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Price hikes 'threaten' food security

Mar 01 2013 22:05 Sapa

The fuel price rise, the announcement of higher fuel levies, Eskom's price hike, higher wages for farmworkers and pending e-tolls is all too much for farmers, says TAU SA.

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Johannesburg - The 81c/litre petrol price hike, announced by the energy department on Friday, is bad news for the agriculture sector and could affect food security in the country, the Transvaal Agricultural Union (TAU SA) said.

Tau SA president Louis Meintjes said the fuel price rise, the budget announcement of higher fuel levies, Eskom's electricity price increase, the farmworkers' minimum wage increase, and pending e-tolling in Gauteng was all too much for farmers.

"Essentially, all these increases include an increase in tax revenue from which the state benefits," he said.

On Thursday, the National Energy Regulator of SA announced that there would be an 8% increase in electricity prices over the next five years. This was half of what Eskom had proposed.

A day earlier, Finance Minister Pravin Gordhan announced that fuel levies would go up by 15 cents per litre, with an additional 8c/l going to the Road Accident Fund.

In February, Labour Minister Mildred Oliphant announced a new minimum wage for farmworkers of R105 a day - up from R65.

"Farmers remain price takers, which means that they cannot recover higher input costs and taxes," said Meintjes.

"The farmer is expected only to pay and to keep on producing."

For some time now the agricultural community had pleaded for a change in the diesel rebate so that farms could remain profitable in the interest of food security.

"Those reasonable requests were simply ignored," said Meintjes.

"The government should take note that if they are not prepared to accommodate reasonable requests by farmers regarding [the] total package of additional increases and taxes, it could have disastrous consequences for the country's food security and agriculture economy."

Earlier on Friday, the energy department announced that the retail price of all grades of petrol would increase by 81c/l from Wednesday.

Both diesel with 0.05 and 0.005% sulphur content would go up by 58.3c/l wholesale.

The wholesale price of illuminating paraffin would go up by 57c/litre, and the Single Maximum National Retail Price (SMNRP) would rise by 76c/litre.

The maximum retail price of LP gas would go up by R1.18/kg.

The department said that during the period under review the average international product prices of petrol, diesel, and illuminating paraffin had increased.

The average rand/US dollar exchange rate had weakened when compared to the previous period, and this had increased the contribution to the basic fuels price on petrol, diesel, and illuminating paraffin.

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