“I am concerned about the effect that the raised fuel levy will have on the shelf price of food, as fuel costs play a major role in the distribution thereof,” Gerrit van Rensburg, MEC of Agriculture and Rural Development in the Western Cape, said in response to Finance Minister Pravin Gordhan’s recent national budget announcement on the increased fuel levy.
Fuel and electricity are major input costs for farmers in the Western Cape and as such, any increase in the cost thereof has a negative effect on farm profitability, Van Rensburg said. He said that the Department of Agriculture in the Western Cape will continue to assist farmers through research on farming practices that is more fuel and water efficient.
The fuel levy sees a general increase of 10c per litre, as well as an additional 7.5c per litre to help finance the new petroleum pipeline between Durban and Gauteng. There is also an additional 8c per litre increase for the Road Accident Fund, applicable on petrol and diesel.
This means 93 octane petrol will now include a total levy of 32 percent, or R2.44 per litre. For diesel the new levy equates to R2.29 per litre, or 33 percent of the current pump price. Cecilia Punt, an economist at the Western Cape Department of Agriculture, said that the levy would have a minimal, but negative effect on the production of agricultural products in the Western Cape. Fuel costs represent roughly seven percent of agricultural intermediate input costs.
According to Punt, an average decrease of 0.13 percent in agricultural production can be expected in the Western Cape due to the levy increase. The most affected district will be the Central Karoo, with production decreases of an expected 0.15 percent.
Enquiries:
Wouter Kriel
Tel: 021 483 4700
Cell: 079 694 3085
E-mail: wouterkriel@gmail.com
Source: Department of Agriculture and Rural Development, Western Cape Provincial Government
