The energy crisis is particularly challenging for food retailers because we rely on electricity to keep food chilled and safe. Burning diesel generators adds massively to our costs. 

We are at a precarious time in South Africa. With official unemployment sitting at 32.7%, and much higher among young people, the International Monetary Fund (IMF) has just forecast our growth at 0.1% this year. That isn’t even standing still. It’s going backwards.

The probability of social unrest relating to food shortages and possible store closures if blackouts get too high is now heightened.

Investment in our economy is critical. Pick n Pay’s investment of R4-billion into the business over the past year shows our commitment to build for the future.

Not many companies in South Africa are making this scale of investment. In our experience, food manufacturers are not investing in their plants to the degree required to maintain adequate market supply, and this has an impact on food security. I was also disappointed to see how poorly South Africa was doing relative to other economies in attracting foreign investment, as reported at the recent Investment summit. 

In recent months we have spent around R60-million per month on diesel. 

Without this unnecessary cost, our recent financial result would have beaten our own forecasts, and those of many external commentators.

Diesel rebate request on deaf ears

Shockingly, 37% of the cost of each litre of diesel we have bought – more than half a billion Rands worth – has gone into government coffers and the RAF as a windfall tax. This is unconscionable, particularly when rolled up across the economy and the hardship the blackouts are causing. Requests by the retail industry to be included in the government’s diesel rebate package have so far fallen on deaf ears. 

Daily blackouts have become our new reality. Which is not to say that we simply accept it and do nothing. We have worked hard on an energy resilience plan, and I am pleased at the progress we have made.

But no company can absorb these costs indefinitely, given the scale of the investment needed to keep the power on.

Maintaining consumer sovereignty is our priority at a time when unplanned costs of energy weigh on every citizen.

We have absorbed much of the cost of inflation, particularly on basic commodities, by saving costs in our business. But we cannot insulate consumers entirely from the impact of the energy crisis.

Food inflation is also being driven by global factors. Eskom has transferred some of its generation costs to industry through the stages of blackouts. We have had to absorb these costs. 

Despite these pressures, we have once again this year managed to keep internal inflation below CPI, and at less than half the current 14-year food inflation high of 14%. This is taking a herculean effort.

It is therefore distressing to see irresponsible efforts to shift the blame for food inflation on to retailers. The recent statements by the Competition Commission and government spokespeople are a case in point. They have inexplicably accused the sector of making unjustifiable profits. This is incorrect and irresponsible.

Troubling levels of poverty and hunger

An estimated 45% of South Africa’s total available food supply is being lost or wasted annually. One of the consequences of blackouts is increased food waste. In a country that already registers troubling levels of poverty and hunger, this is unacceptable.

Over the past four years, we have reduced food waste by nearly 30% as we work steadily towards our target of 50% by 2030. We have also donated more than 880 tonnes of edible surplus food to FoodForward SA, valued at more than R35-million. We are also working with government to change some of the regulations, which would allow more edible surplus food to go to those who really need it.

But I feel compelled to caution that the entire food industry is under existential threat. The probability of social unrest relating to food shortages and possible store closures if black outs get too high is now heightened.

Faced with the reality of structural economic decline, the only meaningful government action seems to be inaction, and to place blame on those trying to help solve the problems.

Mixing up policy with politics

At a time when growth-oriented policy change and certainty should be the only items on the agenda, we are mixing up policy with politics. How our government can risk AGOA – and other bilateral agreements – through overt support for Russia after its invasion of Ukraine, and threatening to withdraw from the ICC, is beyond understanding.

That’s before we’ve even considered the possible effect on Western economies’ pledge to help finance the energy transition away from coal to the tune of $8.5-billion. Without this capital, it will be difficult to end the blackouts and reduce our reliance on coal-generated power.

South Africa’s growth depends on important policy shifts. But we are unlikely to see them happen before next year’s elections.

Our country has boundless potential. But we must all act decisively in shaping our destiny.

It’s how individuals, the private sector and civil society respond that will now determine our future. We fully support the Business Unity South Africa/Business Leadership South Africa initiative to work with government to resolve key areas, and are committed to support where we can. DM