The cost of loadshedding to agriculture
[{“type”:”text”,”content”:”In 2021, agriculture contributed around 2.91% to the GDP of South Africa as well as contributing an added value of nearly R131.1 billion. The value added by the sector increased by around 8.8% in comparison to the previous year, when it reached approximately R120.5 billion. However, shifting the focus onto research conducted by Nova Economics on behalf of Eskom, it is estimated that a 1% reduction in electricity sales due to loadshedding corresponds to a 0.4% decrease in South Africau2019s GDP growth. The report went on to reveal that the agricultural sector was most adversely affected by loadshedding due to its heavy dependence on electricity for irrigation and refrigeration. The study also shows that the cost of loadshedding for agriculture is R4.01 per kWh in terms of 2020 values. That means that for every unit of electricity consumed, the sector generates R4.01 worth of output. The assumption is that if loadshedding occurs, the sector would lose R4.01 for every kWh of electricity that was not provided. Having said that, loadshedding has escalated even more since 2019. Data from ESP shows 11 797 GWh of loadshedding was recorded last year, which is more than four and a half times the prior year. This amounts to the agriculture sector losing an estimated R47 billion due to loadshedding last year, a big void in the rural economy.”,”position”:0,”id”:”5S0rtVTRDy5IMsdP”},{“type”:”image”,”content”:”https://agrisaonline.com/images/882″,”position”:1,”id”:”3qBM7jaHheILwXo2″},{“type”:”text”,”content”:”*Figure 1*nnFigure 1 shows that the agricultural sector was estimated to have lost over 5% of output due to loadshedding between 2013-2015. It was the sector that was worst affected. It was also found that the agricultural sectoru2019s contribution to the loss of GDP attributed to loadshedding (in percentage points) was the highest out of all the sectors: from 2007 to 2019, 2.77%, 5.35% and 4.38% during 2007/8, 2013/15 and 2018/19 respectively. Although these numbers may be dated, it provides insight into how detrimental loadshedding is to the sector. It also lays an outlook on the possible impact stage 6 rolling blackouts that we are currently experiencing could have on the sector for the year to come, should the situation not improve at Eskom.nnTo prevent further damage to the agriculture sector, immediate access to electricity is needed over the next few weeks specifically for irrigation crops that are well into the growing season. The irrigation industry is currently experiencing further pressure from a heatwave that is playing out at the time of writing this. Irrigation is crucial in agriculture as it enables farmers to grow crops, especially in inadequate rainfall areas. Without irrigation, farmers would be dependent on rainfall to water their crops, making them vulnerable to loadshedding. A further challenge that loadshedding presents is the damage to irrigation systems when the electricity supply is unreliable. These systems were not built to operate on an u201con and offu201d basis. This has already seen farmers incur a loss of income due to crop failure and a reduction in agricultural productivity.nnThe rolling blackouts not only lead to serious cash flow constraints for farmers but also puts added pressure on their already tight margins, as farmers are currently facing increased input costs for items such as fuel, fertilisers, and shipping. The added expense of generators or alternate energy sources, as well as high diesel costs, can and will be a significant financial burden. Alternative energy solutions, such as solar panels, may seem like a viable option, but they also come with their own set of challenges. The initial investment for solar panels can be capital-intensive, which can be difficult for farmers to absorb. Additionally, the process of installing and maintaining solar panels can be time-consuming and disruptive to farming operations. This can be especially challenging for farmers who heavily rely on the upcoming harvest for their livelihood.nnAs a result of the energy crisis, consumers are likely to see a rise in the cost of produce brought about by increased input costs and supply chain constraints that farmers may be facing. The rolling blackouts not only have a direct impact on farmersu2019 bottom line, but also have a trickle-down effect on the overall economy. According to Eskomu2019s integrated report, the cost of loadshedding per day to the South African economy is substantial. nn* Stage 1, or loadshedding of 1,000MW, costs R235.5 million per day. n* Stage 2, which involves shedding 2,000MW, costs R471.3 million per day. n* Stage 3, or shedding 3,000MW, costs R706.7 million per day. n* And Stage 4, or shedding 4,000MW, costs R942.4 million per day. nnThese costs are associated with the economic losses of businesses and industries that rely on a stable power supply. Businesses and households have to find alternative power sources during outages leading to a decrease in productivity and an increase in expenses.nnIn conclusion, every branch of agriculture requires electricity in one way or the other. With dairy farms unable to keep milk refrigerated, summer crops needing irrigation and fresh produce having to remain in its cold chain, the rolling blackouts could potentially result in shortages of certain staples. Furthermore, the power cuts are threatening food prices and weighing heavy on the economy, whilst also threatening food security by questioning the availability and accessibility of food. nn1. Knight, A. (2022) Why is electricity important in agriculture? Heifer International. Heifer International. Available at: [www.heifer.org](https://www.heifer.org/blog/why-is-electricity-important-in-agriculture.html) (Accessed: January 23, 2023).n1. Stats, S.A., Third quarter 2022. Statistics South Africa. Gross Domestic Product.n1. Walsh, K., Theron, R. and Reeders, C., 2020. Estimating the economic cost of loadshedding in South Africa. Nova Economics, available at: [www.nersa.org.za](https://www.nersa.org.za/wp-content/uploads/2021/09/Appendix-C_Estimating-the-Economic-Cost-of-Load-Shedding-in-South-Africa-Report.pdf) n1. EskomSePush Application”,”position”:2,”id”:”5bYXeobrk1sOH7xa”}]