AgriSA chief executive Christo van der Rheede has warned that the combined effect of electricity shortages and escalating fuel prices would inevitably lead to higher food prices in South African shops.
Daily power outages, known as load shedding, have plagued South African businesses and households for most of this year. Now steeply higher petrol and diesel costs are adding to the pain.
South Africa’s fuel prices are set monthly, based on fluctuations in the cost of imported oil. Both petrol and diesel prices rose sharply this month, and even higher increases are forecast for October.
Van der Rheede said diesel was essential for farming operations, and it looked like a high spike in diesel prices last year was going to be repeated this year. Under high levels of load shedding, expensive diesel, for operations and to run generators, hits the whole food value chain, from farms to processing and storage facilities, logistics and transport, and distribution and retail centres.
He described the electricity and diesel price rises as a “double blow” for agriculture. He called for an increase in the diesel rebate for agriculture, as it was now insufficient to counter the cost increase.
South Africa’s agricultural sector was becoming unprofitable and uncompetitive in the global market.
“We are at the point where we cannot compete with Namibia, where the diesel price is far less than South Africa. It’s going to have a negative impact on food inflation and the price of products,” Van der Rheede said.