Sharp electricity tariff hikes would have a major detrimental effect on the agricultural sector, Agri Western Cape has said during public hearings into electricity tariffs.
In its submission to the National Energy Regulator of South Africa (Nersa), Agri SA said high increases in electricity costs would be a threat to food security and have a major negative impact on agricultural sustainability and economic survival.
“The current climatic conditions, rising input costs and the exchange rate have had a severe impact on agriculture. Sharp increases in electricity costs would put agricultural cash flow under pressure,” said Carl Braam Opperman on behalf of Agri Western Cape.
The organisation represents 4 000 producers in the Western Cape. The province employs 20% of the national agricultural workforce, said Opperman.
He said the agricultural sector could not afford further electricity tariff hikes. It would weaken profitability further and hurt exports. It would also push farmers to introduce alternatives.
“Being hit with a double digit increase in electricity would force the industry to develop more cost-effective forms of power supply to take them off the grid.”
He said farmers and those involved in agroprocessing had already had to deal with load-shedding and were in a tenuous position.
“We have a constant fear of load-shedding during the agricultural production season.
“Remember the agricultural sector does not have the luxury to make good on revenue losses,” he added.
Opperman called on the Department of Energy, Parliament and Cabinet to intervene on electricity prices.
“Consumers and business fund Eskom through our taxes. Now we may be expected to fund Eskom through increased tariffs, which are not affordable. Eskom should not be allowed to transfer the cost of its mismanagement to the consumer.”
Opperman said Eskom had "managed itself into a debt spiral" and that the current situation was not sustainable.
Agri Western Cape has recommended that a new model be built. It suggests that portions of Eskom should be sold off to create a public–private partnership and that Eskom’s "monopolistic hold" should be terminated.
The organisation also said Eskom should be more lenient towards independent power producers instead of "punishing" farms with more favourable costs for channelling electricity to the grid.