Lower potato and vegetable prices are offering relief to consumers, but producers report pressure on margins as input costs continue to rise.
In the Eastern Cape, commercial grower Thulani Magida expanded from three hectares to 10 hectares this season. With yields of approximately 4,000 bags per hectare and production costs of about R120,000 per hectare, his break-even price is R30 per bag. He is currently receiving an average of R34 per bag, leaving a margin of R4 per bag before overheads.
"The current potato prices are extremely concerning for a business that has just scaled up from three hectares last season to 10 hectares this year. At these levels, this could break the business, and recovery may not be possible," Magida said.
Producing on heavier soils, he noted that cosmetic appearance can affect market premiums. "We don't always achieve that perfectly clean appearance. While our potatoes are still graded Class 1, they struggle to command a premium price. I've made the decision to pause harvesting for a week to see if prices recover. But we are a small vegetable business; we must keep planting. Cash flow is critical. We are in an extremely tight position," he said.
He added that potato prices have largely remained below R50 per bag since October, with only a brief improvement in December.
According to Standard Bank's latest commodity report, in week seven of 2026, potato prices declined 7% week on week to R4,147 per ton, while volumes fell 16% to 22,827 tons. The report indicates prices are likely to remain under pressure if demand remains muted and supply increases.
Tomatoes recorded a 40% week on week price decline to R5,820 per ton, with volumes rising 13% to 6,485 tons.
Potatoes South Africa reported that global markets are also under pressure, citing oversupply and rising input costs across the United States, Europe, and parts of Asia. "Despite good production seasons in several regions, oversupply has become the dominant theme. Declining prices, rising input costs, and increasing uncertainty are affecting producers across the United States, Europe, and parts of Asia," said Francois Strauss.
According to FNB Commercial, higher carryover stocks, expanded planted area, favourable rains, and a stronger rand have contributed to supply growth. "Vegetable inflation remained in deflationary mode after falling by 3.2% year on year, reflecting the increased availability," said Paul Makube.
Magida said rising costs for fertiliser, seed, electricity, fuel, and labour are eroding margins. "The reality is that we cannot control the market price. But our input costs continue to rise. That imbalance makes it incredibly difficult to build a resilient farming business," he said.
Source: FoodForMzansi
