Daily power cuts are wreaking havoc on South African wine producers as they struggle to irrigate and press grapes during the harvest. Electricity from state-run power company Eskom has gone down every day so far this year, and the rolling blackouts have left some producers on the brink.
Christo Conradie, manager of wine business at trade body Vinpro, said: ‘This is challenging for us. In fact, this is a crisis for us.’
The power cuts – known as load shedding – have impacted most sectors of the South African economy, which grew by just 2% last year. Accountancy firm PwC claimed that the country’s economic output could have increased by 7% in 2022 were it not for the regular blackouts.
The South African Reserve Bank has reduced its growth forecast for 2023 to 0.3%, as governor Lesetja Kganyago warned that power disruptions will shave 2% off output growth.
Eskom operates a fleet of ageing and inefficient coal-fired power stations, which cannot meet demand. It regularly imposes load shedding to protect the nation’s grid from collapse. This has been a recurring challenge for the past 15 years, but South Africa is now facing the worst energy crisis on record.
The country has now suffered from more than 100 consecutive days of rolling blackouts, according to Bloomberg calculations. Last year, there were power cuts on 200 days. Eskom announced it will continue load shedding on a continuous basis over the next two years as it overhauls its electricity generating fleet.
President Cyril Ramaphosa is scheduled to announce measures to address the crisis in his state of the nation speech today, but there are no quick fixes.
Wine producers rely on power early in the morning and after lunch, so they have lobbied the government to ask for blackouts to be scheduled during quieter times. They are also seeking diesel fuel rebates for generators and investment in renewable energy to mitigate the crisis.
The wine industry contributes R55 billion (£2.56 billion / $3.1 billion) to South Africa’s GDP and employs more than 265,000 people, but it has faced many headwinds over the past few years. For example, Ramaphosa’s government banned alcohol sales during the Covid-19 pandemic, causing a 20% drop in domestic sales, and exports were also banned for five weeks.
Producers have also faced droughts, supply chain disruptions, a shortage of shipping containers and strike action in the port of Cape Town.
Vinpro expects this year’s harvest to be the ‘fourth smallest crop in 17 years’ as a result of rain, hail damage, disease pressure and uprooting in the Northern Cape, Olifants River and Swartland.
‘Across all regions, mainly the intensively irrigated areas, the lack of electricity needed for irrigation pumps to work will further negatively impact the crop size,’ said Conrad Schutte, manager of the Vinpro team of viticulturists, which issues the crop estimate together with industry body SAWIS.
Vinpro, which represents 2,600 producers, said that larger companies may be better placed to weather the storm by investing in generators and solar panels. But smaller growers are fighting for survival.
‘Load shedding has forced us to constantly readjust our production and vineyard management,’ said Peter Pentz, communications manager at Groote Post, which has had to rely on generators to keep production going. ‘The costs of running a generator are extremely high, which significantly raises production costs.
‘Eskom has to get its ducks in a row. Alternative energy production, such as solar and wind energy, are viable options, but the initial investment is prohibitively expensive. That is still not the final solution, and the onus is on the national energy supplier to sustainably supply us with power.’