1 00:00:02,440 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:09,160 --> 00:00:13,320 Speaker 2: South Africa is the world's second biggest exporter of citrus fruits, 3 00:00:13,360 --> 00:00:16,800 Speaker 2: but the industry is under threat from the failing South 4 00:00:16,840 --> 00:00:20,720 Speaker 2: African port and rail company Transnet delays that the ports 5 00:00:20,760 --> 00:00:23,480 Speaker 2: have meant tens of millions of dollars worth of produce 6 00:00:24,040 --> 00:00:26,520 Speaker 2: just rotted on the port side before it could even 7 00:00:26,560 --> 00:00:29,960 Speaker 2: begin its journey to customers all over the world, including 8 00:00:29,960 --> 00:00:33,400 Speaker 2: the Middle East and South Korea. Farmers are having to 9 00:00:33,440 --> 00:00:36,839 Speaker 2: resort to desperate measures, trucking their fruit up to twenty 10 00:00:36,920 --> 00:00:39,599 Speaker 2: hours in a car in the hope of getting it 11 00:00:39,680 --> 00:00:42,280 Speaker 2: onto the ships. If you look at the sign of 12 00:00:42,479 --> 00:00:46,080 Speaker 2: rose at this point, maybe me are a process as 13 00:00:46,120 --> 00:00:49,000 Speaker 2: a new report from the World Bank ranked South African 14 00:00:49,040 --> 00:00:52,680 Speaker 2: ports among the worst in the world. On today's podcast, 15 00:00:52,800 --> 00:00:57,440 Speaker 2: we ask, is South Africa's infrastructure failing the industries crucial 16 00:00:57,560 --> 00:01:01,280 Speaker 2: to its growth plans? I'm Jennifer Abasagia and this is 17 00:01:01,320 --> 00:01:05,080 Speaker 2: the Next Africa Podcast, bringing you one story each week 18 00:01:05,080 --> 00:01:07,760 Speaker 2: from the continent driving the future of global growth with 19 00:01:07,840 --> 00:01:16,280 Speaker 2: the context only Bloomberg can provide. South African fruit, in 20 00:01:16,360 --> 00:01:19,520 Speaker 2: my opinion at least, is some of the tastiest out there, 21 00:01:19,640 --> 00:01:22,200 Speaker 2: and it's no surprise that it's challenging Spain for the 22 00:01:22,240 --> 00:01:25,720 Speaker 2: title of the biggest fruit producer in the world. But 23 00:01:25,920 --> 00:01:29,480 Speaker 2: without the ports and infrastructure, instead of the green shoots 24 00:01:29,480 --> 00:01:33,400 Speaker 2: of growth, we're actually getting some rotten fruit instead. Tonda 25 00:01:33,480 --> 00:01:36,679 Speaker 2: Taquana has been speaking with fruit packers in South Africa 26 00:01:36,800 --> 00:01:39,319 Speaker 2: to get to the bottom of the crisis and she's 27 00:01:39,400 --> 00:01:42,399 Speaker 2: joining me now hi in Tonde. Thanks for joining us, Hi, Jane, 28 00:01:42,800 --> 00:01:46,840 Speaker 2: let me speak. So this is a fascinating story. Let's 29 00:01:46,880 --> 00:01:50,640 Speaker 2: just start with the context and how big the South 30 00:01:50,680 --> 00:01:52,480 Speaker 2: African fruit industry is. 31 00:01:52,640 --> 00:01:55,720 Speaker 1: Give us some background if you can. Well, we are 32 00:01:55,760 --> 00:01:58,960 Speaker 1: a very big citrus industry. We plant on over two 33 00:01:59,000 --> 00:02:04,800 Speaker 1: hundred and fifty acres of land planting oranges, soft citrus, lemons, grapefruits. 