Astral warns of effect of power disconnections
Warnings by Eskom of power disruptions and electricity disconnections because of unpaid municipal bills would be catastrophic for JSE-listed Astral Foods, the country’s largest chicken producer, CEO Chris Schutte said on Thursday. Any such disruption would add to the woes of a beleaguered industry that is struggling to withstand the influx of bone-in chicken imports from the EU and Brazil, he said.
Power disruptions and electricity disconnections, warned about by Eskom due to unpaid municipal bills, would be catastrophic for JSE-listed Astral Foods, the country’s largest chicken producer, CEO Chris Schutte said on Thursday.
Any such disruption would add to the woes of a beleaguered industry struggling to withstand the influx of bone-in chicken imports from the EU and Brazil.
The crisis faced by the industry has prompted EFF leader Julius Malema to write to Trade and Industry Minister Rob Davies, asking for a 50% tariff on chicken imports.
Major chicken producers including RCL, plan retrenchments and plant closures because they are unable to compete with low-priced imports, particularly from Europe.
The crisis has also been highlighted by the Food and Allied Workers Union, which has called for urgent intervention.
Eskom warned indebted municipalities about the electricity cutoffs in December and is negotiating repayment plans with them.
About 20 defaulters owe Eskom more than R10.2bn for just the past eight months.
Schutte referred to an Eskom letter to Lekwa Municipality, Mpumalanga, notifying it of interruptions to its bulk electricity supply from January 23 because of outstanding debts. Astral’s largest feed-milling plant, the biggest on the continent, and its poultry processing operations are located in the municipality and most of its broiler farms are in the Standerton area. Combined, they employ 4,115 workers. Schutte said Astral had paid all its electricity bills to the municipality and would take legal action against the parties responsible for placing the company in a “calamitous” situation.
Power cuts would severely affect the supply chain of Astral’s integrated business, Schutte said, because poultry farming required feed, water and ventilation to be constantly available to the birds.
The poultry processing plant, which consumes large amounts of electricity, needed a continuous supply for its operations.
“The implications of the ongoing power cuts cannot be mitigated and will lead to bird welfare issues, business interruption costs and the loss of finished product in the cold chain.
“The magnitude of this decision has far-reaching impacts on the community, livestock and food security at a national level,” Schutte said.
Power cuts would make Astral unable to feed 11.5-million chickens. Eskom could issue a notice to disconnect the electricity supply entirely and indefinitely if there was no improvement in the municipality’s debt.
Malema, in his letter to Davies, called for the declaration of a “state of emergency” due to the dire effect of imports on producers and workers.
In addition to the 50% tariff on all chicken imports, he has called for chicken to be designated a product for compulsory domestic procurement by all spheres of government and state-owned entities and for retailers to have country of origin labels on products so consumers can choose to buy local.