Elaine Krouts drives a tractor on her Elands farm near Ennerdale. Photo: Timothy Bernard/ANA

JOHANNESBURG - Farmers could be hit where it hurts the most ... in their pockets, as fuel prices are expected to reach their highest in three years next month.

The Agricultural Business Chamber (Agbiz) said diesel and petrol prices could increase for a third consecutive month by 3% on October 4, partly driven by an uptick in crude oil prices. 

In inland provinces, diesel 0.05% sulphur and 95 unleaded petrol prices could increase by 33 cents and 35c per litre respectively.

“This increase could lift the wholesale diesel price to R12.03 per litre from R11.70 per litre in September 2017. At the same time, the retail price of petrol could increase to R14.07 per litre from the current level of R13.72 per litre,” said Agbiz agricultural economist Wandile Sihlobo.

Sihlobo said the expected increase, while it seemed marginal, “could add pressure on farmers as it coincides with the new season planting period. Also worth noting is that, for grain and oilseed, fuel makes up roughly 11 percent of production costs, therefore an increase in price will add pressure on farmers”.

Many farmers use diesel engines to power the majority of their agricultural machinery. 

“The agribusinesses that operate in the transport industry will also feel the pressure on input costs due to their exposure on road transport. An example of this is maize which has more than 80 percent stock that is transported by road,” Sihlobo said on Monday.

“This expected fuel price increase is mainly driven by relatively higher Brent crude oil prices, which averaged US$53.94 a barrel this month, up by 4 percent from August 2017. Meanwhile, the ZAR/USD exchange had a minimal impact, as it strengthened by 2 percent from the previous month, averaging R13.22 at the time of writing,” he added.

- BUSINESS REPORT