Fuel Crunch From War Threatens South African Wheat, Corn Crops

Farmers in South Africa are heading into the winter planting season with surging diesel prices and tightening supplies — triggered by the Middle East conflict — threatening production in sub-Saharan Africa’s largest commercial wheat-growing industry.Author of the article:You can save this article by registering for free here. Or sign-in if you have an account.(Bloomberg) — Farmers in South Africa are heading into the winter planting season with surging diesel prices and tightening supplies — triggered by the Middle East conflict — threatening production in sub-Saharan Africa’s largest commercial wheat-growing industry.Subscribe now to read the latest news in your city and across Canada.Subscribe now to read the latest news in your city and across Canada.Create an account or sign in to continue with your reading experience.Create an account or sign in to continue with your reading experience.For Rossouw Dippenaar, who farms near Riebeek-West about 80 kilometers (50 miles) northeast of Cape Town, time is running out. He needs as much as 40,000 liters (10,564 gallons) of diesel to plant his wheat, but has only secured about 6,000 liters because some retailers are limiting purchases in a bid to prevent a run on their stocks.“I don’t know what I will do if it doesn’t change in the next two weeks,” he said. “I’m living in hope that it will get better.”Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.A five-day halt to US strikes on Iranian energy infrastructure announced by President Donald Trump on Monday eased global oil prices. But there’s little sign that trade will normalize any time soon. Iran continues to disrupt traffic through the Strait of Hormuz, restricting shipments from key oil and fertilizer producers such as Saudi Arabia, Qatar and Oman, and has dismissed Trump’s claims that ceasefire talks are underway. Unlike in many sub-Saharan African countries, most of South Africa’s crops are grown on commercial farms, with production heavily dependent on inputs such as fuel and fertilizer. Ethiopia produced about three times the 1.9 million tons of wheat that South Africa did last season, but it is primarily grown by small-scale farmers.Cost Shock“The combined effects of rising diesel and fertilizer prices present one of the most significant cost shocks to producers in recent years,” Richard Krige, chairman of Grain SA, which represents corn and wheat farmers, said in a statement. “The impact on farmer viability — and therefore food security — could be severe.”Since the US and Israel began bombing Iran on Feb. 28, global oil prices have surged by 40% or more and emerging-market currencies such as the South African rand have plunged. Fuel and fertilizer account for about half of grain farmer’s production costs in the country and preliminary data suggests the diesel price, which is set monthly, will rise by almost half in April. Many farmers have already ordered fertilizer, but expect to pay higher prices when they replenish supplies.Wheat farmers aren’t the only ones who are concerned. First to be affected will be sunflower and soybean farmers, who will need diesel to harvest by the end of this month. Wheat, barley and canola farmers will start planting in April and corn farmers in Africa’s biggest exporter of the staple will begin harvesting in late May. Farmers of so-called winter grains, such as wheat, may cut plantings if they aren’t confident that prices for their produce will rise sufficiently to compensate for higher costs. So far there is little sign of that. Wheat prices on the South African Futures Exchange in Johannesburg have climbed only 5.6% since the start of the war and the most commonly traded corn contract is up 11%. If they do rise significantly, there would be a knock-on effect on inflation in a country where corn meal and bread are the main staples and beef cattle and poultry are fed with corn.“Farmers are price takers and will either have to absorb these costs or they will say they can’t plant profitably anymore and will halt production,” said Corné Louw, an agriculture economist at Grain SA. South Africa, which has seen its refinery capacity halve in recent years, imports most of the fuel it consumes and 80% of the 2 million tons of fertilizer it uses annually. A third of the crop nutrients come from the Middle East. “Our biggest hope is that the commodity prices will rise with the input costs,” said Johan van Zyl, who farms between Malmesbury and Moorreesburg in the Western Cape province. “If you’re going to be selling at a low price while it’s expensive to get the crop in the ground, it’s a recipe for disaster and you will become bankrupt.”The higher fertilizer prices are currently the main concern, but availability will become a major worry if the war drags on, said Wandile Sihlobo, chief economist at agricultural business chamber Agbiz and presidential envoy on agriculture and land.While industry associations and the government insist the country has enough fuel and the regulated diesel wholesale price will only increase on April 1, some filling stations have run dry or are limiting the volume of diesel people can buy. Farming co-operatives such as OVK have already started increasing what they charge for diesel. The government has said it has little room to intervene. In a March 11 speech to a Grain SA congress, Agriculture Minister John Steenhuisen lamented the impact of global market volatility but mentioned no measures the government could take.“It’s an international crisis and because we are so dependent on imports, it means producers will feel it,” said Willem de Chavonnes Vrugt, president of Agri SA, the biggest farmers lobby group. “And that will end with the consumer if local production does not happen.”The first official indication of how wheat production will be impacted will come on April 23 when the Crop Estimates Committee releases its report on farmers’ intentions to plant winter cereals for 2026.Many farmers say they will need to press ahead regardless of the current market conditions.“We just have to plant blindly,” said Dippenaar. “What else can we do?”The Next Africa newsletter runs every weekday. 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