By Lesedi Sibiya-Diplomatic Insider 

The government intends to raise R20 billion in additional tax revenue for the 2025/26 fiscal framework. These adjustments to the fiscal framework of the calendar year may pose a threat to cost pressure in the agricultural sector. These amendments are however viewed as a strategic outline to avoid an increase of Value-Added Tax (VAT). 

With fuel constituting roughly 13% of variable input costs in regards to primary production, the timing of the increase puts the economy in a compromising position as these fuel levy and electricity tariff hikes may reduce the benefit of global oil price reductions and growth in the rand which would limit cost relief for producers. The increase in these levies may come with several consequences such as impacting the agricultural sector, due to the fact that agriculture is heavily reliant on energy intensive activities. The food value chain could most likely be affected by the fuel levy increase, as this may raise transportation expenses and raise input costs. 

In order to reduce the impacts of the recent fuel levy increases on the agriculture sector, the government may expand and streamline the existing diesel fuel rebate system to ensure that there is more inclusive access by smallholder as well as emerging farmers, who don’t necessarily have the administrative capacity to claim these rebates. Investing in the development of rural transport infrastructure is another key way to combate impact and promoting use of alternative energy sources, which include solar powered irrigation and electric farm machinery, could reduce the sector’s dependency on fossil fuels. 

Investment in research and exploring fuel efficient production techniques are needed, as well as collaborative engagements with reference to the Agriculture and Agro-processing Master Plan (AAMP) between the government, farmer organizations, and agribusiness stakeholders in order to securely design adaptive policies which inflation effects and fuel levies in regards to food prices as well as ensuring food security for low income households. 

In May, South Africa had recorded a preliminary trade balance surplus of R21.7 billion. This surplus was attributed towards exports of R175.7 billion and imports of R154.1 billion with inclusive trade with Botswana, Eswatini, Lesotho and Namibia (BELN). On a month-on-month basis, exports have increased by R10.6 billion (6.3%) from R165.3 billion to R175.7 billion between April and May 2025, whilst imports increased by R1.8 billion (1.2%) from R152.3 billion to R154.1 billion over the same period. Export flows increased in May 2025 which were spearheaded by Gold, PGMs and Citrus Fruits. Import flows increased on the back of higher importation which include Crude Oil, Artificial Corundum and Telephone Sets which include smartphones and other telephones.