34 00:02:05,360 --> 00:02:08,720 Speaker 1: It's not a very huge industry, but it's a very 35 00:02:08,760 --> 00:02:12,640 Speaker 1: big employer. South Africa's agricultural industry as a whole contributes 36 00:02:12,680 --> 00:02:14,800 Speaker 1: a lot to employment in the country. And do you 37 00:02:14,880 --> 00:02:17,440 Speaker 1: know what the stats are for South Africa in terms 38 00:02:17,440 --> 00:02:20,680 Speaker 1: of employments. We have one of the highest unemployment rates 39 00:02:20,680 --> 00:02:21,239 Speaker 1: in the world. 40 00:02:22,040 --> 00:02:25,080 Speaker 2: It's fascinating in that sense that it does employ a 41 00:02:25,120 --> 00:02:28,600 Speaker 2: lot of people, especially considering the other industries that it's 42 00:02:28,680 --> 00:02:32,040 Speaker 2: not employing people. What exactly is the focus then of 43 00:02:32,600 --> 00:02:34,720 Speaker 2: the fruit industry here in South Africa? What are the 44 00:02:34,760 --> 00:02:35,679 Speaker 2: big moneymakers? 45 00:02:35,960 --> 00:02:39,160 Speaker 1: The big moneymakers are oranges as well as soft citrus 46 00:02:39,760 --> 00:02:44,560 Speaker 1: like tangerines, clemantines, valentias. Those are gaining a lot of popularity. 47 00:02:44,919 --> 00:02:47,919 Speaker 1: We're seeing grapefruits as well. A lot of people are 48 00:02:47,919 --> 00:02:51,680 Speaker 1: loving them. And there's also a very niche variety called 49 00:02:51,800 --> 00:02:56,600 Speaker 1: the Jackson's Sweet Sunrise. It's a very sweet, very low 50 00:02:56,720 --> 00:03:00,640 Speaker 1: seeded fruit that is gaining quite a lot of popular. 51 00:03:01,200 --> 00:03:04,480 Speaker 2: And Internso what is making it some of these fruits 52 00:03:04,520 --> 00:03:07,000 Speaker 2: so popular? Is it only in South Africa? Or where 53 00:03:07,040 --> 00:03:10,200 Speaker 2: are we seeing the most exports of some of these 54 00:03:10,280 --> 00:03:11,240 Speaker 2: varietals going to. 55 00:03:11,840 --> 00:03:14,680 Speaker 1: It's not only in South Africa. The soft citrus is 56 00:03:15,080 --> 00:03:19,679 Speaker 1: popular because it's convenient to eat. It's an easy peel orange, 57 00:03:20,040 --> 00:03:23,000 Speaker 1: it's less messy than your normal orange. So it's not 58 00:03:23,080 --> 00:03:26,760 Speaker 1: only in South Africa that it's popular. Generally, South Africa 59 00:03:26,960 --> 00:03:30,440 Speaker 1: sends most of its citrus to the EU, mostly the 60 00:03:30,560 --> 00:03:33,560 Speaker 1: United Kingdom, and it also does have a big market 61 00:03:33,760 --> 00:03:37,560 Speaker 1: in your Asias and it's trying to really open up 62 00:03:37,920 --> 00:03:41,880 Speaker 1: its widen its access to the Americas, but at the moment, 63 00:03:41,960 --> 00:03:44,880 Speaker 1: our biggest customers are in the EU region. 64 00:03:46,920 --> 00:03:49,360 Speaker 2: You and Empoe, I'm one of the co writers here 65 00:03:49,360 --> 00:03:51,920 Speaker 2: in this report, talk about how this really should be 66 00:03:52,000 --> 00:03:57,000 Speaker 2: a positive success story for the country, but it's not necessarily. 67 00:03:57,000 --> 00:03:59,760 Speaker 2: There's another side to it. Can you explain what that is? 68 00:04:00,120 --> 00:04:02,240 Speaker 1: Yeah, if you think about it, the citrus industry to 69 00:04:02,360 --> 00:04:04,680 Speaker 1: be doing far better than it is at the moment. 