Spiralling oil prices could spell trouble for SA agriculture … and consumers

The South African agricultural industry has been cautioned to brace for tougher times as the US-Israel and Iran conflict enters a second week in the Middle East, with no signs of abating. Some major oil producers, including Kuwait and the United Arab Emirates, have cut production to manage storage issues due to the closure of the Strait of Hormuz, pushing prices further. Oil prices breached the ceiling on Monday, hitting levels above the $100-per-barrel mark.

The escalation has already raised fears of fresh inflationary pressures globally, and South Africa is no different. Soon after the onset of the war, economists warned that the higher oil prices and weaker rand could add a few rands to the price of petrol and diesel. But it wouldn’t end there.

Wandile Sihlobo, chief economist of the Agricultural Business Chamber of South Africa, says the conflict has put SA agriculture in a period of high input costs. The sector faces the possibility of damaging fuel price increases as it enters the winter crop planting period and approaches the harvesting of citrus and summer grains. “The other aspect we are watching closely is fertiliser prices, and no doubt we will see a surge in them soon,” says Sihlobo.