Chris Hattingh’s Post

“Astral’s main chicken factory is in Standerton, part of the Lekwa municipality, which is such a basket case that residents claim, only half in jest, that the only thing filling the gaping potholes are the rivers of sewage running down the streets. Though Lekwa was placed under administration in 2021, little has changed, says Schutte. In the past six months, Astral has spent R1.5m a day on diesel to keep the lights on. Now, to get reliable water, it will spend between R90m and R110m building a 7km pipeline between the Vaal Dam and its Standerton factory. “This is so that Astral can be independent of what was once perhaps the best water reticulation system in the country, built on the Vaal Dam with probably the strongest infrastructure,” he says. “The dams and the river are full — but you can’t get water to the plant, which was built in Standerton many years ago, only because of the guarantees we were given about the water and electricity supply.” … Schutte says if you’re looking for the reasons behind soaring food prices — up 14% from last year, according to Stats SA — look no further than the “abnormal costs” of doing business in the country. “The story we’re told is that food price inflation is driven by farmers and inefficiencies within the farming system. It’s absolutely not that. Rather, it’s the additional costs farmers are paying to get basic services that should be provided by the state,” he says. … Remarkably, the Lekwa municipality is trying its luck with a new plan to mitigate the revenue drop: it plans to charge Astral the extra margin it would have charged, had it been able to supply the water (which it couldn’t). Says Schutte: “We’re going to fight that, because we’re paying to put in that infrastructure. Already, it is Astral — not the municipality — that provides water supply to the Standerton community. We had to do this, because we can’t have a situation where we have water at the plant, but the people who work for us go home and don’t have water.” Astral, as Standerton’s largest employer, is doing the municipality’s job; if anything, it should get a rebate on what it spends to do this. So, as much as Astral’s story of the abnormal costs of doing business is a common refrain, it does provide a unique vantage point into what’s really causing food prices to spike — and of the reckoning coming for small town South Africa.”