Agri SA last week said that South Africa’s rising input costs were posing a major challenge to food production in the country, and singled out phosphate and phosphoric acid producer Foskor’s output as well as the hike in fuel prices as problems. Picture: Zanele Zulu/African News Agency (ANA)
Agri SA last week said that South Africa’s rising input costs were posing a major challenge to food production in the country, and singled out phosphate and phosphoric acid producer Foskor’s output as well as the hike in fuel prices as problems. Picture: Zanele Zulu/African News Agency (ANA)

Foskor’s output, fuel prices hit food production, says Agri SA

By Given Majola Time of article published Oct 26, 2021

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AGRI SA LAST week said that South Africa’s rising input costs were posing a major challenge to food production in the country, and singled out phosphate and phosphoric acid producer Foskor’s output as well as the hike in fuel prices as problems.

Agri SA executive director Christo van der Rheede said the costs of fertiliser, herbicides, packaging, diesel, electricity and labour among others were increasing rapidly, making it nearly impossible for many farmers to produce food sustainably.

For this reason, the federation of agricultural organisations said it was appealing to all stakeholders, including the government, to engage and intervene in order to reduce the costs of critical inputs.

It urged optimising substitute products available locally to avert an impending crisis with regard to sustainable food production and ultimately food security.

Van der Rheede said these solutions and substitute products were on the country’s doorstep.

While international fertiliser prices have risen rapidly over the past year, South Africa boasts one of the world’s largest producers of phosphate and phosphoric acid, Foskor.

However, according to a recent study from the Bureau for Food and Agricultural Policy, South Africa is rated the third most expensive country in terms of fertiliser cost for a grain and oilseed producer.

Agri SA appealed to the Industrial Development Corporation and the Department of Trade, Industry and Competition to engage with the agricultural industry and other stakeholders to optimise and to ensure that the agricultural industry benefited from a regular supply and affordable pricing from Foskor.

“Moreover, in recent years, South Africa has become more and more dependent on imported fertilisers as a result of Foskor’s inability to sell affordable phosphate to the South African fertiliser market,” said Van der Rheede.

“Currently, South Africa imports approximately 80 percent of phosphate for fertiliser manufacturers. This has an adverse effect on fertiliser prices, which subsequently leads to significant increases in the variable production cost of farmers.”

Agri SA said that Foskor has some of the best quality phosphate resources in the world and has the capacity to provide phosphate to Southern Africa.

However, the management and supply challenges were driving the phosphate price increase and delays. This was compounded by the frequent closures of the manufacturing plants in Richards Bay, which had caused disruptions to the supply chain.

“The combination of a price increase to farmers and disruptions in the supply is putting food security at risk and has a severe impact on the profitability and sustainability of farmers,” said Van der Rheede.

“This is critical, as several big fertiliser manufacturers in Europe have been forced to cut back on production due to higher gas prices.”

The natural gas price used to produce fertiliser has been hiked significantly. Recent power restrictions and outages across China because of coal shortages have also intensified competition between Asia and Europe in securing sources of energy.

Agri SA said that it also noted that the annual fuel inflation had been consistently higher than overall headline inflation since this year.

Food inflation was steadily on the rise this year, reaching up to 5 percent in September. The potential change in fuel prices was very concerning with planting in motion for the summer crop season, it said.

According to the Automobile Association, the current exchange rate and commodity data predict fuel price hikes of “catastrophic proportions” at the end of this month, with petrol up 99 cents a litre and diesel rising by a staggering R1.42 a litre.

“This is really concerning and will have a disastrous impact on the profitability of many farming operations,” Agri SA said.

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