Following the Finance Minister’s two-month reprieve in the fuel price, that entailed a R1.50c per liter reduction in the general fuel levy, South Africa’s growers face a hefty fuel bill next month as the intervention period will end.
The R1.50c/liter will be back into the fuel calculation and considering the exchange rate depreciation of 9.0% month-on-month (m/m) and 11.4% year-on-year (y/y) so far with crude weakening by 5.4% m/m and 59.0% y/y, a further R3/liter in fuel increases is possible in June 2022 if the relieve measures are not extended or a new fuel price determination is implemented.
This means growers are heading into increased activity in the agriculture calendar. Demand and consumption of fuel is high. The escalation in fuel costs does not bode well for producers as production costs are likely to escalate across the value chains that manifest differently from planting, harvesting, distribution and packaging.
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