Music to farmers' ears: One-year AGOA extension, fuel price drop

Some much needed reprieve for farmers following two key developments in their favour this week, including the one-year extension of the African Growth and Opportunity Act (AGOA) by the United States (US) and the drop in fuel prices.

The latest fuel adjustments took effect on Wednesday, with a 65 cent drop for a litre of both grades of petrol.

Diesel dropped by up to 57 cents per litre, bringing prices to a four-year low.

This is mostly thanks to a stronger rand against the dollar during the period under review.

Fuel is one of one of the most important input components in farmer operations, accounting for 13% of input costs

FNB’s senior economic Koketso Mano said the reduced cost pressures bode well for profitability in the grain and oilseed industry.

“Let's look into the market forces, which suggest that Brent crude oil prices are starting to ease from recent highs. So, as the risk premium that was driven by heightened geopolitical tensions, especially between the US and Iran, as those fade, the market returns to focusing on the fundamentals, right? So, the market oversupply is expected to grow this year, and that should keep prices contained.”