Food shortage warning for South Africa

Experts warn of a potential food shortage in South Africa due to increased water supply interruptions and unforeseen power cuts caused by deteriorating municipal electricity distribution infrastructure. 

South Africa’s central and northern parts have seen their water supply increasingly under pressure, with major metros experiencing extended interruptions in recent years. 

The most public crisis was experienced in Cape Town, which almost hit ‘Day Zero’ in 2018, but the crisis has shifted towards Gauteng.

Worryingly for the economy, water shortages have become more common in Gauteng since 2022, threatening the main driver of South Africa’s GDP. 

There have also been sporadic outbreaks of E. coli in parts of the country, which threaten the safe supply of water and the lives of South Africans. 

At least 67% of South Africa’s wastewater plants are unable to operate properly, while some are not operational at all. 

BDO South Africa’s director, Anita Calitz, and senior audit manager Adele Botes said the deterioration in the supply of water poses a significant threat to the country’s food supply. 

“If we remain on our current trajectory, the next 2 to 10 years could see even more severe water shortages. The risk of ‘Day Zero’ becomes more real with each passing day, as do the prospects of increased water restrictions and compromised water quality,” they warned.  

Water is a universal economic input, so businesses could face operational disruptions, increased costs, and potential revenue losses. 

In particular, the agriculture sector, which consumes 70% of freshwater, could also suffer, leading to food shortages. 

Another impact will be a rise in the price of food, which may not result in an actual shortage of food but in South Africans being unable to purchase it. 

The increased likelihood of water shortages will compound the severe disruptions load-shedding has caused the agriculture and fast-moving consumer goods sectors in recent years. 

While South Africa’s power supply has greatly improved in recent months, there are still sporadic outages due to inadequate municipal distribution infrastructure. 

This results in some areas of the country being without electricity for an extended period. Unexpected and random outages tend to be more disruptive. 

Cliffe Dekker Hofmeyr legal experts, who specialise in the agricultural sector at Tessa Brewis, Deepesh Desai, Jamie Oliver, and Ashleigh Solomons, said erratic power cuts threaten the entire food supply chain in South Africa. 

Unforeseen power cuts affect irrigation schedules, heating, fruit and wine processing, milling, bakeries, abattoirs, cold chain logistics and exports. 

Extreme bouts of rotational power cuts and sporadic changes to the load-shedding stages have, in certain instances, resulted in farms and processors having to discard their produce, with farmers reporting losses of between 30% and 50%. 

The frustration within the agricultural sector is driving farmers and agri-processors to find new solutions to mitigate their losses and manage their risks.

The experts said farmers and agri-processors are increasingly solving this problem by generating their own electricity from renewable energy resources. 

As farmers and agri-processors invest in their own independent solutions, they will become less reliant on the national electricity grid. 

The innovative use of battery storage systems to store excess power from the embedded generation facility, which can be deployed when electricity from Eskom is at its most expensive, will also result in significant savings. 

Battery energy storage systems can also store power directly from the national grid to arbitrage electricity tariffs by buying and storing electricity at a lower price and using it when tariff rates peak. 

Buying cheap electricity and using it during expensive periods can result in substantial savings for farmers and agri-processors.

The financial services industry has also identified this as an opportunity. It is offering innovative funding solutions to farmers and agri-processors to enable them to fund the installation of their own independent power generation solutions.