Fuel hike puts strain on agriculture

Johannesburg – Economists have sounded the alarm bell that the surge in fuel prices is likely to hurt the resurgent agriculture sector.

Senior agricultural economist at FNB agri-business Paul Makube said agriculture input cost pressures will mount as fuel prices increase.

“This comes at an unfortunate time with the onset of the winter crop-planting season and summer crop farmers gearing themselves for the winter harvest. We are heading into increased activity in the agriculture calendar and demand and consumption of fuel is expected to increase in the medium term,” he said .

“The escalation in fuel costs does not bode well for producers as production costs are likely to escalate across the value chains with varying impact on planting, harvesting, distribution and packaging.”

The agriculture sector was one of the bright sparks in a torrid year for the South African economy ravished by Covid-19.

While the national economy as a whole experienced its greatest contraction since at least 1946, amounting to a decline of 7% in gross domestic product (GDP), the agricultural sector experienced an annualised real GDP growth rate of 13.1%.

Fuel prices shot up on Wednesday midnight, with 93 octane petrol increasing by 95c a litre while the 95 octane increased by R1.

Diesel rose by 63c to 65c.

The increases are also expected to hit the pockets of consumers who are still recovering from salary cuts and job losses.

The chairperson of the portfolio committee on mineral resources and energy, Sahlulele Luzipo, said they were concerned about the fuel price hike that came on the back of the electricity tariff hike.

“The impact of these hikes will be unbearable on poor communities because most people rely on public transport to access health services, and oft en the taxi industry increases fares when there is a fuel price hike,” he said.

Sunday World 

Kabelo Khumalo