The tides are turning, but elevated risks bring new challenges
The discussions above point to some relief in the most pressing issues that affected returns in 2022, although the extent to which shipping costs can significantly decrease still remains uncertain. New factors are however emerging that are bound to make 2023 another challenging year in the horticultural production and export space. Here we would like to highlight two factors:
Broad-based cost increases
Broad-based cost increases – Stats SA PPI for agriculture for January 2023 recorded 11.6% year-on-year cost increase. The underlying line items driving these
costs include increased wages, higher packaging costs, increased cost of capital, and chemical and fertiliser costs combined with higher pest and disease risk as mentioned above. Table 3.1 to the right shows the annual increase in costs in different components between 2021 and 2022, and what we estimate the cost increase for these components could look like in 2023. Here, we include labour costs, although not an estimation, as the minister of labour announced a minimum wage increase of 9.6% on the 1st of March. From the table it is clear that some relief is expected to come from easing diesel and fertiliser prices. This is mainly a
40
Made with FlippingBook interactive PDF creator