More pain for consumers as food prices, farmers to be affected by electricity hike
By Tehillah Niselow - Mar 11th, 08:55
Consumers are likely to be hit hard by rising food costs after Eskom was granted above-inflation price increases by the energy regulator for the next three years, according to FNB.
Head of information and marketing for FNB Agribusiness Dawie Maree said the electricity price hikes of 9.41%, 8.1% and 5.2% over the next three financial years, will push up the cost of production as electricity is 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,” Maree said.
Maree added that the food processing sector is likely to come under pressure with the above inflation electricity cost hikes being passed on to consumers.
The Consumer Price Index (CPI) was recorded at 4% in January. Consumers are already tightening their belts with a 74c/l increase in the petrol price increase and a 91 c/l rise in diesel prices in March.
“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,” Maree said. Business Unity SA (Busa) also warned that the electricity price hikes granted by Nersa would likely see a further decline in Eskom’s customer base, as users seek more reliable and cost-effective alternatives.
The increases for the next three years are on top of the 4.41% hike for the next three years, approved by Nersa in October, on Eskom's Regulatory Clearing Account (RCA) application. The RCA refers to funds Eskom can recover due to an electricity shortfall or an escalation in operating costs.
Eskom will also be allowed to "claw back" R3.86bn from its RCA for 2017/2018, Nersa said, and further details of this will be announced soon.
The Congress of South African Trade Unions (Cosatu) said that workers are reeling from the rising costs of fuel, food and other necessities, and Eskom should first develop a turnaround strategy before any price hikes take effect.
“This tariff increase will have serious consequences for the economy. Increases in the cost of living will leave consumers with less disposable income, which will put the economy further in trouble,” Cosatu spokesperson Sizwe Pamla said.
The South African Federation of Trade Unions (Saftu) also slammed Nersa’s decision saying there had been a 400% increase in electricity tariffs over the last 10 years and this latest round of increases “represent yet another assault of the living standards of all South Africans, but more so the poor and the working class”.
“We demand that government should dismiss the current CEO [Phakamani Hadebe] and the entire board and dismantle the task team it has put above the board. Their appointment has made no difference whatsoever. We demand that a new CEO with necessary experience, skills and expertise supported by a new board in which labour and civil society will be represented be put in place,” Saftu said in a statement.
Eskom’s application for between 15%-17% tariff increases for the next three years was largely opposed by business, labour and civil society in written and oral submissions to Nersa.
Load shedding threatens jobs, economic recovery, says consumer body
22/03/2019 - 13:31
Load shedding, which has been escalated to Stage 4, is posing a significant risk to economic recovery, the Consumer Goods Council of South Africa said in a statement, as rotational blackouts continued to grip the country.
Retail sales recover in January after dismal December figures
22/03/2019 - 09:23
Retail spending showed signs of recovery in January, growing 1.2% on an annualised basis, slightly faster than analysts had expected.
SA beef export market reopens to the Middle East
22/03/2019 - 08:23
The recently held Gulfood Trade Show 2019, which took place at the Dubai World Trade Centre, saw the reopening of beef trade between South Africa and the Middle East.
Business counts cost as Eskom battles power shortages
20/03/2019 - 09:14
State utility Eskom will make more power cuts this week as it struggles with capacity shortages that threaten to stymie President Cyril Ramaphosa’s efforts to boost investments and economic growth.
SA meat price inflation to remain subdued due to foot-and-mouth outbreak
19/03/2019 - 11:27
SA’s meat price inflation could remain subdued in 2019 as a ban in exports could increase local supplies, according to the Agriculture Business Chamber (Agbiz), an organisation that represents commercial farmers and agribusiness.