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14 March 2023 | Story Prof Frikkie Maré | Photo Supplied
Prof Frikkie Mare
Prof Frikkie Maré is the Academic Departmental Head: Agricultural Economics, University of the Free State

Opinion article by Prof Frikkie Maré, Department of Agricultural Economics, University of the Free State.
President Cyril Ramaphosa recently announced a state of disaster due to the electricity crisis and the appointment of the new Minister of Electricity in the Presidency, Dr Kgosientsho Ramokgopa. Although there are many arguments for and against the state of disaster and the position of a Minister of Electricity, I think all South Africans agree that drastic measures must be taken to improve the current situation. However, I do not think the state of disaster, or the Minister of Electricity will bring any quick fixes to the table, and therefore we have to assume the crisis will remain in the short to medium term.

The Cause of the Crisis

As South Africans, our biggest crisis at this stage is load shedding. We are confronted with darkness daily, or even twice or thrice a day. Although the impact of load shedding varies according to the time of day it is implemented, it generally hinders us from doing our work, preparing food, and relaxing in front of the television after work. It directly impacts the quality of life of those who need electricity for oxygen machines for them to breathe. It causes damage to our electrical appliances, especially due to power surges when the electricity is turned back on. In short, load shedding is disrupting our lives. It is a nuisance we do not need, and the sooner it ends, the better.

Load shedding may be be a crisis for us as citizens, but it is Eskom’s solution to keep the national grid from collapsing. Thus, the real cause of the crisis is not load shedding but the inability of Eskom to supply enough electricity to meet the demand. The second big concern is the rising cost of electricity in South Africa. From 2007 to 2022, electricity prices increased by 653% in an attempt by Eskom to increase revenue to try and catch up with its heavy debt burden while simultaneously trying to maintain the current power stations and add some new generation capacity.

The problem

South Africa, up until load shedding started in 2007, was always praised as one of the countries in the world with the most stable electricity supply, and electricity was priced among the lowest in the world. Our economy thus developed around the national grid and is heavily reliant on it. Given the above, our food system faces three problems. First and most visible is load shedding that is causing interrupted national power supply and increasing production and processing costs as fuel generators and solar power must be relied on. Secondly, the cost of food production, processing, and distribution increases sharply as national electricity prices increase. Third, new investments in the food chain are discouraged as it is heavily reliant on electricity, which there is not enough of.

The impact

Over the last number of months, the media was full of the impact of load shedding on the food system in South Africa. Visually it ranged from photos and videos of withered irrigated crops which failed as there were not enough hours of electricity to supply water. There were pictures of chicken farms full of dead broilers that died when the heating and ventilation systems could not function during load shedding. Many articles also warned that load shedding would hurt food security in South Africa as it would not be possible to produce or process enough food.

These reported impacts of load shedding on food security caused quite a frenzy among consumers as people tend to run with what is announced in headlines without reading or understanding the context. Consumers immediately fear a situation where there will be insufficient food in South Africa as the headlines read that food security is under pressure.  

Yes, although all the photos, videos and articles in the news might be true and certainly do impact food security, we must also remember that food security is a combination of the availability and affordability of food.  

The impact of load shedding on food production depends on the type of production system. While load shedding has a minimal impact on extensive red meat production, it can be detrimental to intensive systems like poultry production, especially if electrical heating is used to regulate the temperature. It also negatively affects producers relying on irrigation to water their crops as the quality and quantity of the crop will be influenced.

The effect of load shedding can be severe on certain primary producers and even cause farming operations to close. Still, it will not necessarily result in a food shortage in the country as our primary agricultural sector is diverse. However, the price of certain commodities will increase due to a lower supply and higher production costs, negatively influencing food affordability.

The larger problem with load shedding can be found in terms of processing the food, especially fresh produce reliant on a sustained cold chain. For food safety and quality reasons, fresh produce must be kept at constant temperatures, and processors and distributors thus have no choice but to use expensive private electricity generation, further pushing up the cost of food.

Another problem is that, for example, the cold rooms of processors are connected to generators, as power failures might happen even when load shedding is not a problem. Still, the processing line cannot operate without grid-supplied electricity. Although there is thus enough food in the country on a commodity level, these commodities cannot be processed into final food products as fast as in the past. This bottle-neck effect further reduces the supply of food products and increases their price.

We often forget about the impact of load shedding on the consumers’ food choices. If you need electricity to prepare food, the availability of electricity at the time you need to prepare it will affect what you eat. The problem is that more affordable foods usually take longer to prepare, while the quick-to-prepare, ready-to-eat fast foods are expensive. The higher demand for these more expensive products due to load shedding puts further upward pressure on the price of food.

So where are the monsters?

