Government must suspend fuel levies to relieve pressure on food prices

MAHIKENG MAIL-MAHIKENG: Agri SA’s research and analysis has revealed  that the Ukraine-Russia crisis would  have a serious impact on South Africa’s food security and poses very real risks to parts of the agricultural sector.

With global wheat prices and agricultural input costs skyrocketing, government must take urgent action and suspend the fuel levies to provide relief for farmers, especially the nation’s small-scale farmers, and contain food prices for South African consumers.
South Africa’s trade with the Ukraine has increased substantially over the last decade. Between 2016 and 2020, South Africa’s agricultural exports to Ukraine more than doubled from R76,5 million in 2016 to R155 million in 2020. Agricultural imports have remained relatively stable, sitting at R390 million in 2020.  Ukraine and Russia are both major producers of wheat on the global market, accounting for a quarter of global wheat exports, and the disruption to the supply of this staple food will cause food price shocks globally, particularly in South Africa given that we import 30% of our total wheat from these nations.  Moreover, Russia is the leading supplier of fertiliser globally. Recent data shows that global fertiliser prices had already risen substantially between January 2021 and January 2022. Local fertiliser prices doubled while global prices quadrupled. Farmers were therefore already under pressure prior to the current crisis. Russia’s invasion of Ukraine has only worsened this pressure.
Brent crude oil prices have also almost tripled between February and March 2022. With the recent and still expected fuel price increases, the cost of taking food to South African consumers will rise substantially in the coming months unless government acts to contain them.
This is why Agri SA is calling on government to suspend fuel levies while the Ukraine-Russia crisis persists in order to contain food prices. Failure to act can only exacerbate the pricing pressure on consumers, compromising food security in South Africa, especially for the most vulnerable in society.