A Farm Input Cost Index (FICI) compiled by the network organisation Saai with the help of economists from Codera indicates that inflation at the farm level has averaged 9% over the past five years.
By Nico van Burick, Senior Journalist at African Farming and Landbouweekblad
Francois Rossouw, executive head of Saai, says the once-off index was part of a submission to Santam at Nampo Cape, but they would like to continue it monthly because it is an accurate estimate of the actual inflation pressure facing South African farmers.
He states the FICI was compiled using various reliable data sources, as well as a methodology that includes consultation with farmers. “This is a first for the agricultural industry. Farmers are eager to experience greater accuracy and independent indicators, linked to their realities, to fulfil the need to compare and measure their own operations.
“Official estimates are useful, but we prefer independent estimates of farmers’ input costs. The FICI has clearly shown that farmers have faced higher cumulative input cost inflation than what the official estimates indicated,” says Rossouw. “We always talk about the challenges farmers face, especially when it comes to input costs and important administered costs. We now want to summarise all of this in one index so that there is one picture that can be measured over time.”
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Fertiliser and Electricity
The growth in production costs stood at an average of 9.1% by July this year since April 2020. While the annual inflation rate decreased late in 2024, the double-digit input cost inflation in 2021 and 2022 still has an impact on farmers. The index shows that the increase in input costs often exceeds the increase farmers receive for their products.
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The biggest contributor to inflation on farms was the cost of fertiliser, which increased by more than 20% annually over the past five years, followed by electricity, with an average increase of almost 13%. Rossouw says the latter shows that government-driven inflation and problems with service delivery are priority issues that urgently need attention. Other increases of more than 5% include labour, seed, water and diesel.
“We hope to work with the government and other role-players because inflation at the farm level drives up the cost of food for all South Africans. It is in everyone’s interest that inflation at farm level and especially its drivers must be taken seriously.”
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