Fruit SA warns that if Stage 6 load shedding persists and is not resolved, many growers will go out of business, putting thousands of jobs at risk, while emerging growers will be hit the most.
The fruit sector employs just under 300 000 people directly on farms.
“The reality is that it is not viable to farm, pack or export at Stage 6 level of load shedding since it becomes difficult to manage irrigation schedules, cooling and packing with the use of generators beyond Stage 3 of load shedding,” Fruits SA CEO Fhumulani Ratshitanga said in an interview.
The CSIR last week said the year 2022 overtook 2021 as the most intensive load shedding year yet, with December being the highest load shedding month ever.
While the government has declared a power crisis and has plans in place to stabilise the national grid, with an end to load shedding in sight for now, the agricultural sector is under immense strain, losing money hand over fist.
According to the National Treasury, South Africa’s economy will grow at a muted 0.9% in 2023 as a result of prolonged power cuts and the deterioration of port and rail infrastructure.
Thursday’s National Budget delivered by Finance Minister Enoch Godongwana did not provide relief to farmers and the Road Accident Fund (RFA) diesel fuel levy refund that was granted to food manufacturers.
The minister acknowledged that an extremely important sector such as agriculture was experiencing performance risks such as the current power crisis and flooding as well as increased electricity consumer prices and that more funds must be made available for the Department of Agriculture to improve agricultural production and ensure food security.
The collective platform for South Africa’s fruit industry said the use of generators was problematic as this was an added cost to an industry, which was already under pressure.
The industry also ran the risk of losing access to markets due to quality and non-adherence to export protocols that needed cold treatment of produce at certain temperatures for a certain period.
“Due to the relatively short shelf life of fruit, preferential treatment and exclusions and/or lower levels of load shedding could go a long way for our industry, including those involved in cooling and storage of the products,” Ratshitanga said.
She said the exemption of ports from all stages of load shedding was also critical as the country could not afford for port operations to be affected by load shedding.
“Many growers have invested heavily in solar and diesel generators to ensure that they harvest, pack and store the fruit, and apply irrigation. This investment is questionable if further down the supply chain a break in the cold chain or logistics chain impacts fruit movement and quality.”
On top of the current power challenges, Fruit SA said last year the industry had had to navigate numerous challenges.
“We saw massive cost increases across the value chain (e.g. diesel increased by 25%, packing material by 22% and fertiliser by 80%). Shipping costs also increased. The industry also had to contend with shortfalls in infrastructure and capacity, port closures and bottlenecks in logistics, load shedding, shipping delays, higher interest rates and average to low prices.”
Fruit SA said the EU also imposed a new measure for South African oranges against the false codling moth, which then threatened the sustainability and profitability of the citrus industry.
Ratshitanga said that recognising the odds that were against the industry, which was one of the biggest employers in the agriculture sector, they had started this year with concerns around the sustainability and further growth of the industry.
Hence, the industry was engaging with relevant stakeholders to try to arrest these issues.
On the positive side, it said following seven years of negotiations, South Africa had successfully shipped its first container of pears to China last September.
The industry also had three verification visits by Indian (avocados), Japanese (avocados) and Vietnamese (for oranges) authorities for our market access applications for avocados and oranges, respectively. These had been affected by Covid-19-related travel restrictions. They were said to be positive steps towards the conclusion of the applications.
The domestic and global economies were under pressure at the moment and this would impact growers negatively. The EU remained the biggest market for South Africa’s fresh fruit (taking about 35% of the country’s fruit), and the high inflation and energy costs were impacting buying power, which meant less spending on fresh produce. This would obviously affect growers’ earnings.
Fruit SA still saw a growth potential going forward.
However, for this year’s season, she said many fruit industries were projecting contractions in hectares and export volumes.
“The contractions are due to the many challenges affecting nett farm income negatively over the last few seasons which are already alluded to above.”
The local fruit industry was export-oriented, exporting 65% of the 5.6 million tons of fruit produced in the 2020/21 season.
“Increasing and maintaining access to markets is, therefore, critical for its growth. All the infrastructure and logistics bottlenecks also need to be addressed.
“In this regard, public-private partnerships are needed to deal with most of these. However, shipping delays, port congestions, persistent power cuts and the high input and shipping costs may hinder this potential growth,” Ratshitanga said.
Fruit SA said the industry contributed significantly to the economy with fresh fruit comprising 35% of South Africa’s agriculture exports, the value of these exports is about $3.3 billion (R61bn) and just under 300 000 people were directly employed on farms, supporting just over a million dependants.
She said the country’s success in implementing the necessary interventions would continue to strengthen the industry’s position and boost the local economy.
“With the focus on transformation, the growth that we are seeking to achieve will also be inclusive, ensuring that previously disadvantaged individuals also participate meaningfully in the fruit value chain.”