The electricity crisis impacts all roleplayers in the food value chain, from primary producers to final consumers. Although load shedding is the most visible monster here, the fast-increasing price of electricity and the general electricity shortage that discourages future investment are also lurking in the dark and contributing to problems in the overall food system. In my opinion, the electricity crisis currently does not yet threaten food security in terms of availability. Still, it is creating a monster in terms of food prices (inflation) and thus making food less affordable.  

Although private solar power and fuel generators do assist in alleviating some of the influences of the electricity crises, it is not the solution. The problem with solar power, for users requiring large amounts of electricity, is that it is too expensive to install storage capacity (batteries) to use during the night. You also have a problem when it is overcast and rainy, so solar is a mere addition to supplement the national grid during the day. On the other hand, fuel generators can supply electricity 24 hours a day. Still, only the fuel cost to generate 1kW is double what Eskom charges, making it too expensive in the long run.

In my view, the only option to ensure the sustainability of the food value chain in future is to get the national electricity grid functional again. There are many short-term solutions, but none is currently sustainable enough to provide affordable energy needs. Although it will certainly take time to get Eskom fully functional again, I do not think we will run out of food in South Africa. However, we must tighten our belts to be able to afford food while the monsters lurk in the dark.


For more information contact Frikkie Maré at MareFA@ufs.ac.za

News Archive

Guest lecture: Mr Pretorius, CEO of McCarthy Limited
2004-11-05

The challenges facing business leaders in a rapidly changing South Africa

“The world we used to know does not exist anymore. Leaders are continually dealing with crisis and opportunities, in a high-pressure environment,” said Mr Brand Pretorius, honorary professor from the University of the Free State , delivering his 13th guest lecture on the challenges facing business leaders in a rapidly changing South Africa .

Mr Pretorius, CEO of McCarthy Limited, identified certain trends which are responsible for changes to the South African business environment. He said the South African business environment is ever-changing, fast moving, complex and unpredictable. “As business people we have to deal with the impact,” he said.

“Years ago we were globally isolated. Now we live in a shrinking borderless world with crumbling trade barriers. Globilisation of our economy is accelerating. For South African business leaders this creates a sea of export opportunities,” he said.

Although there are ongoing demands for substantial profit growth from shareholders, the days of focussing only on their interests are gone, said Mr Pretorius. Stakeholder commitment now enjoys high priority and business leaders have to deal with the challenges accompanying black economic empowerment and employment equity.

Customers are also well-informed and demanding. Business leaders could easily loose the loyalty of their customers because of a hyper-competitive environment with an oversupply of goods and services.

Mr Pretorius stated that staff want to be involved and are looking for meaning in their workplace. Employers also have to deal with HIV/Aids in their workplaces. Trauma, absenteeism and financial implications could have a great effect on the viability of a business.

Against these changes Mr Pretorius pointed out the challenges business leaders are facing. In doing so a number of questions arise. The external business climate is characterised by turbulence and change. Internally there is a need for stability and meaning. How do we handle both challenges effectively?

Because of changes strategy decay is taking place and past strategies become irrelevant. Mr Pretorius said that business leaders need to modify their business models to prevent the downfall of their companies.

It is important for leaders to know what is happening in their world. “Continuous innovation is a critical success factor. The reality is that innovation is the only insurance against irrelevance,” he said.

Because of a changed environment leaders must perform and transform, simultaneously. How do we strike a balance between focused transformation and the achievement of world class performance, asked Mr Pretorius? “We need to bring about meaningful and sustainable empowerment, in order to create an inclusive economy and society. Leadership and management profiles should reflect the diversity of our teams, however at the same time every effort should be made to stop the brain drain and retain the expertise of experienced white managers.”

He also stated that leaders have an important role to play in terms of employment creation and corporate caring. “Sustainable stability and prosperity will not materialise without efforts in this regard.”

Mr Pretorius said that above challenges could be addressed by developing the ability to focus on creating a better future, rather than defending the past, a long-term vision, facing new realities, enhancing the value of brands and mobilising IT and the Internet to serve the business and customers better.

Retaining a positive vision of the future, embracing change and transformation, building your business according to the right principles and values and aspiring to be the best are some of the guidelines, according to Mr Brand, for future business success. He stated that creating a value advantage above one’s competitors, customer satisfaction and retention and inspirational leadership will add to the success of one’s business.

“We are indeed living in the era of the ultimate challenges, but also the ultimate opportunities. Let me clearly state that I have hope – in my view the tide has turned. Every day I experience small miracles inspired by ordinary people making an extraordinary difference,” said Mr Pretorius.

 

Media release
Issued by: Lacea Loader
Media Representative
Tel: (051) 401-2584
Cell: 083 645 2454
E-mail: loaderl.stg@mail.uovs.ac.za
5 November 2004

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