Meat producer sounds the alarm on food security in South Africa

[Nat Quinn]

Farmers in South Africa have reached a breaking point, says Roelie van Reenen, supply chain executive at Beefmaster Group, with many crippled by collapsed or collapsing infrastructure, and hammered by continuous load shedding.

Beefmaster is one of the largest private employers in the Kimberly area and operates a meat processing facility and feedlot in the wider region.

Van Reenen said that agricultural communities have seen the collapse of critical infrastructure in the country, which is failing due to unrelenting load shedding, wreaking havoc on farmers and businesses all along the agricultural supply chain.

He said that farmers are dependent on irrigation to water crops, but due to power outages, this can simply no longer happen, leading to “WhatsApp groups filled with videos of farmers who show how their crops are withering.”

“The system was under strain before, but with load shedding, it has simmered over into a full-blown crisis, and we are seeing how it is threatening our nation’s food security,” he said.

Van Reenen said the impact of prolonged load shedding is likely to be food shortages and price hikes for food items, with farmers unable to absorb the costs of mitigating load shedding.

“We must remember that farmers are capable people, and they are likely to use things like generators to power pumps so as to keep crops watered, which is going to make it more expensive to produce. In the end, these costs would, unfortunately, be passed on to the consumer, which means food prices are likely to increase,” he said.

The warning from Beefmaster adds to a growing list of alarms sounding from various sectors of the economy.

In January, poultry producer Astral Foods warned that continuous load shedding, as well as the general decay of municipal infrastructure, was contributing to severe business disruptions, raising costs and ultimately impacting prices.

The Bureau for Economic Research noted this month that the woes of the agricultural sector have the most immediate impact, with operational costs skyrocketing and price increases having a knock-on effect along the entire supply chain.

Intense power rationing adversely impacts farming operations, especially those relying on irrigation said the BER.

According to the Bureau for Food and Agricultural Policy (BFAP), a third of total farming income in SA directly depends on irrigation. Irregular irrigation, or during suboptimal times of the day, raises costs and also threatens the size and quality of crops.

For most South Africans, however, the real impact of the crisis will be felt right in the pocket as monthly grocery bills climb higher and certain products become more scarce.

“Load shedding increases costs directly and indirectly through higher rates of wastage and spoilage within food chains,” the BFAP said.

“Financial results from several food companies indicate that fuel expenses to run generators during load shedding are skyrocketing. These costs cannot be absorbed in the chain and are, to a large extent, passed on to consumers.”

Wider problems

While load shedding is having a direct impact on food production in South Africa, Van Reenen said that it is also posing wider problems for municipalities and the communities surrounding operations.

Municipalities are facing huge problems with failing collection rates and mounting pressure to keep ratepayers on their books, he said.

Because of load shedding, more people are moving off Eskom’s grid and looking for alternatives. In turn, this leads to lower rates for municipalities and greater strain on Eskom and the communities that depend on local budgets for service delivery.

“Kimberley has one of the highest tariff rates for municipal-supplied electricity in the entire country. If a business the size of ours decides to go off the grid to curtail the cost of production, Kimberley municipality would lose a significant contributor to their bottom line.

“On top of this, ongoing electricity tariff hikes mean it becomes uneconomical to produce. This is a very real scenario that many businesses are contemplating, with disastrous consequences to municipalities,” he said.

Van Reenen said that municipalities could mitigate this by adopting the same approach as Cape Town and buy back electricity from the public and businesses.

“If every household and business can sell back to the municipality in their area, the biggest portion of the problem can be addressed much quicker as it will cut through the red tape.

“Some infrastructure changes will have to be made; a small price to pay to reach the goal. The effect of such a rollout could even be that Eskom would then be able to supply manufacturing facilities without power interruptions,” he said.

Meat producer sounds the alarm on food security in South Africa (businesstech.co.za)

[Author]

Posts