The head of information and marketing for FNB Agribusiness said on Thursday that the Eskom tariff increases announced earlier in the day would impact negatively on the agricultural economy.
Dawie Maree said via an e-mailed statement that the increases would elevate the cost of production as electricity was one of the highest input costs for irrigation farmers.
“From a primary agriculture perspective, irrigation, fruit and vegetable farmers will particularly be impacted as they rely heavily on electricity for production. Farmers, just like consumers on the other end of the supply chain, are price takers. Therefore, they cannot pass on this increase in production costs. As a result, the cost squeeze will just be harder on producers,” said Maree.
Furthermore, it was likely that the food processing sector would come under pressure, with costs being passed on to consumers who were already impacted by the tariff increases.
“The current power supply challenges coupled with ongoing tariff increases present a compelling case for farmers to consider investing in renewable energy alternatives to ensure the sustainability of the sector,” said Maree.
The National Energy Regulator of South Africa announced on Thursday that it had granted the embattled power producer – which is R420 billion in debt – hikes of 9.41%, 8.10% and 5.22% for years 2019/20 to 2021/22 respectively.
African News Agency (ANA) / The Citizen