Fuel increases challenge agriculture value-chain

The recent fuel hike will have a severe impact on South Africa’s agricultural value-chain and the cash flow of farmers, warns the head of information and marketing for agriculture at FNB, Dawie Maree.

This after the petrol price increased by 74 cents and the price of diesel by 91 cents per litre on Wednesday.

Diesel is a critical component for small-scale farmers, commercial farmers and the supply chain in its entirety, utilised for tillage, harvesting, machinery and transportation.

In addition to the impact of spiking fuel costs, farmers are currently experiencing a late season, requiring an excess amount of diesel.

According to Efficient Group chief economist Dawie Roodt, an estimated 70% of South Africa’s food is transported by road since the collapse of the freight railway network, resulting in an increase in transport costs.

The effects of the fuel increase will ripple through each sector in the supply chain and consumers can expect a hefty increase in the price of goods.

Moreover, with the fuel levy increase expected next month and the lack of rain in parts of the country, it would seem the agricultural sector is in for a rocky ride.

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