DURBAN - The agricultural sector needs to work hand in hand with power utility Eskom to implement green energy solutions, including solar and wind energy, and fend off the economic implications of load shedding, according to Standard Bank’s Agribusiness unit.
Load shedding has had a negative impact on energy-intensive and irrigation-dependent agricultural industries.
“Furthermore, the maintenance of the cold chain is critical to ensure food quality and increase shelf life of products. Therefore, the entire value chain from farm gate to the consumer's home is highly impacted by the challenges of load shedding,” said Standard Bank Agribusiness unit.
On Monday, the Bureau of Economic Research (BER) said in its weekly review that load-shedding further darkened the start of 2021 following Eskom implementing stage 2 load-shedding last week as a whopping 14 748MW of generation capacity was unavailable due to unplanned maintenance, breakdowns and outages delays.
This was in addition to 5 385MW being unavailable due to planned maintenance which totalled amounts to more than 40 percent of Eskom’s installed generation capacity.
Over the weekend, Eskom also said positive Covid-19 cases among employees were negatively effecting their operations and that of suppliers.
“Looking further ahead, it is very concerning that Eskom’s forecast of demand and supply dynamics suggests there is a risk of load-shedding every week for the next three months,” said BER.
Standard Bank Agribusiness said load shedding was one of the lowlights for the agriculture sector which showed its resilience and agility during a depressed economy at the back of Covid-19 with strong growth and good trade results.
“The global coronavirus pandemic came with tough trading conditions due to lockdown restriction in the domestic and international markets. Despite the challenges presented by the pandemic, South Africa’s formal food supply chains have remained resilient overall and managed to remain functional throughout the different stages of the lockdown.”
In November last year, Agri SA welcomed the Mineral Resources and Energy’s Minister’s approval for the National Energy Regulator of South Africa (Nersa) to proceed with processing licence applications for self-generation facilities of above 1MW.
The sector faced other challenges such as the various national lockdowns, continued pressure on high levels of unemployment in South Africa and the country’s downgrading by global rating agencies Moody’s and Fitch.
The unit said last year the agricultural sector recorded positive growth for three consecutive quarters indicating a strong recovery from several difficult seasons of negative growth owing to droughts across the country.
Standard Bank Agribusiness said domestic factors such as agricultural policies, infrastructure and irrigation, and agricultural inputs were among other factors which also contributed to the growth of the sector.
“Investments in agricultural technology remain key to sustaining growth in the sector. The Agbiz/IDC Agribusiness Confidence Index (ACI) was above a neutral point in the last quarter of 2020. This shows investors are optimistic about the future of agriculture and business conditions in the country,” the unit said.
BUSINESS REPORT