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South Africa is the world's second biggest exporter of citrus fruits, but the industry is under threat from the failing South African port and rail company Transnet delays that the ports have meant tens of millions of dollars worth of produce just rotted on the port side before it could even begin its journey to customers all over the world, including
the Middle East and South Korea. Farmers are having to resort to desperate measures, trucking their fruit up to twenty hours in a car in the hope of getting it onto the ships. If you look at the sign of rose at this point, maybe me are a process as a new report from the World Bank ranked South African ports among the worst in the world. On today's podcast, we ask, is South Africa's infrastructure failing the industries crucial
to its growth plans? I'm Jennifer Abasagia and this is the Next Africa Podcast, bringing you one story each week from the continent driving the future of global growth with the context only Bloomberg can provide. South African fruit, in my opinion at least, is some of the tastiest out there, and it's no surprise that it's challenging Spain for the title of the biggest fruit producer in the world. But without the ports and infrastructure, instead of the green shoots
of growth, we're actually getting some rotten fruit instead. Tonda Taquana has been speaking with fruit packers in South Africa to get to the bottom of the crisis and she's joining me now hi in Tonde. Thanks for joining us, Hi, Jane, let me speak. So this is a fascinating story. Let's just start with the context and how big the South African fruit industry is.
Give us some background if you can. Well, we are a very big citrus industry. We plant on over two hundred and fifty acres of land planting oranges, soft citrus, lemons, grapefruits. It's not a very huge industry, but it's a very big employer. South Africa's agricultural industry as a whole contributes a lot to employment in the country. And do you know what the stats are for South Africa in terms of employments. We have one of the highest unemployment rates in the world.
It's fascinating in that sense that it does employ a lot of people, especially considering the other industries that it's not employing people. What exactly is the focus then of the fruit industry here in South Africa? What are the big moneymakers?
The big moneymakers are oranges as well as soft citrus like tangerines, clemantines, valentias. Those are gaining a lot of popularity. We're seeing grapefruits as well. A lot of people are loving them. And there's also a very niche variety called the Jackson's Sweet Sunrise. It's a very sweet, very low seeded fruit that is gaining quite a lot of popular.
And Internso what is making it some of these fruits so popular? Is it only in South Africa? Or where are we seeing the most exports of some of these varietals going to.
It's not only in South Africa. The soft citrus is popular because it's convenient to eat. It's an easy peel orange, it's less messy than your normal orange. So it's not only in South Africa that it's popular. Generally, South Africa sends most of its citrus to the EU, mostly the United Kingdom, and it also does have a big market in your Asias and it's trying to really open up its widen its access to the Americas, but at the moment, our biggest customers are in the EU region.
You and Empoe, I'm one of the co writers here in this report, talk about how this really should be a positive success story for the country, but it's not necessarily. There's another side to it. Can you explain what that is?
Yeah, if you think about it, the citrus industry to be doing far better than it is at the moment. It's one industry that has been planning forward, planting more trees and over time those trees yielded a lot of fruit, but at some point the situation and the country and the logistics sectors coming to a crumble has forced it
to rethink how much they are planting and scale back. Traditionally, fruits producers or just exporters generally would use the country's rail network to get products outside of South Africa to international markets. But the rail sector has really failed in the country. When we were speaking to these people, some of them would say, on one day, you'd find that there are four or five trains that are running on track, and nowadays you are lucky to see just one a day.
And what that does. It means that producers have to look for an alternative way to send their fruits outside of the country, and the the only feasible thing then is to use road, and that is very expensive. It pushes up the cost of the logistics side of things, and it also means that the produce is on the roads for a much longer period than it would be if it was traveling by rail, and such as as
a very sensitive fruit, you know, every minute matters. The more it's on the road, it runs the chance of not getting to its destination in its optimal states.
And when you talk about the price difference, what are we looking at here? How much more expensive is this actually costing.
We've asked that question a lot of times from different people, and it's hard to come up with a figure because the rail sector has not been able to service the fruit industry at an optimal level for such a long time that people don't actually really know how much more
they are spending. But certainly the costs are arising year by year because a lot of people are coming into the markets trying to get this stuff to the ports using trains, and those prices are continually increasing because these demand for it.
And rising for who particular for.
The farmers that need to export these goods, but as we know, those costs do actually land up on the lap of consumers. As much as producers can try and be price takers, they can only do that to a certain.
