Commercial farmer warns of increases in food prices following power tariff hike

Commercial farmer warns of increases in food prices following power tariff hike

Guy Robinson

Guy Robinson

Commercial  farmer Guy Robinson says consumers should brace themselves for further increases in food prices following ERB’s approval of a tariff hike by Zesco Limited.

On Wednesday, the Energy Regulation Board  hiked electricity tariffs for residential, social services, commercial and maximum demand customers were adjusted upwards by various margins in line with the cost of supply for each specific customer category.

With latest increases, commercial consumers will be paying substantially increased tariffs, with monthly fixed charges hiked to K156.47 from K55.09, representing an increase of 183 per cent, while energy charges in terms of kilowatt-hours increased to K0.88 from K0.31.
Maximum demand customers under capacity category of between 301 to 2,000 kVA will be hit with a new fixed monthly charge of K941.25, up from K273.62, an increase of 244 per cent.

The R2 metered residential consumers, with consumption of above 301kWh per month, will now pay K1.54/kWh from K0.51.

But Robinson, a former chairperson of the Food Reserve Agency  said while tariff hikes were unavoidable for Zambia to move towards cost-reflectivity in the power sector, the outlook for the agricultural sector now looks “very grim” as costs of production for farmers would increase dramatically because producers have been hit the worst.

“Load-shedding is already killing us and with this announced jump in electricity prices, I am sorry, consumers have to brace themselves for food price hikes,” Robinson warned in an interview.

He said the outlook for the agriculture sector is very depressing because producers have been badly hit with escalating production costs.

Robinson, the former president of the Zambia National Farmers Union, said price increases for essential commodities like maize and milk were inevitable as continued power outages had decimated production capacities of farmers struggling to remain viable.

“We have looked at our budgets going forward and it is looking very grim! Our costs of electricity [are] going to be absolutely unbelievable,” he said. “You can’t just go up 250 per cent and smile at it, we are in a crisis! You are hitting the producers more than you are hitting the consumers.”

Robinson said the power deficit had negatively impacted the supply of essential products on the local market and fears the latest increment in power tariffs would worsen the current dire situation.

“In the milk industry, we have got to have electricity to keep milk cold, and despite the [electricity] price increases, we are having to run a generator for nine hours a day,” he said.

“This is going to put a tremendous strain on the cost of milk production. If I have got to pay that amount for producing the milk, then I am sorry, the consumer has got to pay me for that milk. If my costs go up, then the product I am producing – be it milk, maize, – has to go up.”
Robinson said it was hurting farmers to see crops dying in the fields due to lack of water.

“What is killing us is the [power] outages; we just can’t irrigate our crops. We have got crops dying in the field as a result of it,” he said. “If we compare the new price of electricity and compare that with the price of fuel and generating, you will almost find that generating is a little bit more expensive.”

Robinson also called on all stakeholders to share an equal proportion of the price increases in electricity to ensure equity and sustainability.

Last month, the ZNFU submitted during an ERB-organised public hearing that farmers’ electricity costs would quadruple based on the new tariffs and would hurt their commercial viability.

According to the ZNFU, the average commercial farmer used to spend K280,000 per month on electricity but following the implementation of Zesco’s new tariffs, their electricity bills would now jump to around K680,000 per month, a gigantic leap of 243 per cent.

 

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