Farmers may not plant due to high diesel and fertiliser costs, warns economist Dawie Roodt

ADVICE TO RESERVE BANK ON RATES: BIG STICK AND THEN HOLD STEADY Farmers in South Africa may choose not to plant this season because current crop prices don’t come close to covering spiralling diesel and fertiliser costs, warns economist Dawie Roodt. Fresh from Nampo, South Africa’s largest agricultural trade show, Roodt told NSN he does not expect widespread abandonment of fields, but he says the price mismatch between production costs and what farmers can sell their crops for is becoming unsustainable. According to Roodt, the only way to close that gap would be sharply higher food prices for staple goods, a scenario that would hit South Africa’s most vulnerable households the hardest. Asked how South Africa should respond to inflation pressures linked to the crisis in the Strait of Hormuz, Roodt said he expects inflation to rise from around 3% to between 4% and 4.5%, with the possibility of moving above 5%. He believes the South African Reserve Bank should respond with a decisive 25‑basis‑point rate hike at its end‑May meeting, and then hold steady.