Food prices could increase up to 1% due to energy crisis – Winde

Eskom’s proposed tariff increase, coupled with load-shedding, will result in multi-billion rand losses to the economy and food price increases for consumers.

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According to a statement issued by the Western Cape MEC for economic opportunities, Alan Winde, the energy crisis was negatively impacting productivity across the economy, but particularly in some key sectors like agriculture.

“In the agriculture sector, a two-hour forced power outage easily leads to four hours down time,” said Winde.
Expensive machinery often had to be shut down well in advance. Both shutting down and starting up processes were complicated and time consuming.

In certain cases, irrigation may not be able to take place optimally due to load-shedding, resulting in additional losses. It was also not financially viable to install standby electricity resources for all agricultural enterprises, he said.

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A study by the Western Cape department of agriculture on the impact of load shedding on productivity found that a productivity loss of 1% would lead to a 3% decrease in SA’s GDP.

“At the same time the consumer prices of primary agricultural products would increase between 0,21% for horticulture products and 0,33% for animal products,” said Winde.

The prices of agri-processed products would increase between 0,35% for grain mill products and almost 1% for meat products, the study found.

Furthermore, the volume of agricultural production would decline by 1,54%, agricultural and food product exports would decline by 3,12%.

Household and labour income for those employed in the agriculture sector would decline by respectively 2,81% and 2,7% and more than 129 000 jobs would be lost, according to the study.

“Poor management is dashing our economic hopes and has a direct impact on our ability to create jobs. Securing energy should be one of national government’s key priorities,” said Winde.