Fuel price hikes hit agricultural sector hard

Recent fuel increases have had a huge impact on the agricultural sector

The recent fuel increases have had an impact on the agricultural sector. The largest tomato producer in the world, ZZ2 in Limpopo, has had to increase its expenses to over R18 million per year.

ZZ2 operates with 400 vehicles and 20 generators all running on diesel. The farm produces up to 130 000 tons of tomatoes every year.

The price of diesel now stands at R10.20/l. Although the price is much lower than what countries such as Israel, New Zealand and the UK pay, it has had a big impact on the production costs of the farm.

Since 2006, when the average price of diesel was R6.10, it has increased by 68%. Indirectly the increase will also have an impact on energy consumption, transport tariffs and on salaries and wages. However, there are solutions to soften these impacts.

The CEO of ZZ2, Tommy van Zyl, says: "What we will do to manage the problem is to try to increase our productivity, decrease the inputs of the rising factors like fuel or fertilizers and improve on our output side."

The consumer will feel the impact of the increasing fuel price when buying a 1kg bag of tomatoes. It will now cost between 20 and 40 cents more per bag.