The huge increases in the price of food have little to do with the Covid-19 pandemic, but more to do with the high prices of fuel and fertilizer.
This week’s sharp rise in the price of petrol (R1.21) and diesel (R1.48), not to mention the record highs of fertilizer prices, put both the consumer and the farmer on the back foot.
A recent report by Grain SA sets out the increase in input costs for maize farmers. It is especially the price of fertilizer that has a big influence as fertilizer accounts for about 30% to 35% of a maize producer’s variable production costs, the report states. Local fertilizer prices are currently at record high levels for nitrogen (N), phosphate (P) and potassium (K), which especially sharply increased in the last few months.
The price of seeds also increased. According to Grain SA’s calculations, maize seed prices for some of the most popular cultivars have increased by an average of 5.6% since last year, while the average of all the maize cultivars has increased by about 3.3%. Sunflower seed prices increased by an average of 3.7%, while soybean seed prices increased by 2.6%.
According to calculations by Grain SA, the total variable cost of maize is expected to have an average increase of between about 20% to 28% year on year.
Estimated production costs for the 2021/’22 production season for maize farmers in the Eastern Free State are R13 998 per hectare and in the Northwest, it is R13 109.
Information provided by Potato South Africa shows that four of the eight regions that supply potatoes work at a loss.
Production costs for potato farmers per hectare for the 2020/’21 season vary between R112 000 and R333 000. After all the input costs have been considered, farmers currently receive an average of R2.24 profit for a 10kg bag of potatoes.
OTHER PRODUCTS
In the past four to five months, the price of a cabbage head is about R8, and bags (approximately 27kg) with up to 10 heads per bag are on average R55. Butternuts are R20 per bag of 7kg.
From July to September this year, the farmer received between R50 and R62 for 10kg. At the end of October, the price for 10kg on the Johannesburg market ranged between R46 (medium) and R55 (large). Nationwide, the price is between R58 and R48.
PROSPECTS
Looking at forecasts, potato farmers believe that their input costs will increase by an average of 30%, which will obviously have an impact on the profitability of the product as well as the price on the market.
If the government does not actively intervene and address the Eskom challenge, it is a further influence that will hamper production. Where there is insufficient power supply to irrigate lands, the result is permanent damage to yields and this factor entails further losses.
The import of chemicals is a further problem. There is a shortage of fertilizer products which further negatively affects production. Then the government must also reconsider the setting of minimum wages. Labour costs, especially in agriculture, become unaffordable when looking at the profit margin and input costs.
IN CLOSING
Each department or semi-state institution is pushing on its own to achieve potentially set targets and apparently does not realise the impact on the bigger picture. The Department of Agriculture may need to require that no other department make any increase of any kind, which may affect agriculture, before agriculture has not evaluated the affordability.
