As the reality of load shedding hits South Africa, farmers are bracing themselves for the impact this is likely to have on their production schedules and revenue. “Agricultural producers are urged to take extra precautions in the months ahead to manage their risk and protect against losses resulting from load shedding,” says Gerhard Diedericks, head of Santam Agriculture.

“Load shedding is already having a serious impact on farming operations that rely on continuous or even periodical electricity production, but sometimes, even short disruptions to electricity supply can cause problems,” he says.

The agricultural sectors most affected include:

Dairy farms – these are in the main highly mechanised, with electricity required for most of the production process, including milking machines and milk cooling. Milking is usually scheduled for early morning and late afternoon, times which coincide with load shedding periods.
Fruit and vegetable farms – these often rely on temperature regulated cold stores, especially when produce is destined for export markets.
Crop farms – farms that rely on irrigation are severely impacted by load shedding. Again, irrigation is usually scheduled for the cooler times of the day to lessen the chances of evaporation, which also tend to be peak electricity usage times.
Poultry farms – with winter around the corner, ‘brooding’ or heating of especially young chicks in broiler houses at certain parts of the day needs to be finely balanced.

Cover for business interruption

Diedericks says most recent insurance claims lodged by farmers for losses resulting directly from load shedding have been for business interruption following power surges. “Business interruption cover entails insurance for gross profits, gross revenue and the additional increase in the cost of working. In recent years, this type of cover has specifically been extended to include loss or damage as a result of power surges. Premiums depend on the level of dependency the farming operation has on power.”

Power surges occur when the electricity returns after an extended outage, sending an increased flow of current to a wall socket or and electrical box. This has the potential to damage any equipment relying on electricity.

“Santam has also since March 2013 extended its cover in terms of the ‘fire and buildings combined’ section to include R50 000 power surge cover, provided that surge arrestors are installed. Additional cover is available for amounts over R50 000,” he says.

Insurance cover for back-up generators

Diedericks says since South Africa was last hit by ongoing, nationwide load shedding in 2008, many farmers have had back-up generators installed professionally. Solar panels are being used for items such as submersible pumps and household lighting. Many farmers are also using gas as an alternative where possible, for example for brooders on poultry farms.

“In terms of insuring generators, Santam considers fixed generators as part of the structure of your buildings – they are therefore covered under the buildings section. A portable generator will be covered as part of the contents section of your policy. Cover is also available for the breakdown of your generator.”

How to use a generator safely

Diedericks offers the following tips for using a fixed generator as a power back-up on your farm:

• Make sure your generator is professionally installed by a registered service provider
• Ensure the installation and use of your generator complies with relevant regulations, for the following reasons:

– It exhausts carbon monoxide which, if not properly ventilated, could be very dangerous
– It generates electricity which has to be properly wired and earthed and sealed
– It is a mechanical device which has moving parts and can become hot

• Never store more than 20 litres of fuel within the building, and ensure proper ventilation
• Purchase a named brand supported by a recognised dealer who can provide safety advice
• Test the generator frequently
• House external generators in an expanded mesh cage with a solid roof
• Remember to have a fire extinguisher of at least 4.5kg on site.

“Load shedding is here to stay for the foreseeable future. We can’t change this, but thinking ahead will mean the difference between losing revenue and doing business as usual. Farmers are urged to make the necessary plans to prevent potential loss, revisit their insurance cover, and obtain advice from their brokers to take into account risk situations which may arise as a result of power cuts,” Diedericks concludes.

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