Pick n Pay chairman Gareth Ackerman has warned that South Africa has a heightened risk of food shortages and social unrest.
Speaking at the retailer’s annual results presentation, Ackerman said load-shedding had placed the economy under enormous pressure.
“The economy is not growing at the required rate to ensure improvement in unemployment and living standards for all South Africans,” he said.
He said food retailers are particularly hard hit by power cuts as a constant electricity supply is needed to keep food fresh.
To protect against load-shedding, Pick n Pay spent an incremental R522 million on diesel to run generators over the last year.
It is also experiencing increased generator repairs and maintenance costs and additional food waste costs due to increased power cuts.
He said Pick n Pay had done its best to absorb these costs as part of its commitment to help consumers during these tough times.
“It is, therefore, distressing to see irresponsible efforts to shift the blame for food inflation to retailers,” he said.
Ackerman said the Competition Commission and government spokespeople are good examples of shifting blame.
“They have inexplicably accused the sector of making unjustifiable profits. This is incorrect and irresponsible,” he said.
Even more worrying is that not all businesses can cover the increasing cost to stave off load-shedding, which impacts investments in the local food industry.
“Food manufacturers are not investing in their plants to the degree required to maintain adequate market supply, and this has a big impact on food security,” Ackerman said.
Another impact of regular power cuts is food waste. An estimated 45% of South Africa’s available food supply is being lost or wasted annually.
“I feel compelled to caution that the entire food industry is under existential threat,” The Pick n Pay chairman said.
“The probability of social unrest related to food shortages and possible store closures, if blackouts get too high, is now heightened.”
He slated the government for its lack of support to improve the situation, saying there is only inaction and placing the blame on those trying to help solve the problems.
Ackerman’s warning echoed the concern of Efficient Group chief economist Dawie Roodt that the country is in trouble.
Roodt said the combination of rising unemployment and poverty and rising food prices created a toxic mix which can cause social unrest.
“The economy is not growing. We have high levels of unemployment and poverty, and I am concerned about public violence seen two years ago,” he said.
“Part of the problem is the lack of electricity and load-shedding, which hampers economic growth and job creation.”
The answer to these problems, Roodt said, is strong political leadership to make the right business decisions. However, it is not happening.
“I am afraid our political leaders are absent. They are not there to lead the country because there is so much infighting in the ANC that they are not even aware of all the problems,” he said.
PwC also cautioned that poor economic performance and the subsequent rise in unemployment exacerbate South Africa’s social challenges.
If South Africa is unsuccessful in addressing unemployment, it will face growing social unrest.