Stronger Rand and electricity & fuel increases put South African farmers under pressure

"Will the litany of bad economic news ever bad?" the Daily Maverick news site asks upon the announcement that South Africa's electricity provider Eskom has been allowed to increase electricity tariffs by more than 15%.

Financial news site Moneyweb calls it a "hefty increase" and notes that these tariff increases are regarded as difficult to predict and hence plan around, further complicating the operating environment for businesses.

In what is described as a "terse statement", the National Energy Regulator of South Africa (Nersa) yesterday announced the increase, bringing R10-billion (576 million euros) to Eskom’s revenues and that it would "be recovered from tariff customers in the 2021/22 financial year”.

This increase is five times the current inflation rate and comes at a time when the Rand has strengthened to R14.50 to the USDollar, trimming export revenues.

Moreover, there are expectations that planned power cuts (called loadshedding) will continue into September.

A Tzaneen farmer tells FreshPlaza that a diesel generator for a packhouse and coldroom can cost around R280,000 (19,200 euro) - excluding the running cost of diesel which has just increased by 4.5%. 

The price for petrol increased by 81c a litre, described as an "enormous jump" in early February and more fuel increases are expected next month.

"It's tough for us farmers," sighs a topfruit farmer in Villiersdorp, "it''s not always easy keeping head above water."





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