As the finance minister will be tabling his budget tomorrow, South Africa’s citrus industry is calling for urgent reforms in logistics as inefficiencies cost the sector R5.27 billion last year.
An independent study by the Bureau for Food and Agricultural Policy (BFAP) has shed light on the severe economic impact inefficiencies in logistics have on the citrus industry. The loss of R5.27 billion for the 2024 season represents a huge blow to foreign revenue and the potential for job creation.
According to the Citrus Growers’ Association (CGA), these figures are direct costs, indirect losses, and waste, all of which harm not only established growers but new ones too.
Public-private partnerships needed
The incoming chief executive officer of the CGA, Dr Boitshoko Ntshabele, said the huge cost makes it clear that large-scale public-private partnerships at ports across South Africa are urgently needed.
“While the findings of the impact assessment are deeply concerning, the CGA views this as an opportunity to collaborate with stakeholders and implement effective solutions,” he said.
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Ntshabele said if all role players worked together, the industry can reach an export level of 260 million 15kg cartons of citrus by 2032, creating 100 000 jobs in the process.
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He said public-private partnerships are the only long-term way to ensure logistical efficiency. He indicated that it should be acknowledged that an efficient export industry can generate billions in additional tax revenue and contribute to true inclusive growth for all South Africans.
“Last year we exported 165 million cartons. More fruit will be coming off our trees, but physically moving them to all the many markets that have a taste for our high-quality citrus is a problem.
“If not addressed soon, our ports, already beset with these delays, will not be able to handle the increased volumes at all,” he said.
The organisation said in a statement that the direct expenditure increase was estimated at R1.56 billion. The indirect cost the revenue not earned as produce is sold at a lesser price amounts, conservatively, to R2.6 billion, and waste is estimated at R1.1 billion.
“Citrus is a perishable product with a limited shelf life, so it is especially vulnerable to the impact of delays. The study quantifies the effects of slow port throughput, deteriorating road and rail infrastructure, unreliable schedules, inefficiency surcharges imposed by shipping lines, and missed market opportunities.
“The losses and added costs jeopardise the long-term viability of the citrus industry. They also impact emerging growers and new entrants the hardest,” the CGA stated.
Farmers, rural communities feel the impact
Chairperson of the CGA and a grower in Citrusdal, Gerrit van der Merwe, said it’s incredibly frustrating for the growers and their rural communities, who feel the impact directly.
“Finally quantifying the damage is an important step. In a certain sense South Africa has gotten used to the destruction of value that has been happening on a greater or lesser scale over the last few years,” he said.
The CGA said it is cognisant of the progress made on logistics in the past year, but, as the BFAP study proves, the pace of reform is not nearly what it should be.
“The CGA applauds President Cyril Ramaphosa’s pledge in his State of the Nation Address that government is revitalising our port terminals and rail corridors through the Freight Logistics Roadmap, leveraging private capital to restore them to world class standards.”
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