PETROL attendant Patrick Simelane, of KwaMashu, attending to a client at a BP garage. Picture: Motshwari Mofokeng African News Agency (ANA)
PETROL attendant Patrick Simelane, of KwaMashu, attending to a client at a BP garage. Picture: Motshwari Mofokeng African News Agency (ANA)

SA consumers, agriculture sector to feel the bite of August fuel price increase

By Karen Singh Time of article published Aug 4, 2021

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DURBAN: Concerns have been raised that today’s fuel price increases may lead to a hike in product and transport prices, which would badly impact South Africans, who are still reeling from the impact of the Covid-19 pandemic.

Energy Minister Gwede Mantashe announced that, from August 4, fuel prices would be adjusted based on current local and international factors. This includes a 91 cents per litre increase for petrol and a 55-56 cents per litre increase for diesel, while the price of Illuminating Paraffin increased by 50 cents per litre.

This follows fuel prices reaching record highs earlier this year.

UASA spokesperson Abigail Moyo said the union was concerned about the increase, as motorists – using petrol-pumped vehicles – will be paying a massive R18.20 cents a litre for 95 unleaded petrol, among other increases.

Moyo said these increases would have a knock-on effect on product and transport prices that South Africans, and especially those affected by the recent violence and looting, as well as those who lost their jobs due to the Covid-19 pandemic, can’t afford.

“We urge the government to make haste with the promised financial assistance for businesses and individuals. UASA also encourages its members and fellow South Africans to steer strong, and make money-wise decisions to make ends meet,” she said.

Paul Makube, senior agricultural economist at FNB Agri-Business, said today’s increase is another hefty fuel price hike of 5% month-on-month for the two grades of petrol, which is 22% higher for 93 unleaded and 21% higher for 95 unleaded year‑on‑year.

Makube said the two grades of diesel will increase by 4% month-on-month and 16% year-on-year.

He said this comes at a time when farmers are busy delivering a huge grain and oilseed crop of 17.07 million tonnes to the country’s silos and gearing themselves for the onset of the 2021/22 planting season, in just over a month’s time, if rains permit.

“The availability of fuel, at the right time and price, is critical for a successful operation across the agriculture value chain. Not only fuel is impacted, but the cost of imported agriculture inputs, such as fertiliser, pesticides, and herbicides will also increase, especially given the recent constraints with availability of ingredients to produce certain fertilisers and the higher cost of shipping,” he said.

Makube said the harvested crop is also being transported to various storage bins across the country, including the export markets.

As a result, he said further fuel hikes will dent producer margins.

“Grain producers and logistics companies in the agriculture value chain will feel the pain, as closer to 80% of grain is transported by road. Livestock and horticulture, with citrus harvest in its infancy, will also be affected in terms of distribution across the country, as well as exports. Mounting cost pressures will eventually erode producer margins and create a potential inflationary pain on consumers,” said Makube.

THE MERCURY

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