The impact of increased fuel prices on farmers at the beginning of the planting season and during harvesting of winter grains could be significant, the Land Bank said yesterday.
Diesel prices rose yet again this month, and the outlook for October and November is suggestive of further fuel increases, said Sakhumzi May, acting Executive Manager: Agriculture Economics and Advisory, Land Bank.
This comes as farmers are preparing to plant summer grains from October.
"As fuel prices rise, farmers face higher operating costs for their agricultural machinery and transportation. This can strain their budgets. Overall, the impact of increased fuel prices during the start of the planting season underscores the importance of effective cost management and sustainable farming practices for farmers to maintain profitability and productivity in the face of rising operational expenses," May said.
On the other hand, the domestic fertiliser market had observed lower averages for fertilizer prices for most of this year, with average prices 26-52% lower year on year, based on August prices in line with declining international fertilizer prices.
"These declines have been a huge relief for the next summer planting season. There has, however, been a recent surge in global oil prices due to renewed worries about supply. We are yet to see how this may spill over into the fertilizer market in the coming months," he said.
The Land Bank said agricultural prospects were also overshadowed by the looming possibility of El Niño weather phenomenon, which is typically associated with a reduction in precipitation and drier weather patterns. Going into the new season, this is being closely monitored.
On Monday, Wandile Sihlobo, chief economist at the Agricultural Business Chamber (Agbiz), said the uncertainty regarding the intensity of the El Niño weather event, as well as the possible higher temperatures and lower-than-normal rainfall which may come with it, was of concern.
He said, however, that the latest message from the South African Weather Service (SAWS) at the end of last month was encouraging.
He said, "the multi-model rainfall forecast indicates above-normal rainfall for most of the country during mid-spring (September to November) and late-spring (October to December).
This meant that some regions of the country, mainly central to western, might not have a similar start of the season to the eastern areas.
Sihlobo added: “The broad sentiment was that showers would likely support crop germination during the beginning of the 2023/24 production season.
“This is also an encouraging message for horticulture and livestock, as the rains will help production conditions in these sub-sectors.”.
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