Farmers can also invest in other industries in order to spread financial risks.

These are the financial decisions North West crop farmer, Seitshiro Marumoloe, makes in a bid to cushion the impact of increasing input costs and other economic threats.

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"It is one of the most difficult challenges to work out the budget and get to realise that you have under-budgeted. It is not always wise to over budget, but it is also not pleasant to under budget [either]," shares Marumoloe.

He says the unpredictability of the market and nature makes it challenging to be spot-on.

"When you calculate and work out your budget at certain rates that are within the market at that particular time, but come the time of production, the market turns against you and the prices of inputs are doubling up. The price of diesel, which is one of the most needed resources, keeps on rising.

"If you relate that also to the issues of climate, the production season can become expensive every time [as] too many or too little rainfall [can lead to the farmer spending more money]."

High input costs have been the topic of discussion in agricultural communities for the past year, as fertiliser and fuel prices, amongst other important inputs, increased to concerning levels.

The Chief Economist at the Agricultural Business Chamber of South Africa (Agbiz), Wandile Sihlobo, wrote in his weekly report in May 2022, that the increases in input costs were partly the result of the Russia-Ukraine war. This is as the conflict resulted in limited fertiliser production and exports from Russia. 

Sihlobo added that prior to the war, Russia was the world’s leading exporter of fertiliser, accounting for about 14% of global exports.

However, for Marumoloe leaving the sector due to the hard economic climate is not an option, as he cites his passion, age and investments as reasons for his persistence. 

“It’s very difficult for me at my age and with all the investments that I’ve already done to leave the sector… For the past three years, we’ve been investing in other industries as well. They have their own difficulties and challenges [too]. But at least they are able to keep me going and they are able to keep my financial profile in a better position."

OFM News