Welcome to a period of high input costs in South African agriculture

My earlier letter this morning may have put what appears to be a scary scenario quite mildly.

The oil price has already crossed $100 per barrel this morning, suggesting that over the coming months, we are likely to see quite steep fuel price increases in South Africa.

The agricultural sector is exposed to the possibility of fuel price increases as we enter the winter crop planting period and soon approach the harvesting of citrus and summer grains. These are all high-fuel-use periods.

The other aspect we are watching closely is fertiliser prices, and no doubt we will see a surge in them soon.

The Middle East is also a substantial producer of fertiliser. The last time we saw a notable disruption in the fertiliser market was when the Russia-Ukraine war started. At the time, because of Russia’s significance in the fertiliser production, we saw a surge in the fertiliser prices.

This time around, with the conflict spreading across the Middle East and the significance of some of these countries in the fertiliser market, we are likely to see major disruptions to fertiliser prices, which we are all watching.

What is increasingly clear at this moment is that we may be entering a period of high input costs in the South African agricultural sector.