Inflation, prices rise concept. Groceries bags and red arrows representing the increase in the cost of living. Digital 3D rendering.
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.
Fertiliser reaches highest level
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.”
Logistical disruptions
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.”
Warning to exporters
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.
“Yet the local agriculture sector has demonstrated its resilience and ability to adapt to changing market conditions in an agile manner over the years and despite current challenges, there are also opportunities.”
Future for citrus exporters
Brandt said the current outlook for citrus exporters is favourable.
“EU markets in particular look promising, and for oranges specifically, duty-free access to the US and tightening Northern Hemisphere supply is expected to contribute to a favourable pricing environment.”
He highlighted that harvesting of apples and pears is currently in full swing; pear harvesting of late varieties usually ends in April, while apple harvesting continues until May.
Apples can be successfully stored for four to six months, and pears for two to four months. “This could enable producers to wait for a better opportunity to export.”
Danger for households
For the country’s households, one of the most immediate impacts of the conflict will be rising food prices.
“Higher oil and diesel prices have a ripple effect on the food supply chain as it impacts operational costs related to farm machinery, fertiliser production, transport, cold storage and ultimately prices on supermarket shelves,” said Brandt.
For consumers, this means a steady erosion of purchasing power as the cost of staples climbs.
“The burden will fall most heavily on lower-income households, which already spend a sizeable portion of their income on food, forcing difficult trade-offs such as reducing protein intake or cutting back on other essentials.
“In effect, the conflict risks turning food inflation into a regressive tax on the most vulnerable, deepening cost-of-living pressures even if broader inflation eventually stabilises.”