Extent, especially in a country that's already dealing with high inflation and unemployment. When it comes to independent suppliers and farmers. You and im Posset spoke with one person who's on the border of Mozambique, and he told you specifically about some of the problems that he's been enduring. What stood out to you about his comments.
We spoke to Erklut and he is the operations manager at a farm called Blade Filets such as farm in spread Lepopo, and one of the things that stuck out to me when he was talking about his experience was
that there seems to be operational inefficiencies that transmits. Just last year alone, they had to spend four million more, four million rants more than they did the last year because they had to find alternative plans for how to send their fruits and also accounts for the foods that had rotten on the way or had reached the destination. A poor quality. If we look at the.
Side of our rows at this point, we are in a process.
I mean, you can't imagine these and them on the floor. Yeah, they need to take this road.
Really just came to now and then they hit balfaws and then they go down.
Yeah together, that's the way they did it.
Yeah, I mean our about plants don't even take together.
Another thing that he spoke of was that they employ a lot of people and so they don't want to find themselves in a situation where they would face the risk of letting go of their people.
For instance, when we talk about the employment figures. This is not in like other to the world where these massive farms are able to take a lot of these hits. Right. A lot of these are independent farmers and this is their main source of revenue, so they can't always absorb some of those costs that you were just outlining there. Yeah.
Yeah, I mean we do have a very big commercial farming landscape in the country, but we also do have a very big small scale farma side, so that is also an issue.
We'll stay with us in Tondo when we come back. We're going to hear what trans Net had to say about this and get the perspective on that side. Welcome back today. We are talking fruit and how South Africa's failing port infrastructure is holding back one of the country's biggest export markets. Joining me is Bloomberg's in Toano, Taquana, who's been talking us through this story that she and
our colleague did in Tonto. You were mentioning trans Net and we also want to weave in this factor about South Africa's ports because the World recently came out with a report about just how detrimental these ports have become, just how much they've been decimated in recent years. Can you walk us through some of their findings?
Sure? So, it found that operationally these ports. Three of our ports were named, and that report it ranked four hundred and five ports in the whole world, and Cape Town came last. The port of Mocha in the Eastern Cape came second worst, and Durban came three hundred and ninety eighth. Those are already shocking numbers.
Yeah, and some of these port operators weren't necessarily happy about this report.
No, they weren't. So one of Transit's issues was that the reports itself relied on third party data and that they were not really consulted to give this out of the story on what was happening in transnits situation. I think they were flagging some of the operational issues they
have from legacy issues that the company has faced. We know that Transnates as a company that has suffered under financial mismanagement, corruption, and really its breakdown can be pegged to that and years and years of under investment, which means that it's equipment fails, equipment doesn't get maintained, and over time there's been this investment gap, which means that they have to play catch up.
Now in Tondo, extreme weather has not helped the situation, of course, what's been the impact of that.
So in April, for instance, Trusted said they lost about three hundred and five hours of production at the Capeton port because of adverse wind patterns, and what that means is that the whole port goes into what is called wind bound and there is no production that happens. And the tricky thing is that, for instance, the fruit industry, you've got a very small window of opportunity to get these fruits onto the ships and have them leave. So
timing is a very crucial factor. But in having said that, they did say that there are aware that this is a problem and that their conscious sits still and not do anything. So here's what Oscar Borcart said one of trans executives.
It was a challenging doing it a lot, and I think that's where it really so equipment needs the fruit industry also add to make choices to.
Divert food and tando. You're mentioning investment there when we talk about hopes for future investment into the sector in order to improve a lot of the issues that you've outlined there, What is the likelihood we'll see that anytime soon.
I think that it's really encouraging that the private sector is showing a willingness to participate and help translate out and in a way they're also helping themselves because they do need the logistics sector in the country to really work. And that is a really you know, good indication of where things are going. And the industry is really also
upbeats up. That's the fact that is happening. When we were speaking to Trust executives, they were also saying that there's a whole list of orders, equipment orders that is in the pipeline and that they're starting to receive more and more equipment to help them.
Tondo, thank you so much for your reporting. Really great to get you on the podcast this week.
Thank you.
As Intundo said, fruits are the bright spot in an economy that's stagnated for quite some time. Agriculture is a key part of South African GDP, so perhaps the ushering in of a new government and increase private investment in infrastructure may finally help sweeten the returns for the fruit sector down the road. This program was produced by Adrian Bradley. If you like the podcast, don't forget to comment and subscribe. Wherever you are listening, I'm Jennifer's Abasaja. Thank you so
much for listening. We'll see you next time.