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FIFI PETERS: The Franchise Association is asking on authorities right here in South Africa to take pressing motion to unravel the vitality crisis. It says that load shedding is inflicting the sector to endure from important losses, because the working setting is turning into untenable due to the power outages.
We’ve Tony Da Fonseca, the previous chair of the Franchise Association of South Africa and the CEO of OBC Better Butchery, on the road for extra on this story. Tony, thanks a lot to your time. Just give us a snapshot of what the impression of load shedding and I suppose the extra aggressive power cuts that we’ve got skilled within the latest whereas have had on the franchise sector thus far.
TONY DA FONSECA: Hi, good night and thanks for the chance simply to precise a few of our frustrations, I suppose. Obviously there isn’t any doubt that these disruptions are inflicting nationwide inconvenience – and price, after all – actually within the retail sector on the finish of the day. You launched me as a previous chairman of the Franchise Association, so I’ve received somewhat little bit of an perception into different areas throughout franchising however, actually within the retail sector that I because the CEO of OBC am in the end involved with particularly within the butchery sport and within the retail area.
We are excessive vitality customers and after all the chilly chain is essential within the upkeep of guaranteeing meals security and the meals integrity of what we promote our clients. So after we get to Stage 5 and Stage 6, the prices are simply exorbitant by way of attempting to take care of the chilly chain to make sure that we give our clients meals that’s meals protected, after all.
So it’s including an unlimited quantity of price to our shops. It’s lowering profitability. In some cases the unintended consequence of this [on] a few of our shops, relying on the time – not solely a few of our shops, however retailers usually. Depending on the time of load shedding, what they’d slightly do is definitely keep closed as a result of in not so busy durations the funding doesn’t justify the returns. So the unintended consequence is that employees is being put on brief time period, coming in a bit later as a result of it’s not worthwhile opening at the moment.
So moreover the exorbitant prices of a small enterprise like ours per department, I’ve seen something from a R100 000 to R180 000 value of additional diesel to maintain mills working to make it possible for our merchandise keep meals protected. So moreover beginning to make these companies lower than engaging by way of profitability, it’s additionally having a knock-on impact on our employees, the place hours have been minimize and that sort of factor.
So not solely from that, clearly we take a look at the availability chain the place in some cases it’s throughout the chain, not solely [for] perishable merchandise. Obviously we’ve heard lots within the media about what’s occurred to the poultry trade, which has had a devastating impact on the quick-service eating places.
But even typically a few of our suppliers can’t get sufficient glass bottles or plastic bottles to pack juices. So I don’t assume we’ve even begun to grasp the meals impression and detrimental impact it has on our enterprise and our economic system in whole.
FIFI PETERS: When you speak concerning the impression on meals manufacturing particularly, a narrative that involves thoughts for many of our listeners and most South Africans is the latest one the place a poultry farmer within the North West had 40 000 of his chickens killed on account of the power outages – and what that did to the manufacturing course of.
Would you say that maybe load shedding is hitting the retail sector essentially the most, or is it throughout the board by way of the devastating impression?
TONY DA FONSECA: I feel it’s equally throughout the board and is affecting all sectors throughout the board. Obviously among the well-known fast-food chains lately – and I feel this nonetheless continues – over the festive season truly needed to shut some branches as a result of they couldn’t get sufficient poultry. It was additionally reported extensively within the media that one producer needed to destroy ten million chicks as a result of they couldn’t course of them.
Again, it’s received to do with vegetation not working, so birds can’t get slaughtered on the appropriate weight, on the appropriate time, and so on and so on. So within the meals sector it’s had a devastating impact. If you consider among the very well-known rooster meals franchises, in case your core enterprise is rooster and you haven’t received uncooked materials your solely various is to shut your doorways.
So in chains like that it’s been devastating. In our case, within the butchery sector, providing a variety of merchandise, what we’re additionally discovering is customers are shopping for smaller as a result of they’re additionally having losses at dwelling resulting from lack of electrical energy, sadly. We hear heaps about photo voltaic and various vitality, however the actuality is the majority of our customers merely can’t afford that. So we’re discovering that persons are beginning to purchase extra tinned meals since you they clearly can’t run the danger of the meals perishing. So actually it’s huge.
You’ve talked about the one breeder that needed to destroy 40 000 birds. We are listening to of farmers the place, within the allotted time once they’re speculated to irrigate the crops, there’s load shedding. They can’t irrigate their crops.
This is turning into a risk throughout the board by way of sufficient meals for the nation. Food stability is now turning into a problem within the poultry sport. We’re beginning to discover that costs have elevated radically.
