With the umpteenth diesel price increase just around the corner, food security will become problematic as the high fuel price will result in rising input costs and subsequently higher food prices.
After the most recent increase in the diesel price, consumers are already paying R8 more for the commodity than they did this time last year. This is before an expected rise of more than R1 in November.
The new planting season recently started, and the already extremely high input costs farmers must deal with are now even higher.
“Even with the 10 and 15c per litre increases and seen in perspective, the diesel price was already a huge challenge for farmers,” says TLU SA general manager Bennie van Zyl.
“It's about supply and demand - there is an extremely high demand for diesel and globally we are facing an energy crisis. The European winter has just started and there is already a huge shortage of gas.”
Farmers' input costs include seed, fertiliser, lime, fuel, pesticide, insurance, price hedging, electricity and maintenance.
The increase in the fuel price must be put in context.
“This has a direct influence on various factors and thus increases the costs of almost every item in the chain of essential survival tools. The costs also then increase for the farmer and seen in the current prices that the farmer get on the market, this is an extremely serious matter as there are farmers who are currently throwing products away as they are not economically marketable due to the poor prices that naturally is caused by the weak buyer's market, which financially has to use its money for essentials only, as there are no financial capacities to be able to afford a healthy plate of food every day," explains TLU SA’s Erika Helm.
This ripple effect is not going to be clearly visible now, but it must be considered that if the farmer does not make a profit, he cannot undertake the same plantings as the current year in the following planting seasons, due to a deficit in finances. Banks are reluctant to provide loans due to uncertainty around land expropriation.
“This means in reality that there is the prospect that there will be a serious decline in future plantings which will cause a food shortage,” TLU SA said.
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