Farmers’ organisation Agri SA has asked the Treasury for rebates on the petrol and diesel they are using to generate power, warning that extra production costs caused by blackouts could threaten food security in the next 24 months.
Load-shedding is making farming much more expensive, as farmers now have to absorb increased capital outlays for generators and high diesel costs in addition to already high input costs such as fertiliser and shipping costs.
The Ukraine-Russia war has seen the escalation of some agricultural input costs. Load-shedding, which was ramped up to stage 6 again a few days ago, will worsen the plight of the sector. Existing rebates to encourage agricultural production are in place for diesel used in harvesting and ploughing as well as the one-way transport of agricultural goods or livestock to markets but are not in place to cover the cost of diesel-powered electricity generation, say farmers.
The rebates provide refunds of about R2.60/l, according to Agri SA.
“Farmers have spent literally millions of rand on acquiring generators and solar panels. They also spend millions now on diesel. This is a serious challenge for the agricultural industry,” said Christo van der Rheede, an executive director at Agri SA.
He wrote recently to the Treasury and the finance minister asking for a meeting on rebates, and explained that farmers’ collective debt has risen substantially since 2006 from R50bn to R200bn.
In his letter to the Treasury, Van der Rheede wrote that “the purchasing of diesel and petrol to generate electricity has become a tremendous financial burden for thousands of farmers who play an instrumental role in ensuring food security”.
He asked for additional rebates and/or a reduction in Eskom line costs.
The added costs of power come as farmers face crop losses, mounting challenges in producing food, lower yields from reduced watering of crops, difficulty in milking cows and challenges with the cold storage of vaccines, fruit and vegetables, milk and animal feed.
Agri SA, has produced a detailed document on how load-shedding is affecting various farming activities. Milking by dairy farmers is halted as is the cooling and processing of milk. The processes used in the growth of fungi used in the biological control of pests are interrupted.
Repairs of broken equipment are stopped, and large freezers that store food for cattle and livestock cannot run.
Semen used in cattle breeding has to be stored at 17°C, and if ruined is thrown away at a cost of R92 a dose.
Table grapes and sugar cane cannot be irrigated, with the risk of crop failure if grapes get sunburned.
Cattle escape when electric fences switch off as do dangerous animals at game farms.
Chickens cannot be slaughtered. Egg production is reduced as lighting used cannot operate. Mixing and milling of grains for animal feed is halted.
Labour relations break down when workers are not paid when they are not working due to load-shedding.
Since 2015, the cost of diesel has risen 160%-170%, said Van der Rheede.
Shipping costs per container have risen from R17,000 in 2017 to R150,000-R170,000, according to Agri SA. Global shipping costs spiked during the pandemic, and are expected to stabilise this year.
Fertiliser costs have also increased, in some instances by 100%-150%, he said.
Van der Rheede said: “The cost crunch on the agricultural sector makes it very difficult to employ more people and to ensure cheaper food.”
The Treasury acknowledged Business Day’s request for comment but had not done so at the time of going to print.
“Some farmers stand to lose everything,” said Peter Cloete, head of Agri SA Eastern Cape. He said that bad roads in the Eastern Cape meant truck owners refused to deliver fuel and food to farms and farmers often had to fetch fuel for generators themselves.
Power cuts increased already rampant stock theft, he said.
Cloete said that while irrigation farmers were the worst affected by load-shedding, all farmers are struggling and many were becoming pessimistic.
In some cases, generators and solar installation are not feasible or affordable and can result in reduced production.
Department of agriculture spokesperson Reggie Ngcobo said he would comment after a planned departmental meeting with the farming industry.
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