By Kaya 959 News
A slight reduction in the petrol price is good news for many, especially farmers busy harvesting summer grains.
Fuel prices eased for the first time in 2021 on the back of a 2% decrease in international Brent crude oil prices and the rand strengthening by 3% in April relative to the previous month.
This week, petrol prices dropped by 9c while the two grades of diesel fell by 34 and 30c respectively for the 0.05% and the 0.005% sulphur content.
Although the decrease is still small, it is most welcome as farmers are busy harvesting the summer grains and oilseed crops and getting on with the planting of winter crops.
80% of grain transported by road
This will help prevent further escalation in input costs across the value chains with varying impact on planting, harvesting, distribution and packaging.
It is important to note that closer to 80% of grain is transported by road from farms to silos, to the various harbours, as well as milling areas across the country and this has an impact on profit margins of grain producers and logistics companies in the agriculture value chain.
Horticulture with citrus harvest in its infancy will also be affected in terms of distribution across the country and for exports. Livestock producers face cost pressures as they transport animals from production areas and finally to slaughterhouses.
Moreover, the prices of inputs such as fertilizer, herbicides and pesticides are highly influenced by the levels of both the crude oil prices and the rand exchange rate.
It is hoped that the current developments of rand strength and easing of international crude oil prices would persist and provide the much-needed relief for farmers and consumers and further contribute positively to containing inflation.
The drop in fuel price is thanks to a stronger rand.
MANCOSA’s Meshel Muzuva said consumers must remember there will always be the instability of local and global economies and this can affect fuel prices.
He said international petroleum prices have been stable, and this has allowed the rand to leverage its recent strength. This has led to a lower contribution to the basic fuel prices on petrol, diesel and illuminating paraffin.
“The fuel price decrease will bring some relief to cash-strapped South Africans. Financially-burdened South African consumers can thus expect a breather in May from the series of fuel price increases earlier in the year and users of paraffin will be delighted with the news as we are approaching cold winter months,” she said.
Cost of living decrease
The impact of the decrease in the price of paraffin will result in poorer households witnessing a decrease in their cost of living.
Consumers will also benefit from the lower prices of transport and fuel and this will effectively increase their disposable income and enable them to spend more on other goods.
“Nevertheless, consumers should continue to be worried given the ongoing instability in both local and global economies which may point to future uncertainty around petrol prices in the coming months. “Global financial markets do impact the rand, so the weakening of the rand in future could push the fuel price further to unsustainable levels and bite the little income at the disposal of households,” Muzuva said.