Tiger Brands: Prolonged load-shedding a risk to food security
Food insecurity as a result of prolonged and higher levels of load-shedding has been added to the list of pressures burdening businesses and consumers.
Tiger Brands, the country’s biggest food manufacturer, said its production plans are informed by load-shedding schedules, and that prolonged cuts pose a risk to food security and increased food wastage.
“It is already challenging for food producers and the broader supply chain, including agri-producers, to manage under the current levels of load-shedding,” Tiger Brands said in response to emailed questions.
“An escalation in the current levels of load-shedding will likely introduce a multitude of operational challenges in the supply chain and services beyond the scope of our manufacturing operations. ”
Tiger Brands owns brands such as Jungle Oats, Ace maize meal, Tastic rice and Albany bread, and operates 44 manufacturing sites.
South Africa is in the midst of its worst electricity crisis since the start of load-shedding 16 years ago, with rolling blackouts of up to 10 hours a day in some areas.
This not only disrupts households and businesses but places strain on infrastructure, including water networks.
According to the data-driven publication The Outlier, Eskom implemented blackouts for more than 200 days in 2022, and every day so far in 2023.
While Tiger Brands did not respond to questions about how much load-shedding had cost it to date, it said its roll-out of solar power to mitigate the effects of load-shedding at an initial four manufacturing sites was in full swing.
The company has concluded power purchase agreements with independent power producers.
“The solar power installation at our Home and Personal Care manufacturing plant in Gauteng was commissioned in December 2022 and we expect installations at our Henneman Mill in the Free State, King Foods in the North West, as well as the Beverages manufacturing plant in Gauteng to go live at the end of March 2023. Plans are in place to expand on this during 2023,” the company said.
The initial rollout would generate two megawatts of power, providing a third of the power usage required by the sites going live in March.
“The goal is to have 65% of the business’s electricity requirements at manufacturing site level across South Africa sourced from sustainable energy solutions by 2030,” Tiger Brands said.
Load-shedding has created problems at every leg of the agricultural production chain, affecting crop irrigation, processing and storage.
The SA Canegrowers Association recently said growers face concerning yield losses because they have fewer hours of continuous energy supply.
“Growers need a minimum of six hours of continuous energy for proper irrigation. As a result of the intermittency of the power supply, disrupting irrigation, irrigated growers will lose up to 40% water capacity,” the sugar association said in a statement.
According to SA Canegrowers’ scenario modelling, continuous load-shedding at stages four to six will cost growers more than R723 million in 2023. An escalation to stages six to eight could cost the industry more than R1.8 billion and anything beyond stage eight could cost the industry more than R2.4 billion.
Eskom said that in stages one, two and three, customers experience load-shedding for two hours once in 32 hours. In stage four, customers are load-shed for two hours four times in 32 hours. During stage five there is about eight hours of load-shedding each day. At stage six Eskom sheds 6 000 megawatts and this translates to two power outages lasting four hours.
Stages seven and eight have not yet been implemented. Stage 8, the highest of the stages, doubles the frequency of stage four. This means Eskom will shed 8 000MW and South Africans will be without electricity for up to six times a day — 12 hours a day.
But municipalities with notoriously poorly maintained and ageing infrastructure experience longer blackout periods than scheduled, as their machines and pumps battle to restart.
The SA Canegrowers said the continuation of load-shedding without any arrangement to enable irrigation would also have long-term implications. Cane stalks left in the ground can produce cane for up to 10 years. Insufficient irrigation not only reduces cane quality and causes yield losses, it will also lead to increased mortality, significantly shortening the lifespan of the cane.
“SA Canegrowers is therefore appealing to Eskom and the government to help the industry in particular, as well as the broader agricultural sector, to find urgent solutions to mitigate the impact of load-shedding.”
The association suggested some short-term measures for the government’s consideration, including restricting load-shedding to stage four in irrigated cane growing areas during peak watering season; diesel rebates for growers using generators; and tax rebates for those investing in alternative energy sources.
Astral Foods, a poultry processing company, recently said in a trading update that South Africa’s food safety was compromised as poultry companies battle with crippling levels of load-shedding.
Astral Foods said its half-year profit could plunge by “no more than 90%” to 142c for the six months ended March 2023 because it wasn’t able to hike chicken prices to cover soaring feed and load-shedding costs.
The poultry producer cautioned that a substantial increase in the poultry selling price would be required to recover these costs.
In mid-January, the South African Poultry Association said in a statement that stage six load-shedding had a dire effect on the country’s chicken and egg industry, and that producers were having to spend excessively on diesel to keep businesses running.
The poultry association said on 18 January that over the previous six weeks, its members “had to cull over 10 million day-old chicks due to disruptions caused by load-shedding”.
Anti-dumping advocacy group the FairPlay Movement has called for a removal of the 15% VAT on chicken portions because of “rapidly rising agricultural costs, including unreliable and increasingly expensive electricity, and the likelihood of chicken price increases”.
The group started its VAT-free chicken campaign in 2018, and renewed the call after Russia’s invasion of Ukraine, which led to an increase in chicken prices globally.
FairPlay founder Francois Baird has said that South Africa is facing “a perfect storm” because it is “threatened not only by predatory imports but by rising input costs, poor rural infrastructure and daily power cuts, with a substantial electricity price increase likely this year”.