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Load Shedding: A surge of impact on SA’s Agri sector

04 August 2022 Santam

Regular load-shedding is wreaking havoc in South Africa’s agricultural sector, with farmers bracing themselves for the impact of ongoing interrupted power on production schedules, revenue, sensitive electronic equipment, and crime. This means many Santam AGRI policyholders are raising questions regarding what their cover includes.

Hanlie Kroese, Manager at Segment Solutions AGRI, says farmers need to fully understand their indemnity from a policy perspective. “We strongly advise speaking to your broker or insurer to understand what’s covered when it comes to power surges and other load-shedding related damage. We know this is a tense situation and we are committed to supporting our farmers in whatever ways we can.”

The agricultural sectors most affected by load shedding will be:

• Dairy farms – these are 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.
• Poultry farms – brooding or heating of especially young chicks in broiler houses at certain parts of the day needs to be finely balanced.
• Crop farms – Load shedding can affect irrigation activities especially for farmers who cannot utilise their electric pumps during their access window to water and/or indirectly by the load shedding of key irrigation scheme pump stations. In the latter case, a farmer may have access to electricity, but the irrigation scheme pump stations may be affected by load shedding (or vice versa).

Power surges are also proving a particular problem. These occur when the electricity returns after an extended outage, sending an increased flow of current to a wall socket or and electrical box. The same principle applies with standby power with the likes of a generator. Power surges have the potential to damage any equipment relying on electricity.

In terms of power surges, Kroese adds, “Santam has extended the wording on the fire, buildings-combined & office contents sections to include power surge cover as an insured peril on all Agri policies with a limit of R50 000, with an option to increase (advisable). The same cover applies to houseowners and the house contents sections.

“The electronic section of the policy also includes cover due to power surge, but please note that any item insured under the machinery breakdown section needs to be insured as an item under the fire section of the policy for load-shedding damage relating to a power surge.”

Most of the 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 due to power surges.

Santam is also urging farmers and producers to invest in back-up fixed generators. All such installations must be done by qualified service-provider and comply with municipal bylaws.

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