will need to fork out an additional 74c per litre, as a rising oil price offset a stronger rand against the dollar in February.
The Central Energy Fund said on Monday that the inland price for a litre of 95-octane unleaded petrol will rise 5% to R14.82 from Wednesday, and diesel almost 7% to R14.05.
Dawie Maree, head of information and marketing at FNB Agribusiness, said petrol and diesel are used for tillage, harvesting, machinery and transportation, making them critical components for both small-scale and commercial farmers.
Maree said the fuel hike would add to the “woes of producers”.
“From a farm producer level, we are currently experiencing a late season whereby farmers are still using a lot of diesel,” he said.
Maree said that the increase in the diesel price would have a negative impact on food inflation and the disposable income of consumers, who are already struggling to make ends meet.
Requier Wait, head of economics and trade at Agri SA, said the imminent hike in fuel prices was of concern because it is an important cost for farmers.
“Farmers are price takers and rising diesel prices increase farmers’ input costs. This lowers the margin they can earn on their produce,” he said.
“South African farmers are very resilient. They focus on increasing production efficiencies as far as possible, aiming to mitigate rising input costs.” said Wait, adding that the price hike would have a particularly adverse impact on producers who were not able to achieve the necessary efficiencies and economies of scale.
“Rising diesel prices must be absorbed as part of a changing cost structure and it directly impacts on farming margins,” he said.
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