Electricity cost is a growing portion of agricultural input costs and a further 19.9% Eskom tariff increase could drive marginal farmers off their land, says Dr Requier Wait, head of trade and commerce at AgriSA.
Wait responded to the application Eskom submitted to energy regulator Nersa, for an average tariff increase of 19.9% for its direct customers from April 1 next year, and 27.5% for municipalities from July 1 next year.
AgriSA will also make a submission to Nersa and make a presentation at the upcoming public hearings. The deadline for written submissions is October 13.
Wait says the rate of cost increases in the agricultural sector outpaces the growth in revenue. Electricity represents a growing share.
In 2009/10 electricity was 4.1% of total input cost. This grew sharply to 5% in 2014/15. A slight drop in the next year to 4.9% and further drop in 2016/17 to 4.6% is probably the result of mitigation measures, says Wait. Farmers started managing their electricity demand and are including renewable sources in their energy mix.