Middle East conflict threatens food prices in SA

Agricultural Economist Wandile Sihlobo has raised concerns about the impact of the conflict in the Middle East on food prices.

He warns that if the war now entering its third week is prolonged, it could push up fertiliser prices.

About 80% of the country’s fertiliser is imported and makes up approximately 35% of production costs for grain farmers.

Consequently, an increase in fertiliser prices is likely to hit consumers hard.

This could be compounded by the expected rise in fuel prices at the start of April, following higher Brent crude prices and the disruption of a key oil route in the Middle East: the Strait of Hormuz. At the close of trade on Friday, the oil price was hovering around $103 per barrel.

"Fuel accounts for about 13% of grain farmers' input costs; that’s quite substantive," said Sihlobo. 

"The issue of a rise in fuel prices is not just a farmer's concern, but also a concern for folks that are in agribusinesses. We must not forget that about 80% or so of our grains are transported by road. So, when the fuel prices are increasing, that puts pressure. The third aspect that we have to think about is the issue of fertiliser prices."