Fuel price drop a relief to SA farmers

Petrol pump

by MTHULISI SIBANDA 
JOHANNESBURG, (CAJ News) – A reduction in the price of fuel is a timely boost as South African farmers with planting scheduled in a week’s time.

Planting of summer crops particularly maize begins in the eastern producing areas of the country.

Another boost is the weather outlook. It is positive with a La Nina in the offing.

La Nina is a pattern characterised by above-normal rainfall for the Southern Africa region.

Moreover, commodity prices are currently strong with maize above R3 200/ ton and almost 34 percent higher year-on-year and interest rates are at record lows.

“The drop in fuel prices comes at the right time and coupled with the above-mentioned factors will afford farmers an opportunity to expand their operations in the 2020/21 crop season,” said Paul Makube, Senior Agricultural Economist at FNB.

Citing a decrease of 8,8 percent in international crude oil prices and the 3,2 percent strengthening of the rand exchange rate from the previous month, the Department of Energy made a downward adjustment to fuel prices.

Petrol now costs between R14,06/litre and R14,86/l.

Diesel is between R12,38/l and R12,39/l.

Makube said with agriculture activity likely to increase in the near term, the decrease would help reduce cost of operations across the value chains that manifested differently from planting, harvesting, distribution and packaging.

Grain producers and logistics companies in the agriculture value chain will benefit, for example, over 80 percent of grain is transported by road.

“Hopefully, these benefits would trickle down to the consumer in the current tough economic environment through limiting the upswing in inflation,” Makube said.

South Africa’s total summer grain and oilseed planted area for the 2019/20 crop season was 2,91 million hectares. It is likely to increase for the 2020/21 season.

– CAJ News

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