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Agriculture

Rising input costs to hit farmers, consumers

April 11, 2022
Rising input costs to hit farmers, consumers

Agriculture minister Calle Schlettwein warns that rising input costs will affect Namibia’s agricultural production, with possible job losses in the near future.

This comes as supply shortages fueled by the Ukraine-Russia conflict, along with a host of pre-existing factors, have driven fertilizer prices to record highs.

Russia, which accounts for around 14% of global fertilizer exports, has temporarily suspended outgoing trade, which is expected to have a strong ripple effect across global food markets.

“I believe the sector is facing a steep uphill battle,” said the Minister. “Not only have fertilizer prices soared, its availability is uncertain. Equally fuel prices have increased by about 75%. This cumulative input price hike is making mechanized agriculture (crop production) and agricultural production in general very expensive.”

Schlettwein noted that the development will have a devastating impact on the domestic economy where the agricultural commodity export earnings amounted to N$1.3 billion Q4 2021 according to latest Namibia Statistics Agency data, including possible jobs losses in a sector estimated to be one of Namibia's biggest employers, contributing approximately 167,242 jobs.

“The risks of pushing it into non-viable terrain have sharply increased and that has many negative effects on the economy. The chances of job losses and impoverishment are on the incline,” he said.

He added that small scale farmers were on the brink due to their failure to absorb price hikes of fuel and fertilizer.

Official government figures show that the country imported fertilizers and pesticides valued at N$334.4 million in Q4.

“For small scale farmers the situation is even more threatening since their ability to absorb price increases for both fuel and fertilizer is just not there. The resultant effect shall be much lower production yields, much lower income for farmers and much less food produced locally. We will regress in our efforts to bring us closer to food self-sufficiency, and, unfortunately, also in our progress of poverty eradication in the sector,” the minister said.

“The impact on consumer prices will obviously follow and increases in food prices will be large and unavoidable.”

Agriculture experts assert that fertiliser costs constitute over 50% of some farmers' expenditure on input costs  and are expected to rise by between 32% and 69% in neighbouring countries such as South Africa.

Research firm Simonis Storm notes that fertiliser prices in South Africa increased by 128% in 2021 on average in United States Dollar terms, following a 155% rise in international fertiliser prices last year.

“Fertiliser costs are usually between 30% and 50% of total production costs (depending on the crop), making the price increases a significant impact on profitability of local farmers. We reiterate that we do believe high input costs will weigh on farmers’ profit margins and potentially lead to higher fruit and vegetable prices in coming months,” the company warned.

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Last modified on Wednesday, 13 April 2022 16:04
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