Fin24

Power prices threaten SA food

2011-06-24 06:39

Johannesburg - Rising electricity costs could spell the end of irrigation farming in South Africa.

Agricultural experts say it is becoming impossible for these farmers to operate profitably.

Dr Theo de Jager, deputy chief executive of Agri SA, said the situation was progressively deteriorating because electricity prices would rise sharply for years to come.

De Jager said 25% of South Africa’s staple foodstuffs – wheat and maize – is being produced under irrigation.

This may not sound much, but it is this 25% upon which the country relies. Production of the other 75% depends on whether or not it rains.

De Jager said if fewer farmers irrigate and a drought should occur, South Africa’s food security could be at risk. Farmers are struggling with more than just electricity prices, he said. The high cost of diesel is taking just as heavy a toll.

De Jager said the situation is so serious that South Africa may soon have to import all produce currently being grown using irrigation, as that would be cheaper.

Eskom spokesperson Hillary Joffe said the utility was aware of farmers’ concern over the cost of electricity, but it was so far unaware of specific cases where farmers had started switching off irrigation pumps.

In the 2010/11 financial year farmers had to pay 18.7% more for power. This increase was less than the 24.8% average price increase that the National Energy Regulator (Nersa) had approved for the period.

Joffe said the agricultural sector will pay 25.78% more for electricity in the 2011/12 financial year.

The average increase for this period is 25.8%.

The agricultural sector uses around 3% of Eskom’s total generated electricity. Most of this is used for irrigation.

De Jager said farmers are already doing all they can to use the electricity as efficiently as possible.

For instance, they irrigate after 22:00 at night, when electricity is cheaper, but still struggle to recover costs.

Investment Solutions economist Chris Hart said that above-inflation tariff increases are bad news for the agricultural sector, and that the problem is that prices of agricultural products do not rise correspondingly.

He said the entire economy is experiencing the same problem. That is one reason why the economic recovery has been so lacklustre. At current interest rate levels the economy should be growing strongly, but this is not happening.

Hart said to rectify the situation farmers’ production prices should rise. But this could not happen because it would then be cheaper to import.

On Thursday, Eskom met representatives of organised agriculture to discuss issues such as electricity tariffs and electricity theft. The outcome of the meeting was unknown by production time.

- Sake24

For business news in Afrikaans, go to Sake24.com.

Comments
  • Feds - 2011-06-24 07:15

    And so South Africa's descent into a Zimbabwe style state steam rolls ahead. Zim was extremely productive until Mugabe got hold of it, now its a wasteland... Way to go ANC.

  • Vince.York - 2011-06-24 07:22

    The ministries from all fronts have made it quite clear in normal elitist communist style, that you need to start already growing your own food and not spend so much time concentrating on unequal wealth creation. (THAT is a state preserve now). What with transport pointing the way to use donkeys to get to the high speed rail links, fertilizing your own organic food, and using paper bags instead of polluting plastics SA will be the leading Green Nation in the world soon, without any call for energy consumption at all and certainly no need for anything to be tolled or tithed. Communist NIRVANA / UHURU. LOL

  • Sentor - 2011-06-24 07:28

    The cost of incompetence and corruption

  • rumsour - 2011-06-24 07:39

    We are now paying the price for the lack of infrastructure development over the last 17 years (No building football stadiums does not count.)

  • Maiavan - 2011-06-24 07:41

    This piece is pure genius: "Eskom spokesperson Hillary Joffe said the utility was aware of farmers’ concern over the cost of electricity, but it was so far unaware of specific cases where farmers had started switching off irrigation pumps." So we are aware of the problem but until they turn off their pumps and loose the crops, whats the problem?

  • christo.boshoff1 - 2011-06-24 07:41

    Buy Kestrel Windmills to produce electricity that can power the irrigation pumps! The extra power generated, put it back onto the grid! I think farmers should embrace green technologies to survive and even prosper! Solar panels on Barn rooftops may also contribute to a clean energy supply! It may cost allot to invest at 1st, but the investments should pay for itself over the coming years! Go Green Farmers!

      Jasper van der Westhuizen - 2011-06-24 11:34

      Christo, agreed. However, massive costs to the farmers in this regard should be 100% tax deductible. Same goes for private security in crime ridden areas. Businesses could hire more security guards, get extra CCTV cameras, alarms, etc., but there should be a 100% tax incentive, because the obligation lies with the government to provide for safety and security, affordable electricity, etc.

  • semaj - 2011-06-24 07:54

    Hillary Joffe would not know if irrigation pumps had been switched off; with no power for lighting, how could she see?

  • tiger - 2011-06-24 08:49

    The farmers should get electricity as lower cost.

  • Creeky - 2011-06-24 08:51

    Ja BOET! And "THEY" want to Nationalise the Farms... Looks like LOGIC is also not a Pedi, Zulu or Xhoza word!

  • mnbain - 2011-06-24 09:22

    I personally think the formula by which inflation is now being calculated does not represent true inflation, but rather what politicians would like inflation to be.

  • Nasdaq7 - 2011-06-24 10:16

    Solar power - what's the problem?

  • Cui Bono - 2011-06-24 11:16

    Food security must come first !! - SA is now a net importer of food (first time in its history - Farmers are not producing enough to cover our domestic needs and need to be given 100% support to ensure that SA doesn't have to use it's hard earned forex to buy food when it can be easily be grown locally !!

  • Horst - 2011-06-24 11:23

    May I suggest that the irrigation farmers get together, frack the Karoo and generate electricity from the gas to power their pumps. That should work out much cheaper than Escom.

  • struth - 2011-06-24 12:34

    The ANC need to seriously engage with Economists who know what they are talking about!! We are going to be importing wheat and maize very soon if the farmers cannot afford these rising electricity costs! What a ridiculous situation. The ANC couldn't even run a spaza shop effectively never mind a country!

  • ZACKIE - 2011-06-24 14:20

    are they still going to nationlise the land?

  • Lunguza - 2011-06-24 14:57

    Farmers should simply switch to solar irrigigation as a mater of urgency, plus we will be manufacturing cheaper and more effecient solar panels in Paarl next year

  • 1234 - 2011-06-25 00:54

    This is laughable. The only reason the Nats were interested in infrastructure was to build wealth for the elitist whites. They couldnt care less about building infrastructure for all South Africans. Over the past 17 years, with little or no support from the white elite(who actively sabotage the new South Africa, so they can say, we told you so)the ANC has attempted to build something, not destroy it. Trying to create a better place for everyone is a fantastic goal and not an easy task, considering the history. Im always so fascinated about the comments about corruption, the Nats were the biggest crooks in the world, and people choose to conveniently ignore that fact. Not saying the ANC is not full of cronyism and corruption, it is. But, we do need to take care of our family/tribe. The whites did the same thing. Money has to come from somewhere to build stuff, and it comes from taxes which should be collected from everyone who earns something, and its not. Do away with income tax and increase the VAT, then everyone pays. The government has been subsidizng power for years, now time to pay the real cost of living. Wake up and stop throwing stones and lets all work together to make SA a great place for everyone.

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