A RAFT of fuel price hikes has affected agricultural production costs, driven food price inflation and forced farmers to cut back on petroleum consumption, a study has revealed.
Fuel prices were increased by more than 21 per cent after the government early this year scrapped its increasingly costly subsidy which had kept pump prices down.
Without the fuel subsidy, countrywide pump prices for unleaded petrol now costs K9.91 per litre, while diesel primarily used in the agricultural and mining sectors, now costs about K9.20a litre and kerosene is pegged at K6.83.
A study conducted by a consortium of four organisations revealed that farmers were hit by the hike.
The organisations include the Consumer Trust Society (CUTS) International Zambia, the Agriculture Consultative Forum (ACF), Economies Association of Zambia and the Zambian Voice.
“Following the removal of the subsidy on fuel, the average cost of fuel as a proportion of the total cost incurred by farmers increased from an average 21 per cent to 28 per cent,” the study showed.
“Consequently about 41 per cent of the farmers engaged in maize production increased the price of a 50 kg bag of maize by an average of 11 per cent.”
The key drivers of the increase in the cost of production and distribution identified by the farmers were the increase in the cost of transportation of inputs and produce as well as the cost of seed and fertiliser among other inputs, according to the study.
The research, however, revealed that a large majority absorbed the increase in the cost, a move that consequently affected their profitability and viability.
“About 25 per cent of the farmers using diesel reduced their consumption of petrol by 40 per cent compared to a reduction of 50 per cent in the consumption of petrol by 33 per cent of the farmers that consume the petrol,” the research showed.
“This implied that a significant proportion of the farmers absorbed the shock reflected by the price increase per litre of fuel following the removal of the fuel subsidies. This was likely to exert pressure on the cost of production and had potential to adversely affect output or increase the unit price of output.”
While agriculture output has been favourable in the last few years, the Zambia National Farmers Union (ZNFU) indicated carly this year that the fuel price hike was likely to “adversely” affect crop production in the country.