The Impact of Load-shedding on Agriculture
Rolling power cuts (“load-shedding”) in South Africa have precipitated a national crisis. The unpredictable energy supply has had a serious impact on the agricultural sector, and has reached its worst levels ever – since January many South Africans have experienced eight hours a day without electricity, and more.
Roughly half of the country’s farming income derives from “heavy users of power”, says Wandile Sihlobo, chief economist for the Agricultural Business Lobby (AgBiz). Farmers and growers rely on power to operate machinery and water pumps and a range of other equipment, for example:
- Field crops, fruit and vegetables require reliable irrigation systems (consider that a significant percentage of the country’s wheat, sugarcane, maize and soybeans is produced under irrigation).
- The impact of load-shedding means that industries such as dairy come to a complete standstill during power outages, owing to the need for electricity for milking, processing and storage purposes.
- Meat and wool production also require continuous power generation.
And then there are the cold-chain logistics challenges. Agri SA’s chief executive officer, Christo van der Rheede, notes that fruits, particularly bananas and avocados, need uninterrupted cold storage across the transport process, as they could ripen or even rot overnight - and, as Sihlobo points out, agriculture exports to markets such as the European Union have stringent requirements regarding temperature controls.
Engineering News reports that farmers are also not able to access Eskom’s lower Ruraflex tariffs for using power during off-peak times as they are forced to operate outside of these. In addition, “Farmers also incur more costs when they have to manually restart pumps and water systems following loadshedding, which uses more electricity; however, farmers cannot risk insufficient irrigation, since it will result in lower production and lower quality of production.”
Not to mention the damage to equipment due to outages shutting down irrigation systems.
All of this has led to increased costs, pressure on crop yields, and extensive financial and job losses. And it’s not just the farmers who are affected. “Downstream activities such as milling, bakeries, abattoirs, wine processing, packaging, and animal vaccine production, face similar challenges… There are also food security concerns as the effect of load shedding will probably show in the volumes of products to be harvested/produced later in the coming months due to the time lag in agricultural production stages,” writes Patrick Lawlor, Editor of Investec’s Focus publication.
Nova Economics investigated the relationship between load shedding and quarterly GDP growth over the period 2003 to 2023. Their report states that the agricultural sector was the most adversely affected "because of its [heavy] reliance on electricity for irrigation and refrigeration (for the maintenance of the cold-supply-chain critical in preserving fresh produce)".
Based on the South African Reserve Bank’s estimated impact of 1GWh of load shedding on quarter to quarter growth, Investec puts the “year-on-year hit” for agriculture, forestry and fishing closer to 10%.
In an email to the Disaster Management Forum, Agri SA estimated that the agricultural sector reportedly lost around R23-billion in nine months in 2022, owing to crop failure and a decrease in productivity because of load-shedding.
And in March 2023, AgriSA’s Van der Rheede wrote in the Daily Maverick that “The agriculture sector’s growth contracted by 3.3% in the last quarter of 2022, well above the overall 1.3% reduction. In the same quarter, it shed 12,000 jobs. While the last quarter of 2022 saw significant load shedding, the first quarter of 2023 has witnessed truly unprecedented levels of blackouts.”
Not surprisingly, the Agbiz/IDC Agribusiness Confidence Index (ACI), which declined four points in Q4 2022, deteriorated a further 5 points in Q1 2023 to 44 – the lowest since Q2 2020 when Covid-19 lockdown restrictions were first implemented.
Terence Corrigan, writing for the Daily Friend, reported in February 2023 that according to Stats SA food price inflation was then at a 14 year high, and that “Chris Engelbrecht, chair of the Association of Southern Africa Sugar Importers made a grim forecast: ‘I estimate load-shedding will increase the South African food cost in general by 20% in the next few months.’”
Potential Solutions
At the end of February 2023 the ministerial task team comprising think tanks, agricultural organisations and the Department of Agriculture, Land Reform and Rural Development reported to Parliament on a short-term plan to ensure adequate energy for farming operations by reconfiguring the power network to isolate farms from residential communities when scheduling power outages.
The aim was to ensure that farmers were able to irrigate at critical times such as evenings and mornings. Plans for the medium- to long-term include a dedicated supply for farmers and diversification of power production, including biogas from the sugar cane industry.
AgBiz’s Sihlobo countered that “Eskom has made it abundantly clear that it is highly unlikely for that to happen”.
In order for farmers and growers to remain rurally productive and profitable, concrete solutions must be identified in order to reduce, if not entirely eradicate, the impact of "power cuts" on agriculture. One option to consider is the installation of alternative, sustainable energy solutions, such as wind power or solar energy, to provide farmers with an alternate solution to reliance on the national grid, or a supplementary revenue stream.
Measures such as the tax rebate for the installation of solar panels (125% for companies), announced in the Budget, will also hopefully assist all South Africans, including farmers, to access affordable energy and reduce reliance on the grid.
In 2021, a pecan farmer took matters into his own hands by installing South Africa’s largest off-grid low-voltage solar system. The 180 ha farm in Hartswater has solved its irrigation problems with an average daily production of 3,500 kilowatt hours of solar power production for its irrigation pumps.
But while large-scale farms may be better equipped to turn to alternative energy sources, the costs of installation can sometimes be prohibitive for smaller operations. Gaining access to capital and finance become critical considerations when weighing up the feasibility of renewable resources in agriculture.
Some farmers are choosing to increase the revenue per hectare of their farm by renting land to wind turbine owners – as Mark Tanton, CEO of Red Cap Energy says, they’re “in effect farming the air above the land as well as the land itself”.
According to Tanton, a farmer is typically only required to rent out about 2% of their land and can continue to farm between the turbines. A fixed percentage of the revenue from every turbine on the farm is paid for the duration of the project.
Considering that a typical project includes a three- to six-year development phase, two years of construction, and then 20 years of operation, this revenue could offset some of the losses caused by load-shedding. (During the two-year construction period, a fixed amount is paid per turbine.)
Tanton told Farmer’s Weekly that benefits to farmers include the generation of an annual income for 20-plus years, improved roads and other infrastructure, increased security, and opportunities to access additional capital to further develop their farming operations.
Load-shedding has had a major impact on food production in South Africa, and while the government is taking steps to improve energy security, ultimately this is a challenge farmers, growers and the government alike must take on together. While the solution may not be a simple one, the switch to more sustainable energy solutions in agriculture should be explored, such as the use of wind power in agriculture and solar panels on farms.