Absa Insights 2019, Agriculture
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Agricultural sector to power up with renewable energy to fight food insecurity

Absa Insights is a portal where the bank’s sector experts share essential learnings and new developments with its clients and other businesses. The world is changing; so in 2019 Absa has introduced a series of discussions featuring high-level thinking around Consumer Goods and Services, Agriculture, Telecommunications, Mining and Energy and Infrastructure. Bookmark Absa Insights, where the bank shares insights from discussions designed to help you navigate the ever-shifting trends that are shaping the economy.

Listen to the audio below (or scroll down for a summary of it).

Interruptions in the electricity supply have had crippling effects on the agricultural sector and, the broader value chain who play a vital role in ensuring South Africa's food security.

Power provision is a key factor... If you look at some farmers, they can't be without power for extended periods.

Ray Van Rooyen, Coverage Banker, Secondary Agriculture – Absa Corporate and Investment Banking

Farmers that are dependent on irrigation operate in critical production periods and, power outages in the cold chain means that the quality of wheat and other grains, dairy products, fruit and fruit canning processes, poultry and vegetables will be affected.

Farmers need to be resourceful (and businesses as well) to solution their problems.

Ray Van Rooyen, Coverage Banker, Secondary Agriculture – Absa Corporate and Investment Banking

In recent years, the generation of renewable energy between the borders of the Western and Northern Cape have increased.

According to Business Insider, over 70 wind turbines operate on wind farms, five of which equate to R142 billion and collectively contribute 645.71 megawatt to the grid.

Consistent supply continues to be an issue.

Ray Van Rooyen, Coverage Banker, Secondary Agriculture – Absa Corporate and Investment Banking

We've been quite actively speaking to those clients on alternative power solutions... a lot of our clients have moved into the solar and alternative energy type of sources, and we actively helped them to sort of finance those type of projects.

Hendrik Van Der Linde, Coverage Banker, Secondary Agriculture – Absa Corporate and Investment Banking

While it is advisable to go 100% off grid from a financial perspective – to overcome the issue, clients in the agricultural sector have approached Absa for assistance in the creation of a consortium that will look at addressing the unreliable power supply with sustainable, alternative solar solutions.

We're going to see a much-improved electricity supply within the whole African continent... that will help with development going forward, we can then achieve significantly improved growth rates.

Ray Van Rooyen, Coverage Banker, Secondary Agriculture – Absa Corporate and Investment Banking

For more detail, watch the video below. Roux Wildenboer (Secondary Agriculture, Absa Corporate and Investment Banking) in discussion with Hendrik Van Der Linde and Ray Van Rooyen (Secondary Agriculture, Absa Corporate and Investment Banking) on the investment opportunities, infrastructure constraints and the potential that technology presents in the agricultural sector on the African continent.


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