South African farmers are bracing for yet another blow to their already rising production costs as electricity tariffs head upwards following a settlement between Eskom and the National Energy Regulator of South Africa (Nersa).
With irrigation, storage, and agro-processing heavily reliant on power, industry experts warn that higher tariffs will squeeze profit margins, force operational changes, and make food production even more expensive for the country.
In a statement, Nersa confirmed it has settled with Eskom after admitting mistakes in calculating the utility’s revenue needs.
In simple terms, Nersa and Eskom have agreed to fix these errors for the next three financial years. Eskom argued that Nersa’s original decision left it short by R107 billion, but after reviewing the numbers, Nersa admitted to some miscalculations and agreed Eskom should receive R54 billion more instead.
This extra money will be recovered gradually over the 2026/27 and 2027/28 financial years, meaning electricity tariffs will rise slightly higher than first expected. For now, there will be no extra increase in 2025/26.
According to Nersa, the settlement avoids a long and costly legal battle, ensures Eskom remains financially stable, and spreads the increases over time so that consumers don’t face sudden tariff shocks.
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What farmers can expect
According to Decentral Energy, electricity costs will rise sharply:
- Direct Eskom customers: 8.76% increase from April 2026 and 8.83% from April 2027.
- Municipal customers: Hikes will filter through via municipal tariff books, depending on cross-subsidies and local financial management.
Thabile Nkunjana, senior economist at the National Agricultural Marketing Council (NAMC), says the increase in electricity prices since April 2025 has been a heavy blow across the agricultural value chain.
“The increase in electricity prices since April 2025 has made it hard for farmers, manufacturers, processors, and retailers to avoid feeling the financial pain. You can only imagine how much farmers and retailers are shelling out to preserve a consistent water supply in the fields, and ordinary South Africans are complaining about the expense of keeping their lights and geyser on, he said.
The numbers paint a worrying picture. The agriculture sector spent over R7.4 billion on electricity in 2018/2019. By 2023/24, this had skyrocketed to R10.4 billion. “This is an indication that these tariffs are exacerbating the cost of farming and producing food,” Nkunjana warned.
Energy-intensive industries at risk
More than a quarter of the country’s food comes from energy-intensive, irrigation-dependent businesses, such as horticulture, dairy, poultry, grains, and general food agro-processing. “These industries will undoubtedly become less profitable as a result of any more electricity hikes, which will also force some companies out of business,” Nkunjana adds.
South African farmers are already battling rising input costs, with fertiliser and pesticides remaining high since the Covid-19 pandemic and the outbreak of the war in Ukraine. Even though rebates help some producers, food production is still costly.
“Diesel is an equally expensive alternative as is the case to install solar panel,” he said.
Commercial crop farmer, Qenehelo Mavuso from Harrismith, in the Free State, highlights the day-to-day realities.
“When we wash [potatoes], the cost is high due to electricity, and we have to increase the number of people to work on the sorting table. To compensate for high electricity costs, farmers have to increase labour to meet production targets,” he said.
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