Warning: Food prices in SA set to increase in the near future

The Absa AgriTrends report has issued a stern warning to low-income households about the high likelihood of significant increases in food prices due to the ongoing conflict in the Middle East. The report, released on Tuesday, highlights that the South African agricultural value chain is already facing rising input costs, disrupted trade flows and heightened logistical risks. Loffie Brandt, sector executive for agriculture at Absa AgriBusiness, said the most immediate impact on the country’s agriculture stems from rising cost pressures.

Brandt said urea, a fertiliser used to boost crop yields, has reached its highest level in several years and has been trading above $650 a tonne by early April. He added that producers who have not secured their fertiliser stock will face higher costs and tighter supply availability as global supply chains remain strained. “With petrol and diesel prices respectively climbing by around 15% and 40% per litre month-on-month in April, producers entering planting or harvesting season will face cost pressures as diesel consumption typically peaks during these times.

“Rising fuel prices also carry wider inflationary effects across the economy and may delay anticipated interest rate cuts.” Brandt said that logistical disruptions will increase the cost and risk profile for exporters who face higher freight costs, driven by elevated bunker fuel surcharges, doubled surcharges on some routes and restricted vessel availability. “Longer transit times also raise the risk of fruit arriving in poor condition, potentially missing optimal market windows,” he said. “At the same time, diversions to alternative markets may result in reduced revenue for producers.” He added that demand for South African produce in the Middle East remains firm; however, exporters should prepare for a volatile trading environment if the conflict persists. “Continued monitoring of oil markets, shipping conditions and currency movements will be essential as the situation evolves,” added Brandt.