Astral Foods

Solutions for rural problems hold key to future city challenges

Frans van Heerden, Managing Director of Astral Foods Poultry Commercial Division

Astral, a major poultry producer, faced a crisis in Standerton, where unreliable water and electricity threatened their operations and livelihoods.

Last year, Chris Schutte, CEO of Astral, spoke to Landbouweekblad in an interview, expressing his frustration about how South African poultry producers should compete with Brazil, one of their biggest export competitors. He pointed out that Brazil doesn't have loadshedding or water problems, and their government fully supports agriculture and exports.

Astral Foods, listed on the JSE, is the largest poultry producer in the country and one of the primary job creators in Standerton. The company has over 5 500 employees in the town, with more than a third from Standerton.

The company has faced several crises in the past few years, suffering billions in losses due to an ongoing electricity crisis, water and sanitation interruptions for days, and a bird flu outbreak. After futile attempts to negotiate with the local Lekwa (Standerton) municipality and legal action for better service delivery reached an impasse, the company is now spending millions to become self-sufficient.

Poultry giant Astral’s industrial processing plants in Standerton need substantial and continuous water and electricity supplies. Astral has made plans to source its water from the Vaal River and has secured a water licence to pump water from the Vaal River to its essential Goldi chicken plant in Standerton. The move will also see it build its water line at a cost of R100 million, freeing the company from depending on the municipality. It's a case study of what can be done when businesses have no choice.

"Our infrastructure in Standerton is specifically designed for poultry farming. We operate the largest feed mill in Mpumalanga and own a processing facility with an integrated breeding and hatching operation capable of processing 1.8 million broilers per week. Relocating is not an option. Beyond the sheer cost of moving our infrastructure, Astral is one of the largest employers in the region, and relocation would have a devastating impact on the local community," said Frans van Heerden, Managing Director of the group's Poultry Commercial Division.

He refers to a 10-day water interruption in 2019 in Standerton as the company's "Rubicon moment" when they realised Astral had no other option but to become self-sufficient. Service delivery issues in the Lekwa (Standerton) municipality led to a ten-day water supply interruption to Astral's poultry processing plant – costing the company millions in losses. 

"Prevention is better than cure," says Frans, warning people not to wait for their town and company's Rubicon moment. "Bouncing back from a disaster such as a ten-day water interruption and recovering from financial losses is challenging and expensive."

Astral's experience at their Olifantsfontein plant, located between Kempton Park and Tshwane in Gauteng, offers a stark warning. Frans observes the worrying trend of infrastructure decay spreading from rural areas to urban centres, impacting their metropolitan facility as well. "This highlights the interconnectedness of infrastructure challenges – solutions developed for rural areas today hold the key to addressing future problems in cities," he says.

Astral has learned the following lessons during the past few years.

• The supply situation is worse than what the authorities are telling us. Therefore, it is essential to take precautions and prepare for the worst.
• Business interruption costs money and disrupts operational efficiencies over the longer term. Recovery becomes much more complicated.
• Choosing partners with the knowledge to design and implement a holistic plan that caters to flexibility is crucial.
• The solution's cost should be equal to or less than the current utility supply, including the cost of ownership.
• Accountability of the regulatory environment can't be delegated to third parties.
• Due to technical and scientific considerations, continuous management of solutions by specialist service providers is necessary post-commissioning.
• Timelines and costs must factor in legal and environmental requirements.
• We must find a balance to hold all spheres of government accountable (national, provincial and local) while maintaining good relations.
• We have a social responsibility towards the community to improve utility supply. 
• Stakeholder and community communication can cause delays – prepare for laborious and lengthy negotiations.

Contact
Tel: +27 (0) 12 667 5468
Web: www.astralfoods.com