Diesel price hike will squeeze farmers & consumers
A senior economist says while the slight drop in petrol prices for August has put a smile on consumers’ faces, the agriculture sector has been under pressure due to the increase in the diesel price.
The mixed fuel price changes for August saw a 28-cent per litre drop for both grades of petrol, while diesel increased by just over 60 cents per litre.
Senior agricultural economist at FNB, Paul Makube, says these prices will spill over to retailers due to increased distribution costs of inputs and agricultural produce to and from farms.
“We are now just over a month closer to the onset of the new crop season, a period characterised by elevated demand for fuel as farmers prepare and plant various crops across South Africa. A sustained increase in fuel prices will erode producer margins.
“Nonetheless, the downside price outlook for international crude oil prices, as well as the renewed rand exchange rate appreciation, bodes well for the potential easing of fuel prices ahead of the heightened activity in the South African agricultural calendar.”
Meanwhile, the Product Head at FNB, Ester Ochse, advised customers using petrol to save the extra money from the decrease and pump their emergency savings.
Ochse urged diesel users to look for extra expenditures they can cut.
“If you drive a diesel vehicle, this is going to hit you hard this month, with at least 62 cents a litre increase for you this month. So what does this mean? This means that you will need to look at alternative areas where you can stop this gap. Go and have a look at your budget, see if there are some things that you can reduce on, and that is the way to do it.”
