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Input environment
INTRODUCTION
S
outh Africa’s reliance on the import of production inputs has shown how vulnerable
the local market can be to price and availability changes in the international market.
Prices spiked on the global oil market after Russia invaded Ukraine, which triggered a
wave of international sanctions against Russia, one of the world’s leading exporters of
crude oil.
Except for the Brent crude situation, the world experienced an exceptional increase in natural gas
prices due to the sanctions and Russia therefore restricting the flow of natural gas to Europe, which
pushed international natural gas prices to new highs. The above disrupted trade flows directly
affected international and local markets, especially energy markets.
During the reporting period, the rand weakened by 20,3% from R14,59/$ in September 2021 to R17,55/$
in September 2022, which resulted in even higher local input prices. Brent crude oil prices increased
throughout the same period from $74,74 in September 2021 to $90,37/barrel in September 2022
(20,9%). The purchasing of inputs was very challenging due to the exceptional increase in international
market prices and the uncertainty of supply.
Graph 1
indicates volatility in the exchange rate and the
Brent crude oil price.
INPUT AND PRODUCTION OVERVIEW
AFFECTED
DISRUPTED TRADE FLOWS
directly
MARKETS
02/10/2018
01/12/2018
30/01/2019
31/03/2019
30/05/2019
29/07/2019
27/09/2019
26/11/2019
25/01/2020
25/03/2020
24/05/2020
23/07/2020
21/09/2020
20/11/2020
19/01/2021
20/03/2021
19/05/2021
18/07/2021
16/09/2021
15/11/2021
14/01/2022
15/03/2022
14/05/2022
13/07/2022
11/09/2022
10/11/2022
20
19
18
17
16
15
14
13
12
11
10
140
120
100
80
60
40
20
GRAPH 1
AND/DOLLAR EXCHANGE RATE AND BRENT CRUDE OIL PRICE
BRENT CRUDE OIL PRICE
R/$ EXCHANGE RATE
Rand/dollar exchange rate
Brent crude oil price
SOURCE: GRAIN SA
Dispute resolution
As a member benefit, Grain SA assisted various members during the reporting period – particularly with
respect to dispute resolution. Disputes on seed quality, agrochemical damage, VAT, the diesel rebate
and fertiliser quality were dealt with in collaboration with Grain SA members.