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We’re all feeling the effects of the rolling blackouts, which have become significantly worse during the second half of this year.
While on a personal level, load shedding thwarts our efforts to cook enough or properly – leading to one too many psychological breakdowns a week – the electricity crisis is causing chaos on a much larger, more serious scale.
It’s a real wonder how the economy hasn’t completely tanked yet, but with this word to the wise from Pick ‘n Pay chairperson Gareth Ackerman, we might just be on our way to total anarchy.
SA’s entire food industry is under existential threat, with a high likelihood of social unrest relating to food shortages and possible store closures if blackouts are escalated, Ackerman has warned via The Daily Maverick.
While our politicians are fighting about who to blame for the lack of power in this country, our supermarkets are struggling to keep enough food on the shelves to feed the people.
“I feel compelled to caution that the entire food industry is under existential threat. The probability of social unrest relating to food shortages and possible store closures if blackouts get too high is now heightened.
“Faced with the reality of structural economic decline, the only meaningful government action seems to be inaction, and to place blame on those trying to help solve the problems.”
In Ackerman’s frank assessment of the impact of rolling blackouts, he mentioned how burning diesel in generators to keep stores open and food fresh had added massively to Pick n Pay’s costs in recent months and was becoming increasingly less sustainable. Pick n Pay has recently spent about R60 million per month on diesel, a total of R522 million:
“It is an extraordinary challenge to manage a business on this basis. Without this unnecessary cost, our results would have beaten our own forecasts and those of many external commentators.”
Rubbing salt into the wound is the fact that “37% of the cost of each litre of diesel Pick n Pay has bought… has gone into government coffers and the [Road Accident Fund] as a windfall tax.
“This is unconscionable, particularly when rolled up across the economy and the hardship the blackouts are causing. Requests by the retail industry to be included in the government’s diesel rebate package have so far fallen on deaf ears.”
No company can absorb these costs indefinitely, given the scale of the investment needed to keep the power on and stores open.
He said Pick n Pay had also absorbed much of the cost of inflation, particularly on basic commodities, by saving costs in its business, but cautioned that it cannot insulate consumers entirely from the impact of the energy crisis.
While food manufacturers are struggling to gather enough resources to invest in maintaining an adequate market supply, attracting foreign investments has also proven to be trickier:
Turning to macroeconomic issues, he lashed out at the government, for mixing policy with ANC politics, by risking the African Growth and Opportunity Act and other bilateral agreements through its overt support for Russia in its war on Ukraine and threatening to withdraw from the International Criminal Court, which “is beyond understanding”.
“That’s before we’ve even considered the possible effect on Western economies’ pledge to help finance the energy transition away from coal to the tune of $8.5-billion. Without this capital, it will be difficult to end the blackouts and reduce our reliance on coal-generated power.”
Asking for investments feels like being stuck between a rock and a hard place, with South Africa being particularly precarious right now. Official unemployment is at 32,7% and the economy is “not even standing still, it’s going backwards”, with the IMF forecasting the country’s growth for the year at just 0,1%.
He said that the country is simply not growing at the required rate to ensure improvements in employment and living standards for all South Africans, adding that “We need to grow the size of the cake before we try to cut it differently”.
Enough power-poking and blame games, Ramaphosa, it’s time to take the electricity/food crisis seriously.
[source:dailymaverick]
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