Fertilizer prices are nowhere close to the pre-COVID level, although they have softened notably in recent months. The significant issues in 2021-22 were the supply chain disruption and the start of the Russia-Ukraine war, which led to a surge in fertilizer prices. You can read about why prices remain elevated here; I won’t discuss the reasons in this post.
I am raising this issue because, in September 2024, as South African farmers were getting ready to start the planting season, I remarked that they were experiencing better input costs. For example, in rands terms, most fertilizer product prices were down by roughly 10% year-on-year compared with the previous year.
Since fertilizer accounts for approximately a third of the grain farmers’ input costs in South Africa, such a price decline significantly improves farmers’ finances.
Also worth noting is that in rands terms, herbicide prices were down by around 20% in August 2024 compared with the same period last year. The prices of insecticides were down by roughly 15% year-on-year in August 2024.
Since herbicides and insecticides comprise about 10% of grain farmers’ input costs, declining prices help with operational costs. The stronger domestic currency, combined with the decline of these prices in the international market, was the significant factor behind the decrease in domestic prices.
While I highlighted the proportion of these products in the grain farmers’ costs, they also make a considerable share of the production costs in the horticulture sub-sector.
However, considering the input costs, fertilizer prices remain higher than pre-COVID levels. There remain some cost pressures in farming. So, yes, commodity prices, mainly grains and oilseeds, have increased. However, at the same time, input costs have also increased. Therefore, if the farmer is not receiving higher yields per hectare, there will be financial pressure on the sector.
Higher fertilizer prices are more challenging for the broader African farmers in Zimbabwe, Malawi, Zambia, and others. Last year, these countries saw far more major grain harvest losses than South Africa. The difference was that South Africa has improved seed varieties, and higher fertilizer usage is another contributing factor.
Farmers in Zimbabwe have seen high yields in recent years because of lower fertilizer usage. As prices remain at these levels, this presents continuous challenges for farmers in the region.
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