result of crude oil and natural gas prices expected to trade slightly lower compared to 2022 levels. This is expected to drive global fertiliser prices lower. Locally, this is however offset, to some extent, by a weaker Rand with the reality that, despite some cost pres- sures easing, we are still trading far above pre-pandemic levels.
Input costs forecasts for 2023 show a mixed bag
Table 3.1
2022 Year-on-year % change
2023 (Estimations) Year-on-year % change
60.5%
Diesel
-8.2%
Labour
6.9%
9.6%*
Chemicals and fertiliser
85.2%
-22%
Packaging
22%
8%
9.61%
18.65%
Electricity
Source: Absa AgriBusiness research, 2023 *Actual Value
Access to lucrative export markets remains the lifeblood of the high-value, long-term crop sector in South Africa. In this space, the risk of losing markets is however increasing. As an example, the most notable is certainly oranges exports to the EU. In 2022, a cooling protocol was instituted against orange exports from South Africa which requires oranges to be loaded at 5 degrees Celsius core temperature after which they should be set/shipped at this temperature for 25 days. Since Market access
the start of 2023, an intensified protocol has commenced. This will require oranges to be loaded at a core temperature of 2 degrees Celsius and shipped and stored at this temperature for 20 days. This is concerning because even in times of unconstrained electricity, this protocol would have been difficult to adhere to with the current cooling infrastructure. At the time of writing this issue remained
unresolved and creates significant downside risk for producer returns during the coming season.
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