From deteriorating rural roads and rail infrastructure to bottlenecks at harbours, South Africa’s agricultural sector is negatively affected by a lack of investment in efficient logistics.
Production areas are often far from the main consumers and export markets, and a breakdown in logistics can have dire consequences for producers.
Facilitator, Theo Vorster, discussed the impact of logistics on the sector and what can be done to overcome this challenge with a panel of industry experts during the third session of Nation in Conversation at Nampo Bothaville on 18 May 2022. The panel included the likes of Dr Pieter Taljaard (Grain SA), Dr André van der Vyver (South African Cereals and Oilseeds Trade Association: SACOTA), Misumzi Xata (PPECB) and Jan-Louis Spoelstra (Flying Swans Foundation).
Vorster started the session of by stating that the problem with a growing agricultural sector is that if you can’t move the commodities out of the country, you’ll need to move them back into the market which simply isn’t big enough to accommodate the products. Having said this, the need for an effective, fully functional and enabling infrastructure is of cardinal importance to the sector not only for the sake of providing quality affordable food and fostering profitable sustainability but also to ensure foreign income.
When asked his view on the current infrastructure challenge, Dr Van der Vyver said that for any business to survive, growth needs to happen. Over the last 10 to 12 years, grain production in South Africa has grown by around 9% per year. The flip side of the coin is however that demand for grain products has only grown by 2% per year. It is within this reality that the county is faced with a big opportunity to secure foreign income through exports.
In turn, Dr Taljaard sketched the picture of a serious dilapidating rail infrastructure when he said that 20 years ago grain exported by rail amounted to 80% of total exports, whereas it has steadily declined to only 17% at the moment. This decline impacts not only local food security but also the global competitiveness of the sector as it affects all commodities. In illustrating the opportunity that lies in utilising an effective rail infrastructure, Spoelstra explained that a properly functioning goods train can relieve the pressure on the road infrastructure by 100 trucks per freight.
According to Xata, between 60% and 70% of all agricultural exports are pushed through to the Durban port, which causes a lot of congestion. In light hereof he raised the question if it would be possible to unlock further efficiencies if other ports, such as that in East London were to be utilised.
The panel spoke at length about the value of private-public partnerships and in illustrating the success of such partnerships, Spoelstra said that when the private sector took over control of the railways in South America, the volume of grain on rail increased from 3,5m tonnes to 250m tonnes of grain per year. According to him Transnet is currently busy with a big drive to secure such partnerships, and that big conglomerates such as Sasol and Omnia are already on board by means of privately owned fleets of rail wagons.
The panel members were in agreement that in moving forward it is of crucial importance to invest in private-public partnerships and to strike a balance between short and long term needs. Spoelstra sums this drive up when he refers to the necessity of the so-called coalition of the winning. The latter referring to the coming together of all role-players across the various value chains in seeking solutions to the various challenges.
