The easing of the fuel price comes at a critical time for South Africa’s agriculture. Fuel consumption generally occurs throughout the year, but harvesting is one of the highest usage periods. We are harvesting grains, oilseeds and citrus.
Today, May 7, South Africa’s petrol (95 ULP inland) and diesel (0.05% wholesale inland) prices decreased by 22 cents per litre (c/l) and 42 cents per litre (c/l), respectively. The retail price of petrol is now at a record R21.40 per litre, and the wholesale diesel price is R18.90 per litre.
The underpinning driver of the decline in fuel prices is the decrease in Brent crude oil prices, which are influenced by increased oil output in major producers, among other factors.
Fuel generally accounts for a sizable share of farmers’ input costs. For example, for grain farmers, fuel costs between 11% and 13% of production costs.
Beyond the farming side, the general transportation of agricultural products also heavily relies on road transport. Roughly 81% of maize, 76% of wheat, and 69% of soybeans are transported by road. On average, 75% of national grains, oilseeds, and a substantial share of other agricultural products are transported by road. This higher road usage illustrates the decline of rail effectiveness over time and, most importantly, the centrality of fuel to agriculture.
It is also worth noting that the decline in fuel prices, although relatively small, also bodes well for moderating food price inflation.
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