SOUTH AFRICA – The government of South Africa has declared a national state of disaster following years of power outages that are pushing most food industries and businesses to the brink of losses as well as threatening the country’s food security.
South African President Cyril Ramaphosa said: “We are therefore declaring a national state of disaster to respond to the electricity crisis and its effect.”
This crisis is nothing new and has been 15 years in the making, but in the recent months, the power shortage has escalated more. South Africans faced electricity cuts for 288 days last year, while, this year, there have been electricity blackouts for up to 15 hours a day.
“We are in the grip of a profound energy crisis, the seeds of which were planted many years ago,” Ramaphosa said.
“The state of disaster will enable us to provide practical measures that we need to take to support businesses in the food production, storage, and retail supply chain, including for the rollout of generators, solar panels, and uninterrupted power supply.”
The announcement follows an open letter from the Consumer Goods Council of South Africa (CGCSA) calling for government action to support the food and beverage industry.
The CGCSA letter, which was signed by food and beverage companies including Coca-Cola, Tiger Brands, Mars, Massmart, and Bidfood, called for the removal of red tape, a suspension of the fuel duty levy, incentives to install local renewable energy sources, and for essential food production to be exempt from load shedding.
In its latest ‘Food Inflation Brief’, covering December, the Bureau for Food and Agricultural Policy (BFAP) warned of the consequences of the continuing, rotating, scheduled power cuts on the South African agricultural and food sectors.
The impact of loadshedding on the economy and the food system is severe,” it affirmed, adding that Loadshedding increases costs directly, and indirectly through higher rates of wastage and spoilage within food chains.
Financial results from several food companies indicate that fuel expenses to run generators during loadshedding are skyrocketing, and the costs cannot be absorbed in the chain, and are to a large extent passed on to consumers.
The report expects the loadshedding scenario will be a key factor that prevents South Africa from following the global trends of decreasing food price inflation during 2023.
The country’s state-owned power company, Eskom, has US$26bn (£21bn) of debt, old infrastructure, and power stations that do not work properly, not to mention a recent strike that crippled the company.
To lessen the impact of the crisis on the economy, Ramaphosa announced proposals including a bounce-back loan scheme to help small businesses invest in solar equipment and investment in power infrastructure. He outlined deals to source energy from private companies as well as neighboring countries.
He also averred plans to exempt ‘critical infrastructure’, including hospitals and water treatment plants from load shedding–both of which have been impacted by outages.
The Cape Chamber of Commerce and Industry is hopeful the “government’s willingness to allow more private sector involvement in the energy space, will accelerate much-needed innovation and help grow the green economy and alleviate future problems encountered.”