50 5.2. INPUT PRICES 5.2.1. Seed Recently, seed prices have seen significant increases across various crops. Specifically, maize seed prices have risen by 2,3%, while soybean seeds have increased by 6,9%. Sunflower seed prices have climbed 4,3%, and sorghum seeds have experienced a 6,2% increase. These rising costs pose substantial challenges for producers, as they directly impact their overall production expenses. For instance, maize seed prices for the 2025/2026 production season rose by 2,3% on average. Sunflower seed prices rose by 4,26% on average, sorghum seed prices by 6,.2% and soybean seed prices increased by 6,9%. Given the already tight profit margins in agriculture, these increases in seed prices can squeeze producers’ budgets further, potentially affecting their planting decisions and overall agricultural productivity. 5.2.2. Fertiliser From September 2024 to September 2025, international fertiliser prices have increased across the board. Only Ammonia saw a decrease of almost 25%. Different assumptions are made in compiling the budgets. In the case of fertiliser (which represents the largest portion of a producer's variable costs), the budget incorporated an average of the price lists for N, P, and K from all fertiliser companies. 5.2.3. Fuel When calculating fuel costs, forecasts are determined using future rand/dollar exchange rates and future crude oil prices. The factors that influence the local fuel price movements are Brent crude oil prices and the rand/dollar exchange rate, as well as local fuel levies. Graph 5 (on page 39) shows the international Brent crude oil prices and the Gauteng wholesale prices of diesel over time. Over a year, Brent crude oil prices were $72,93 per barrel in September 2024 to $67,34 per barrel in September 2025, lower oil demand in China and announcements that OPEC+ were expecting to increase production contributed to prices decrease. Over the same period, the rand strengthened against the dollar from R17,58 to R17,46. 5.2.4. Chemical The increase in chemical products varies depending on whether it is an herbicide, an insecticide or a pesticide. From data received from various local companies, agrochemical prices have decreased in the past year. The estimated increase will vary between different producers and across various regions, due to each producer making different purchases, different production practices and many more. We know that producers are price takers, that these higher input costs cannot be passed on to consumers and that producers must absorb price increases. 5.3. THE COST STRUCTURE OF BUDGETS The cost structure of the budget is composed of variable and fixed costs. In the budgets, variable costs are, for example, seed, fertiliser, herbicide, diesel, etc. These costs differ as more or less of the input is used. The fixed or overhead costs are expenses incurred regardless of the level of production or output volumes. While fixed costs vary significantly among producers, a specific amount is allocated for estimating total production costs. These fixed costs must be added to the variable cost per hectare to determine the overall production cost. INCOME AND PRODUCTION COST We know that producers are price takers, that these higher input costs cannot be passed on to consumers and that producers must absorb price increases.
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