Need To Ramp Up Logistics As Agriculture Gathers Steam

9 September 2021 – South Africa would need to ramp up its logistics as the local agricultural output was likely to increase in the coming years, especially within the citrus sub-sector, which would demand extra capacity at the ports, according to the Agricultural Business Chamber (Agbiz).

The chamber’s chief economist, Wandile Sihlobo, said the major economic reconstruction initiatives such as agriculture and agro-processing master plan also attempt to boost domestic production.

“The additional output will need to be channelled to the export markets, increasing the volumes in the South African ports. Another important consideration is that even in-country logistics will increasingly come under pressure as agricultural production improves. A large share (of about 80 percent) of major agricultural commodities such as maize, wheat and soyabeans are transported by road.

“As South African authorities have signalled, a move from road to rail will require increased investment and security at rail lines. The constant theft at Transnet lines is counter-productive to the national efforts and business activity and should be a key focus for the police and security authorities,” said Sihlobo.

Agbiz said logistics had always been the backbone of South Africa’s export-oriented agricultural sector, although it did not always get much attention as it had more recently due to various disruptions.

South Africa’s agricultural exports, valued at $10.2 billion (R145.5bn) last year, the second-largest value on record, were supported by functional logistics at the shipping ports and the farm gate. Sihlobo said since the start of the Covid-19 pandemic, the disruption in the global shipping lines, growing container ship shortages and costs, theft of Transnet infrastructure, and most recently, cyberattacks at Transnet had brought some focus into this sector.

“For South Africa’s agricultural sector, especially the export-focused sub-sectors such as the fruit, wine and grain industries, smooth running of the logistics is crucial.”

Through these challenges, South Africa’s agriculture logistics role players had managed to push hard to maintain robust export activity in the first half of this year. Hence, South Africa’s agricultural exports amounted to $6.1bn, which was 30 percent year-on-year.

Sihlobo said beyond the inland transport facilities, there was also a need for increased investment and efficiency and ways of reducing costs for users at the ports. South Africa’s ports ranked poorly in the global ratings. A case in point is the World Bank and IHS Markit’s Comparative Assessment of Container Port Performance. South Africa’s ports of Cape Town, Port Elizabeth, Durban and Ngqura were at the bottom of 351 ports of various countries.

“As with several interventions in the recent past where the government’s financial resources are constrained, a dialogue between government, logistics role-players and potential investors might be crucial for mobilising capital for investments in the ports. This should be a long-term and strategic area for the country to focus on, especially as the global leading shipping companies anticipate challenges in the shipping lines for years to come.”

FNB Agriculture Head of Information and Marketing Dawie Maree said the stage was set for another record export year for agricultural products.

“International demand remains high and prices for our major export products continue to be at elevated levels. The year started off on a high note.” said Maree. Source (Business Report)