Study shows the economic impact of electricity shortages

Electricity shortages resulting in a productivity loss of only 1% in the whole South African economy could lead to a 3% decrease in gross domestic product, translating into a loss of R52 billion. This is according to research by Cecilia Punt, manager of macroeconomics at the Department of Agriculture in the Western Cape. mport volumes are projected to decrease by 1,02% for horticultural products and 5,85% for mineral products, while export volumes are projected to decrease by 1,53% for horticultural products and 8,11% for vehicles. A ll industries are projected to lower production as a result of lower demand for domestically produced goods. Aggregate agricultural production per province may decrease by between 0,5% in the northern Cape and 2,37% in KwaZulu-Natal, while production in the Western Cape is expected to decrease by 1,08%. Output by all other industries is projected to decrease, with the greatest decline in the car industry at minus 5,78%. Consumer prices for primary agricultural produce are likely to increase 0,21% for horticultural products and 0,33% for livestock. he price of field crops is expected to decrease by 0,11%, but this reduction is not sufficient to offset increases in consumer prices of processed food, which could increase 0,35% for grain mill products and 0,97% for meat products. he study poses that food and agricultural price increases would constitute a welfare loss for consumers, especially low-income households, which spend a proportionally greater share of their income on food. his would be exacerbated by the negative impact of productivity losses on employment and household incomes. The study points out that the general contraction of the economy would lead to a net loss of 129 100 employment opportunities, and that this would lead to an average fall of 2,70% in labour incomes and a 2,81% fall in household incomes. Carl Opperman, CEO of Agri Wes Cape, said at the regional Wes Cape meetings that agricultural roleplayers and Eskom are working hard to reduce the impact of loadshedding on agricultural production in the province. gricultural roleplayers have so far requested that Eskom reduce loadshedding in the agricultural sector in the Western Cape as far as possible until the fruit and wine harvesting season is over, to offset the impact of loadshedding on this sector. The sector, in turn, will undertake to significantly reduce electricity usage during winter. Negotiations are also underway in which the industry has requested ring-fencing from loadshedding in return for a reduction of 500MW of electricity usage per day. O pperman added that it doesn’t help to fight with the local electricity suppliers – instead farmers must unite and negotiate with the generation commission, as this is the group who is responsible for ensuring that there is sufficient electricity for each province. – Glenneis Erasmus