The continued increases in input costs might affect the ability of South African farmers to continue farming sustainably and profitably, according to the Input Cost Monitoring (ICM) report, published by the National Agricultural Marketing Council (NAMC) on Thursday.
The quarterly report analysing historic and current trends from selected agricultural production input prices in both domestic and international markets said that international fertiliser prices have increased due to several factors such as low stock levels caused by the Covid-19 pandemic, high natural gas prices and the Russia and Ukraine crisis.
It said that South Africa’s fuel prices were influenced by international and local factors.
International factors include the fact that South Africa imported both crude oil and finished products at a price set at the international level, including importation costs like the shipping costs.
The price trends for domestic fertiliser between August 2016 and August 2022 show that the local fertiliser prices for Potassium Chloride (KCL), Urea, and Mono-Ammonium Phosphate (MAP) increased by 251.0% (from R6 741/ton to R23 660/ton), 169.1% (from R 5 681/ton to R15 291/ton) and 153.7% (from R9 057/ton to R22 978/ton), respectively.
From August last year to August this year, domestic fertiliser prices for KCL, Urea and MAP increased by 117.1% (from R10 897/ton to R23 660/ton), 40.0% (from R10 919/ton to R15 291/ton) and 48.3% (from R15 498/ton to R22 978/ton), respectively.
NAMC’s Market and Economics Research Centre said that the fluctuation in the domestic prices of fertilisers was subjected to price volatility in the global market.
It said that since the beginning of last year, international fertiliser prices had been rising steeply in response to lower global supply.
For net importing countries, such as South Africa, macro-economic factors such as the exchange rate also played a crucial role in this regard since fertiliser was procured in countries of origin and in foreign currency terms.
With regards to domestic fuel prices, the centre said that these were linked to factors such as international crude oil price (US$ per barrel) and the R/$ exchange rate. It said that between September 2016 and September this year, diesel and petrol prices increased by 128.4% (from R10.49/litre to R23.96/litre) and 92.1% (from R12.17/litre to R23.38/litre), respectively.
In US dollar terms, crude oil prices increased by 98.5% (from US$47.36/barrel to US$94.00/barrel). During the same period, crude oil prices in rand terms increased by 136.3% (from R664.46/barrel to R1 569.80/barrel). Between September last year and September this year, diesel and petrol prices increased by 54.8% (from R15.48/litre to R23.96/litre) and 27.5% (from R18.34/litre to R23.38/litre), respectively.
Crude oil prices in US dollar terms increased by 29.6% from US$72.55/barrel to US$94.00/barrel, with a 14.5% depreciation of the rand (R14.59/$ to R16.70/$). It said that these fluctuations in South Africa’s fuel prices have been driven by the rising price of international petroleum.
With regards to the freight indices August last year to August this year, the Grain and Oilseeds Freight Index (GOFI) decreased by 62.2% and 29.2%, respectively.
The shipping sector had been volatile since 2020 due to the global effects of the Covid-19 pandemic on demand for commodities and this had affected freight rates. In August, the BDI reached 1 411 index points and the GOFI reached 169 index points.
Meanwhile, on Thursday, JSE listed diversified chemicals group Omnia Holdings convened with investors and analysts to unpack its agriculture segment’s strengthening capabilities and demonstrate its prospects for accelerated growth, specifically within the AgriBio sector. Omnia group CEO Seelan Gobalsamy chaired the session supported by key members of Omnia’s Agriculture leadership and R&D teams.
The company said that the agriculture sector was ripe with opportunities to address global food security and supply challenges, with the AgriBio segment being particularly relevant as an enabler of more sustainable farming, boosting outputs and elevating industry competitiveness.
“The focus on addressing climate change through regenerative and sustainable agriculture means AgriBio products are growing in demand globally – with double digit growth potential. It is an exciting time for us to harness our 30 years’ experience in the segment, complemented by our long-standing holistic Nutriology® model, to expand our products and solutions aimed at meeting this major societal need,” Gobalsamy said.
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