JUNE 2025 started on a positive note for the agriculture sector, firstly a strong GDP outcome after surging by 15.8% q/q (sa) in Q1 of 2025, and now a further reduction in fuel prices.
With harvesting of summer crops in full swing, a fuel cut will boost farmer’s profitability as it accounts for almost 13% of input costs in grain production.
The citrus export season is also in full swing, and this will boost margins as the cost of transportation from farms to ports of exit is reduced.
The latest announcement from the Department of Mineral Resources & Energy (DMRE) shows that the price of the two grades of petrol both decreased by just 5 cents/litre to R 21.35/ litre and R20.52/ litre for the 93 (ULP) and 95 (ULP & LRP) respectively, says FNB- Senior Agricultural Economist- Paul Makube.
Similarly, the two grades of diesel both saw decreases of 36.90 cents/ litre to R18.53/ litre and R18.57/ litre for the 0.05% and the 0.005% sulphur content respectively.
However, the earlier announcement by the Minister of Finance of the hike in the Fuel Levy offset some of the benefits. During his Budget Vote Speech on the 21st of May 2025, the Minister raised the Fuel Levy by 16.00 c/l on petrol and 15.00 c/l on diesel, respectively, with effect from the 4th of June 2025.
Finally, consumers will benefit immensely as it will help limit further price increases and boost demand for agriculture commodities.
Further, the benign inflation and interest rate outlook following a 0.25% cut in May 2025 with a further reduction in the offing later in the year bodes well for the rebound in consumer demand and expansion in the agriculture sector.
Image (FNB- Senior Agricultural Economist- Paul Makube).
