SOUTH AFRICA – Astral Foods, a South Africa based integrated poultry produce, said that it had signed an emergency agreement with Standerton (Lekwa) Municipality as an interim measure to stave off the current water crisis.
This is after the company faulted water supply constraints stemming from the deterioration of infrastructure in the Lekwa municipality which supplies its processing plant in Standerton as having significant cost implications for the company.
According to an IOL Business report, the company said that under the agreement, the municipality has committed itself to supply a minimum of 2 megalitres of treated water a day at Astral’s Goldi processing plant via the municipal infrastructure.
The municipality also made Astral an emergency “service receiver” and agreed to cede 3.5megalitres daily of their raw water allocation from the Vaal River system to the group for two years.
In its recently reported interim results for the six months ended March 2019, Astral reported that it had suffered a US$5.93 million (R85million) cut to its profit as a result of the water supply interruptions.
Astral, led by chief executive Chris Schutte, said the company was pursuing alternative sources of water as the supply interruptions at the poultry processing plant had reduced production to 50% of the scheduled capacity.
“Astral is actively seeking alternative water supply solutions in an attempt to mitigate any further cost impacts under the ongoing water supply interruptions.
“All possible avenues are being explored which includes continued legal action to secure water supply through the municipal infrastructure,” it said.
Astral said in light of the water crisis, the company has installed infrastructure on one of its poultry farms alongside the Vaal River in order to draw water.
The company had previously secured a high court order, which obliged the municipality to submit a long-term plan on how it intended repairing and improving the municipal water supply infrastructure.
“At the peak of the crisis absolutely no water was supplied for a seven-day period, leading to a significant negative impact on the integrated agricultural supply chain,” the company said.
Andy Crocker, the managing director of Astral’s commercial division, said the arrangement with the municipality meant that the company should have access to sufficient water to run the processing operations in the short term, albeit at a significantly higher cost.
As one of the largest processing plant in the country, the processing facility requires 5.5mega litres of water per day to process two-million broilers a week.