Business in SA has reached an existential crisis due to rapidly deteriorating power and water infrastructure that requires urgent action from the government, says Astral chair Theuns Eloff.
“[The] government has simply failed in its duty to provide basic utilities to meet the needs of its people,” Eloff said in the chicken producer’s annual report published on Friday.
“I am under no illusion that there is an easy or quick solution to these problems, but I do know that the government will have to address these issues as a matter of urgency to ensure the commercial survival of companies,” he said.
On Sunday, Eskom put the country on stage 5 load-shedding with unprecedented breakdowns at its ageing coal-fired generation fleet and unit 1 at the Koeberg nuclear power plant being taken offline for scheduled maintenance.
The state-owned utility has warned that high stages of load-shedding will remain in place over the next six to 12 months as it attempts to clear a backlog of maintenance at most of its plants.
Writing in the chicken producer’s annual report on Friday, Eloff lambasted the government for its “inability to provide the country with basic needs”.
“It is difficult to remain positive, and it is widely acknowledged that drastic political change is needed,” he said.
Largest employer
Astral, which owns the Goldi, County Fair and Festive brands, has four main processing plants where it produces and slaughters 6.9-million chickens a week.
It produces about 1.8-million chickens a week under the Goldi brand in Standerton, Mpumalanga, for consumers and fast-food chains, and it is the town’s largest employer.
In 2020, water cuts in Standerton were so severe that Astral took the Treasury and the government to court to force them to draw up a financial recovery plan for the municipality in a bid to ensure reliable water supply.
It won the case in the Pretoria high court in April 2021, but the town continues to face “municipal infrastructure challenges”, Astral CEO Chris Schutte said in the annual report.
“The failure of local government to deliver basic services to industry and local communities is playing havoc ... and issues in Standerton continue to affect our operations,” Schutte said.
Astral also faced water supply challenges at its processing facility in Olifantsfontein near Pretoria, which produces about 2.2-million chickens a week under Festive brand.
Astral said last month it spent R126m to mitigate load-shedding and R9m on water in the financial year end to September, when it reported a 21% increase in revenue to R19.3bn. Total profit for the year was R1.07bn.
The group said it recycled 900-million litres of water (14% of business usage) in the financial year and treated 300-million litres (4% of usage) to ensure it met drinking standards.
More reliable
Chicken producers compete with cheap frozen chicken imports. Temporary duties, ranging from 3% to 265%, that were applied to such products from Brazil, Poland, Ireland, Denmark and Spain in December 2021 in a bid to protect the local industry from anticompetitive behaviour, have been suspended.
The company has previously said it is difficult to compete with chicken from international markets where water and power supplies are more reliable.
Eloff said the company’s performance in the latest financial year was “remarkable”, given the challenges it faced.
Business Day previously reported that Astral is spending R200m in its 2023 financial year, which started in October, to mitigate power and water cuts.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.