There is no sign of the increasing cost of living in South Africa slowing down, as the effects of a global hike in food prices are exacerbated by rolling blackouts in the country.
AgriSA, the biggest federation of agricultural organisations in South Africa, said the impact of ongoing power outages on the agricultural sector and the wider economy holds serious implications for food security in the country.
High food prices have been commonplace globally, according to the UBS Agriculture outlook. The war in Ukraine, government interventions in markets, high energy prices, labour issues, and persistent climate-related challenges all contribute to the sector struggling to keep costs manageable.
UBS added that disruptions in the global supply chain will continue to have an impact on markets well into 2023.
Domestically, AgriSA said the extended period of Level 6 load shedding in the past week has threatened the viability of the agricultural sector, warning that an escalation beyond these levels would be catastrophic and could pose a risk to the country’s national security, added AgriSA.
According to AgriSA, load shedding has affected the farming sector by:
- Contributing to inflation that may result in farmers planting less due to rising costs;
- Causing disruptions in planting schedules;
- Increasing the cost of production; and,
- Increasing overall risk and causing more uncertainties.
“Electricity is central to modern farming practices, and the recent increase in load shedding has seriously disrupted farming operations. Pumping stations, irrigation, cooling and other systems all depend on power supply,” said AgriSA.
Farmers forfeit their water quotas for irrigation purposes when the power is off – making an irrecoverable loss that paralyses farms.
AgriSA said that farmers are already reporting huge losses as processing machinery, irrigation equipment and other machinery are damaged and come to a standstill due to power outages.
Load shedding also leads to farm employees spending more time working to catch up on lost hours, which requires overtime wages to be paid out – this pushes up already increasing production costs.
Killing the cold chain
Most notably, the constant outages are also causing massive damage and disruptions to the ‘cold chain’ – the process of keeping produce refrigerated through its supply chain process.
AgriSA said that retailers are now starting to reject fresh produce, mainly vegetables, due to delays in delivery.
This problem will only get more damaging in warmer seasons and will have a direct role in the reduction of food available and increase the cost to consumers, AgriSA added.
The association has called upon the Presidency to ensure that stability and safety at all power plants are prioritised as they are national key points.
AgriSA said it supports Eskom’s decision to increase its renewable energy capacity.
“The Department of Mineral Resources and Energy has a critical role to play in quickly getting the necessary policy infrastructure in place so that Eskom can increase its capacity. Failure to do so poses serious economic risks to South Africa, including social instability.”
The latest Household Affordability Index provided by the Pietermaritzburg Economic Justice & Dignity group (PMBEJD) shows that South African food prices at mid-point this year have continued to increase.
The PMBEJD comprises a basket of 44 food items most frequently purchased by lower-income households, who make up most households in the country.
They found that 40 out of all 44 listed foods saw a price jump compared to last year. Twenty-six items saw an increase above 10%.
The five items that saw the biggest increase were:
- Cooking oil: +69%
- Spinach: +39%
- Cake flour: +24%
- Chicken livers: +24%
- Cremora: +23%