The impact of load shedding on the agricultural sector will have major consequences for food security in South Africa.
That's the warning from Christo van der Rheede, the CEO of Agri SA, as the country remains gripped by daily power cuts.
From irrigation to conveyor belts, from cold storage facilities to railway lines, all aspects of the business are disrupted.
Speaking to Cape Talk radio, Van der Rheede explained how power outages were having a detrimental effect on food security in the country.
“You have to slaughter the chicken, beef or lamb, process it and package it so it can land on the shelves of the retailer. The same applies to maize or any other product. So, the entire agricultural value chain depends on a constant supply of electricity.”
While farmers can use alternative forms of electricity, like solar panels or generators, it becomes a costly exercise.
Irrigation systems will not work with solar electricity and a higher level of electricity generation is needed to run a processing facility.
“It costs farmers millions more to buy diesel and to put in place generators. Then, you have transformers blowing up due to power surges. It's a mess,” said Van der Rheede.
Agricultural businesses who experience interruptions in business operations because of load shedding damage are not extensively covered by insurance.
“Insurance companies only cover you to a certain point and then afterwards, they stop because they say it’s become unbearable. Small businesses depend on solar panels and inverters and these often pack up due to surges, and then they have to find money to replace it,” Van der Rheede said.
Load shedding is also having a severe impact on employers and their wellness. Truck drivers and delivery employees may become stuck in a timeslot without power and have to wait hours to offload their cargo, taking them hours to return home or unable to perform any other deliveries for the day.
Retailers are forced to install and run diesel generators, with big players forking out millions of rand a month to fuel the generators or risk losing even more money in spoilt stock.
Astral Foods, a major poultry producer, told BusinessTech in May that “the difficult macro-economic environment could worsen food insecurity in South Africa”.
As of March 31,Astral Foods headline earnings per share dropped by 88% and earnings per share by 89%.
“Moreover, the impact that load shedding had on the poultry division, especially boiler operation, decimated all economy-of-scale benefits and operational efficiencies, with the poultry division incurring a loss of R283 million, mainly due to the high feed-input costs,” the company said.
Environment