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The agricultural sector of South Africa can benefit greatly from the massive decrease in fuel prices. The retail price of the 93 ULP and LRP petrol have both gone down by R1.76 per litre, with the 95 ULP and LRP petrol falling by R1.88 per litre for Gauteng.
The prices of wholesale diesel with 0.5% sulphur content decreased by R1.34 per litre and R1.40 per litre for Gauteng and the coastal areas. The 0.005% sulphur diesel grade dropped by R1.35 per litre and R1.41 per litre for Gauteng and the coastal areas respectively, stated the Central Energy Fund.
The reason for this massive price decrease is due to the crash in the international crude oil prices, having reached a low of US$22.87 per barrel. This is a result of the dispute between Russia and Saudi-Arabia about production cuts, which was then followed by a decrease in demand due to the outbreak of the coronavirus pandemic forcing people to isolate themselves.
The lower fuel prices are welcomed at this very advantageous time, with the harvest period approaching for the bumper grain, oilseed crops and the winter crop season, as well as the early stages of the citrus harvest.
Because agricultural produce is distributed mainly by road transport, the effect of the fuel decrease could lead to improved profitability of producers, as they head into a period of increased activity for the sector. This also at a time that farmers are increasingly using petrol and diesel for backup generators during the current power supply challenges facing the country.
The fuel price decrease will also benefit consumers with disposable incomes, as the costs of goods and services where transport plays a big role will then also be lowered. Along with the agricultural sector, other businesses will also greatly benefit from this price drop as it eases financial pressure during the current economic challenges caused by the 21-day lockdown period.
Article source: Bizcommunity
