{"id":811339,"date":"2025-02-15T17:00:00","date_gmt":"2025-02-15T15:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=811339"},"modified":"2025-02-14T18:10:30","modified_gmt":"2025-02-14T16:10:30","slug":"south-africans-warned-of-incoming-blow-to-their-budgets","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/811339\/south-africans-warned-of-incoming-blow-to-their-budgets\/","title":{"rendered":"South Africans warned of incoming blow to their budgets"},"content":{"rendered":"\n

South African consumers are facing another blow to their grocery budgets as food prices are expected to rise in response to Eskom\u2019s electricity tariff increases. <\/p>\n\n\n\n

Farmers will collectively bear an estimated additional cost of R1.27 billion to foot the increased energy bill, a burden that threatens to ripple through the agricultural sector.<\/p>\n\n\n\n

Theo de Jager, executive director of the Southern African Agri Initiative, warned that this will ultimately raise food prices across South Africa.<\/p>\n\n\n\n

Eskom had initially sought a much steeper increase through its Multi-Year Price Determination (MYPD6) application, requesting a cumulative 66% hike over three years. <\/p>\n\n\n\n

However, the National Energy Regulator of South Africa (Nersa) scaled back these demands, approving only a 35% increase over the same period. <\/p>\n\n\n\n

Even so, the approved 12.7% tariff hike for 2025 continues the trend of rising electricity costs, taking effect on 1 April 2025 for Eskom-supplied customers and on 1 July for those receiving electricity via municipalities, which typically add distribution surcharges.<\/p>\n\n\n\n

De Jager has stressed that the increase will be particularly damaging to irrigation, dairy, poultry, pig, and fresh produce farmers. <\/p>\n\n\n\n

He highlighted that South African farmers already spend around R10 billion annually on electricity, and this additional burden will further squeeze farm margins. <\/p>\n\n\n\n

Small and medium-sized family farms, which lack financial reserves to absorb cost hikes, will be especially vulnerable.<\/p>\n\n\n\n

Unlike other industries that can adjust prices to account for rising costs, farmers often have little pricing power and must absorb a significant portion of these expenses. <\/p>\n\n\n\n

However, De Jager expects food prices to rise within one or two seasons as the effects of the tariff increase filter through the supply chain.<\/strong><\/p>\n\n\n\n

Electricity costs are just one of several mounting challenges for South Africa\u2019s agricultural sector. <\/p>\n\n\n\n

The country also faces risks related to deteriorating infrastructure, particularly in water supply and ports.<\/p>\n\n\n\n

Port inefficiencies continue to hamper exports, leading to costly delays for farmers who rely on international markets. <\/p>\n\n\n\n

These logistical constraints further erode competitiveness and threaten profitability.<\/p>\n\n\n

\n
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Executive director of the Southern African Agri Initiative Theo de Jager. <\/em><\/figcaption><\/figure><\/div>\n\n\n

Adding to these concerns is the growing uncertainty surrounding South Africa\u2019s trade relationship with the United States. <\/p>\n\n\n\n

Former US President Donald Trump recently signed an executive order halting all aid to South Africa, a move that could have far-reaching economic consequences. <\/p>\n\n\n\n

While the immediate impact affects approximately $439 million in aid\u2014primarily funding the country\u2019s HIV\/Aids programme\u2014the more pressing issue is the likely exclusion of South Africa from the African Growth and Opportunity Act (AGOA). <\/p>\n\n\n\n

AGOA grants duty-free access to the US market for certain South African goods, and losing this preferential trade status would significantly impact industries such as fruit and wine exports.<\/p>\n\n\n\n

Business Unity South Africa (BUSA) CEO Khulekani Mathe has voiced concern over this development, warning that while the loss of aid is troubling, the potential removal from AGOA is a much graver issue.<\/p>\n\n\n\n

The uncertainty surrounding South Africa\u2019s trade future with the US comes at a time when global trade policies are becoming more protectionist. <\/p>\n\n\n\n

The European Union is also tightening trade barriers, even against imports from fellow European nations like France, adding another layer of complexity for South African exporters.<\/p>\n\n\n\n

Positive signs <\/h2>\n\n\n\n

Despite these mounting risks, there are some positive signs for the agricultural sector in 2025. <\/p>\n\n\n\n

According to Wandile Sihlobo, chief economist of the Agricultural Business Chamber of South Africa, the country\u2019s agricultural output is expected to recover this year. <\/p>\n\n\n\n

A combination of favourable La Ni\u00f1a rainfall patterns, stable electricity supply, expanded summer grain planting areas, and controlled spread of animal diseases all contribute to a more optimistic outlook.<\/p>\n\n\n\n

Soil moisture and crop conditions remain relatively good, except for specific areas in the North West, Free State, Western Cape, and Northern Cape, where conditions are more challenging.<\/p>\n\n\n\n

Sihlobo cautions that global geopolitical factors could still pose a threat. <\/p>\n\n\n\n

Donald Trump’s re-election has introduced uncertainty regarding US trade policy, with speculation that the US may impose tariffs of up to 20% on all imports and as much as 60% on Chinese goods.<\/p>\n\n\n\n

If China retaliates, it could lead to disruptions in global grain and oilseed prices, indirectly affecting South African farmers who depend on stable international markets.<\/p>\n\n\n\n

Nevertheless, the agricultural sector remains a vital pillar of South Africa\u2019s economy, and Sihlobo expects a 3% growth from the sector in 2025.<\/p>\n\n\n\n

While rising costs and trade uncertainties pose significant risks, the resilience of the industry, coupled with favorable weather conditions, provides hope for a stable and productive year ahead.<\/p>\n","protected":false},"excerpt":{"rendered":"

South African consumers are facing another blow to their grocery budgets as food prices are expected to rise thanks to Eskom. <\/p>\n","protected":false},"author":92,"featured_media":800396,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9872],"tags":[18336,19033,80,1164,853,21707],"class_list":["post-811339","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-agoa","tag-agricultural-business-chamber-of-south-africa","tag-busa","tag-eskom","tag-south-africa","tag-southern-african-agri-initiative"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/811339","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/92"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=811339"}],"version-history":[{"count":4,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/811339\/revisions"}],"predecessor-version":[{"id":811851,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/811339\/revisions\/811851"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/800396"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=811339"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=811339"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=811339"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}