Food insecurity as a result of prolonged and higher burden levels adds to the list of pressures weighing on businesses and consumers.
Tiger Brands, the country’s largest food producer, said its production plans were informed by a load shedding schedule, and that prolonged cuts could affect food safety and increase food waste.
“It has become a challenge for food producers and the wider supply chain, including agricultural producers, to manage at the current level of load shedding,” Tiger Brands said in an emailed response to questions.
“The escalation of the current level of load shedding will cause many operational challenges in our supply chain and services beyond the scope of our manufacturing operations.”
Tiger Brands owns brands such as Jungle Oats, Ace corn meal, Tastic rice and Albany bread, and operates 44 manufacturing sites.
South Africa is in the midst of its worst electricity crisis since load shedding began 16 years ago, with outages lasting up to 10 hours a day in some areas.
This not only disrupts households and businesses, but also disrupts infrastructure, including water networks.
By data-driven publication The OutlierEskom has outages for more than 200 days in 2022, and every day so far in 2023.
While Tiger Brands has not responded to questions about the cost of load shedding so far, it said solar power is expected to reduce the effect of load shedding at four of its initial manufacturing sites.
The company has concluded power purchase agreements with independent power producers.
“The installation of solar power at the Home and Personal Care Manufacturing plant in Gauteng is commissioned in December 2022 and we expect the installation at our Henneman Factory in the Free State, King Foods in the North West, as well as the Beverage Manufacturing plant in Gauteng. to go live by the end of March 2023. Plans have been is to expand this during 2023,” the company said.
The initial rollout will generate two megawatts of power, providing a third of the power usage required by the site that will go live in March.
“The goal is to have 65% of business electricity needs at manufacturing site level in South Africa come from sustainable energy solutions by 2030,” Tiger Brands said.
Load-shedding has created problems in every leg of the agricultural production chain, affecting crop irrigation, processing and storage.
The SA Canegrowers Association recently said farmers are facing yield losses due to the ongoing lack of energy supply.
“Farmers need continuous energy for a minimum of six hours for proper irrigation. As a result of the intermittency of resources, interrupting irrigation, irrigated farmers will lose up to 40% of their water capacity,” said the sugar association in a statement.
According to SA Canegrowers’ scenario modelling, continued discharges in stages four to six will cost farmers more than R723 million in 2023. Escalation to stages six to eight could cost the industry more than R1.8 billion and anything beyond stage eight can. costing the industry more than R2.4 billion.
Eskom said that in phases one, two and three, customers experienced load-shedding for two hours once every 32 hours. In the fourth stage, customers open two hours four times in 32 hours. During the fifth stage there are about eight hours of unburdening each day. In stage six Eskom released 6 000 megawatts and this translates to two power outages lasting four hours.
Phases seven and eight have not yet been implemented. Stage 8, the highest of the stages, doubles the frequency of stage four. This means that Eskom will release 8 000MW and South Africans will be without electricity for up to six times a day – 12 hours a day.
But municipalities with well-known and aging infrastructure experienced longer-than-scheduled downtime, as their engines and pumps had to be restarted.
SA Canegrowers said continued load shedding without arrangements to enable irrigation would also have long-term implications. Sugarcane stalks left in the ground can produce sugarcane for up to 10 years. Inadequate watering not only reduces the quality of sugarcane and causes loss of yield, it will also cause mortality, significantly reducing the life of sugarcane.
“SA Canegrowers is therefore calling on Eskom and government to help the industry in particular, as well as the wider agricultural sector, to find the necessary solutions to mitigate the impact of load shedding.”
The association recommended several short-term measures for the government’s consideration, including limiting irrigation to the fourth stage in sugarcane irrigated areas during the irrigation season; diesel rebates for farmers using generators; and tax breaks for those investing in alternative energy sources.
Astral Foods, a poultry processing company, recently said in a trade update that South Africa’s food security has been compromised as poultry companies battle with crippling levels of load-shedding.
Astral Foods said its half-year profit could fall by “no more than 90%” to 142c in the six months ending March 2023 as it was unable to raise chicken prices to cover feed costs and reduce burdens.
Poultry producers warned that the selling price of poultry would have to rise significantly to recoup these costs.
In mid-January, the Poultry Association of South Africa said in a statement that the sixth stage of load shedding had a negative impact on the country’s chicken and egg industry, and that producers had to spend too much on diesel to keep their businesses running.
The poultry association said on January 18 that in the past six weeks, its members “have had to cull more than 10 million chicks of their age due to stress-induced stress”.
Anti-dumping advocacy group FairPlay Movement has called for the removal of the 15% VAT on chicken parts due to “rapidly rising agricultural costs, including unreliable and increasingly expensive electricity, and the possibility of increased chicken prices”.
The group started its campaign for VAT-free chicken in 2018, and renewed its call after Russia’s invasion of Ukraine, which led to an increase in chicken prices worldwide.
FairPlay founder Francois Baird said South Africa is facing a “perfect storm” as it is “threatened not only by predatory imports but by rising input costs, poor rural infrastructure and daily power outages, with large increases in electricity prices this year” .