Food prices have been escalating and loadshedding is being blamed for it Photo Pexels
South Africa – The food industry is under significant threat. As loadshedding continues, the prices of retail food have escalated. Food price inflation is expected to be 9.9% in 2023, up from the previous forecast of 7.3%. Things could get worse as many retailers are currently facing food shortages.
Pick n Pay chairperson Gareth Ackerman was frank in his assessment of how loadshedding was impacting the food industry and prices. He also feared that South Africa could see “social unrest relating to food shortages”. However, Executive Director of Agri SA and Agriculturist, Christo van der Rheede, assured South Africans that the country remains food secure at a national level. There are other factors at play causing food prices to rise.
“We have seen very funny rains and it’s almost unseasonal rains in the North that have impacted on our tomato production and now our onion production has been impacted negatively. We all know when there’s a shortage on the shelves, it leads to price increases. There’s also another big challenge many of our retailers are experiencing, which is loadshedding.”
Pick n Pay, which owns food retail Boxer, spent R522 million on diesel to run generators in the 52 weeks to February 26. Shoprite spent R560m on diesel to power up its stores in the six months to January.
Loadshedding impacting farmers
While loadshedding is emptying out the pockets of retailers, it is also doing the same for farmers, van der Rheede explained. Retailers are buying less and less from farmers as they can’t keep their fridges running all the time. This means farmers are earning less and less for their products.
“Currently we’re experiencing level six loadshedding. That means they [retailers] cannot stock a lot of meat so farmers get a very low price for their cattle and for their sheep which they want to send to the feedlots and send to the abattoirs to be slaughtered. The abattoirs and the feedlots refuse to take in a lot of products because the moment they slaughter it, they need refrigeration capacity and they are fully stocked at the time. They can not send them to the retailers.”
According to van der Rheede, farmers do not make a huge profit from their goods. With margins becoming slimmer and slimmer, they might opt to invest their time and money in other things.
“Farmers don’t produce food to eat it themselves. They produce food for the people of this country and to export. Yes, they want to make a bit of profit so that they can reinvest their profit back into their businesses. The profits in agriculture are marginal … I’ve never seen a real farmer driving around with the flashy Mercedes-Benz and living a fleshy life. They live ordinary lives because tomorrow there will be a drought or an outbreak and they need money for that.”
Farmers are the ones with the expertise. Having land is very good but it does not produce food on its own. Just like how European nations and South American countries protect their farmers and support them, South Africa has to do the same, said van der Rheede.
SMread: The answer to loadshedding: Is it coal or clean energy?
Solving the issue of food insecurity
There are a number of issues South Africa needs to solve but the main issue is loadshedding. Without a steady supply of electricity at a reasonable price, it will be hard to bring down the cost of food and keep farmers on farms.
“The important thing is we need to address the issues of energy cost and energy availability. The entire agricultural value chain right up to the retail floor depends on electricity because as a sophisticated commercial agriculture sector you rely on your cold storage linkages, your facilities to export and to provide the best food available to our people. It means we have to become much more self-reliant. We will have to find ways and means to take care of ourselves.”
To hear more from Christo van der Rheede on food insecurity and solving the issue, listen to the podcast here:
