Broad-based input cost increases have been a reality for farmers worldwide throughout 2022.
Here in South Africa, the agricultural producer price index for August showed that production costs had risen by 15% year-on-year.
These increases were underpinned by many factors, ranging from a weakening exchange rate, to disruptions in the manufacturing and distribution of agrochemicals and fertilisers.
VOLATILE EXCHANGE RATE
Over the past six months, the rand-dollar exchange rate has fluctuated between highs of around R14,50/US$ in April and). This is the result of heightened levels of global risk aversion and aggressive contractionary monetary policies in various countries. In earlier coverage of macroeconomic factors, we noted that the US Federal Reserve's hawkish stance on that country's interest rate was leading to extreme dollar strength. This stance is underpinned by persistently high inflation, with the Federal Reserve determined to bring inflation in the US down to about 2%, despite the risks that this posed for economic growth around the world.