Today it was within the information that one of many main poultry producers is [finding that] it’s costing an additional R1 million per day on gas to maintain the operation going. That’s going to have a knock-on impact on the buyer. Either that producer goes to cease producing, as a result of the extra birds they produce it prices them cash, or clearly it must be handed on to the buyer. And if the market can’t bear it, the producers are going to chop prices as a result of it’s pointless producing extra birds whereas it’s costing you cash to place it out out there.
So not solely will there be a shortage due to the additional enter price, meals inflation goes to be manner above and [the prediction is] that meals inflation shall be manner above the nationwide common of inflation.
So it’s throughout the board.
FIFI PETERS: [I was] making reference there to Astral Foods listed there on the JSE. They mentioned it’s costing them 1,000,000 rand in diesel per day.
You additionally touched on the shortage, and notably the shortage of chickens. I recall going to one of many quick meals shops through the festive season to purchase a quick meals rooster meal. They had no rooster, so I couldn’t purchase something from them.
But I needed to grasp how acute the issue of the poultry shortage is correct now, in your view, and to what diploma it extends to different meats, like in your butchery. Are you seeing shortages throughout different traces as effectively on account of load shedding?
TONY DA FONSECA: Yes, we’re, particularly within the poultry sector that’s so reliant on vitality. In the meat setting – clearly poultry manufacturing is underneath a really strict and managed setting, not that different meats aren’t. But actually within the poultry, when you look, rooster homes are maintained at a sure temperature, [chickens] clearly slaughtered at a sure temperature and these varieties of results.
Certainly within the beef sport it’s raised barely in a different way, however what we’re discovering is that among the farmers are literally having to cull their cattle somewhat sooner, or attempt to work across the schedule. So once more it’s pushing up value.
And then course [those who] keep the chilly chain are equally affected by further vitality prices to attempt and keep the product contemporary. And what we’ve got discovered is that among the farmers are literally saying they’re slicing the volumes that they’re producing as a result of they run the next danger of losses, which once more can have a knock-on impact on meals costs. So it truly is throughout the board.
FIFI PETERS: Tony, thanks for that. You have [painted] the present image within the franchise trade and the challenges which are being skilled on account of the power cuts. You’re asking authorities for some reduction, on high of pressing intervention to unravel the crisis. What can authorities do to assist the franchising sector proper now?
TONY DA FONSECA: Probably some of the irritating issues is there doesn’t appear to be a lot readability by way of what motion’s being taken.
We are in Stage 6 [load shedding], subsequent week Stage 2, then we’re in Stage 3, then we’re again as much as Stage 5.
There appears to be no clear plan, in order that could possibly be the very first thing.
Where are we going, and what’s being finished?
Obviously the simplest [thing] can be to make sure that we’ve got sustainable vitality, and at the least a dependable schedule that we are able to rely on, [so] we are able to plan our manufacturing round it.
If we’re at Stage 2, Stage 3, individuals can plan round that work shift. But while you’re something at Stage 5 and Stage 6, which accurately occurs inside a few hours, it’s very troublesome to replan manufacturing schedules.
So some consistency can be good, and clearly some reduction by way of if we take a look at the large quantity of diesel and different consumption. And when you take a look at the portion of taxes we’re paying on gas, it’s simply including to the associated fee.
What we’re discovering is that, although the vitality isn’t obtainable to us as a result of we’re kind of peak-demand customers, actually our vitality payments aren’t lowering.
So actually [it’s about] having a sensible view on what’s possible, and clearly communication to the market so that folks can plan.
A variety of our suppliers plan on how they’re going to do their manufacturing, work late, work across the schedule – and it adjustments. So some consistency can be perfect.
And clearly there are a number of companies which are going to want a lifeline – whether or not it’s from tax incentives or [to] hold these enterprise sustainable whereas we undergo this – as a result of on the finish of the day with these vitality prices there’ll be a number of companies that merely aren’t going to make it, which has received a knock-on impact on employment.
So actually these sort of interventions are going to be completely essential to attempt and hold companies alive whereas we wait and attempt and work by [this] and discover options for it.
So actually extra of an open dialogue, so at the least individuals can perceive what’s going on and how for much longer they must make allowances and plan round it. And after all, any concessions by way of retaining companies and their doorways open, so we are able to hold individuals in jobs is totally essential.
FIFI PETERS: Tony, thanks a lot to your time. We’re going to have to go away it there, however hopefully one or two – or maybe much more – officers in authorities have been listening to among the reduction measures that you simply imagine shall be useful in retaining the franchise trade afloat. That was Tony Da Fonseca, the previous chair of Fasa, in addition to the CEO of OBC Better Butchery.