We know that South Africa’s network operators are struggling to keep customers happy under the constant threat of load shedding. What we don’t often hear about is the farmers of the country – specifically chicken ones – and how load shedding affects their output.
The problem isn’t a lack of chickens. It’s quite the opposite. Farmers are stuck with too many chickens.
What’s wrong McFly? No Chicken?
When load shedding strikes, these factories must stop production, sometimes for half a workday, stopping the slaughtering of the chickens. Normally, that wouldn’t be a problem. But constant rolling blackouts have created a backlog that may never be cleared. On top of that, the backlog of chickens is doubling losses in extra feed and water.
To counter this, the factories have begun using generators to power their machines. The ramp-up in costs even forced KFC to temporarily close some of its restaurants at the end of last year. These issues have caused one of South Africa’s cheapest sources of protein to shoot up in price – a markup of almost 17% in the poultry industry in the last year alone.
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Not just the chicken farmers
It’s not just poultry farmers taking a hit. The agricultural industry is suffering heavy losses too, what with load shedding halting irrigation, processing, and storage at every step of the operation. The stores they sell to are forced to heavily invest in generators and fuel for them to be able to safely store the food. Shoprite, for example, is spending an extra R100 million per month to buy diesel and keep fridges and lights going. That’s not including the extra cost of special freezer trucks and renewable energy solutions.
This leaves the country’s food prices free to continuously rise. Add in the central bank’s forecast of a 6.2% food inflation increase and the country has a real problem. Not just for the farmers, but for those buying the food. Farmers need electricity urgently. Unless the government’s plan to ‘fix’ load shedding within the next 18 months bears fruit, they probably won’t get it.
Source: Bloomberg