Business Day

Astral warns of effect of power disconnect­ions

- Linda Ensor Political Writer ensorl@businessli­ve.co.za

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.

 ??  ?? Chris Schutte
Chris Schutte

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