70 00:04:04,920 --> 00:04:08,480 Speaker 1: It's one industry that has been planning forward, planting more 71 00:04:08,560 --> 00:04:12,320 Speaker 1: trees and over time those trees yielded a lot of fruit, 72 00:04:12,520 --> 00:04:15,440 Speaker 1: but at some point the situation and the country and 73 00:04:15,480 --> 00:04:19,279 Speaker 1: the logistics sectors coming to a crumble has forced it 74 00:04:19,440 --> 00:04:25,000 Speaker 1: to rethink how much they are planting and scale back. Traditionally, 75 00:04:25,360 --> 00:04:30,200 Speaker 1: fruits producers or just exporters generally would use the country's 76 00:04:30,400 --> 00:04:33,960 Speaker 1: rail network to get products outside of South Africa to 77 00:04:34,000 --> 00:04:38,680 Speaker 1: international markets. But the rail sector has really failed in 78 00:04:38,720 --> 00:04:41,160 Speaker 1: the country. When we were speaking to these people, some 79 00:04:41,200 --> 00:04:44,080 Speaker 1: of them would say, on one day, you'd find that 80 00:04:44,240 --> 00:04:47,080 Speaker 1: there are four or five trains that are running on track, 81 00:04:47,480 --> 00:04:50,440 Speaker 1: and nowadays you are lucky to see just one a day. 82 00:04:50,640 --> 00:04:54,440 Speaker 1: And what that does. It means that producers have to 83 00:04:54,480 --> 00:04:58,279 Speaker 1: look for an alternative way to send their fruits outside 84 00:04:58,320 --> 00:05:01,880 Speaker 1: of the country, and the the only feasible thing then 85 00:05:02,200 --> 00:05:06,120 Speaker 1: is to use road, and that is very expensive. It 86 00:05:06,160 --> 00:05:10,000 Speaker 1: pushes up the cost of the logistics side of things, 87 00:05:10,279 --> 00:05:15,200 Speaker 1: and it also means that the produce is on the 88 00:05:15,279 --> 00:05:17,440 Speaker 1: roads for a much longer period than it would be 89 00:05:17,480 --> 00:05:20,200 Speaker 1: if it was traveling by rail, and such as as 90 00:05:20,240 --> 00:05:24,320 Speaker 1: a very sensitive fruit, you know, every minute matters. The 91 00:05:24,440 --> 00:05:27,200 Speaker 1: more it's on the road, it runs the chance of 92 00:05:27,720 --> 00:05:31,400 Speaker 1: not getting to its destination in its optimal states. 93 00:05:31,440 --> 00:05:34,360 Speaker 2: And when you talk about the price difference, what are 94 00:05:34,400 --> 00:05:36,640 Speaker 2: we looking at here? How much more expensive is this 95 00:05:36,680 --> 00:05:37,520 Speaker 2: actually costing. 96 00:05:38,040 --> 00:05:41,440 Speaker 1: We've asked that question a lot of times from different people, 97 00:05:41,839 --> 00:05:43,960 Speaker 1: and it's hard to come up with a figure because 98 00:05:44,279 --> 00:05:46,479 Speaker 1: the rail sector has not been able to service the 99 00:05:46,520 --> 00:05:49,520 Speaker 1: fruit industry at an optimal level for such a long 100 00:05:49,520 --> 00:05:52,599 Speaker 1: time that people don't actually really know how much more 101 00:05:52,640 --> 00:05:56,159 Speaker 1: they are spending. But certainly the costs are arising year 102 00:05:56,200 --> 00:05:58,680 Speaker 1: by year because a lot of people are coming into 103 00:05:58,720 --> 00:06:01,400 Speaker 1: the markets trying to get this stuff to the ports 104 00:06:01,560 --> 00:06:05,839 Speaker 1: using trains, and those prices are continually increasing because these 105 00:06:05,880 --> 00:06:06,560 Speaker 1: demand for it. 106 00:06:06,880 --> 00:06:09,560 Speaker 2: And rising for who particular for. 107 00:06:09,520 --> 00:06:13,440 Speaker 1: The farmers that need to export these goods, but as 108 00:06:13,440 --> 00:06:17,760 Speaker 1: we know, those costs do actually land up on the 109 00:06:17,880 --> 00:06:21,560 Speaker 1: lap of consumers. As much as producers can try and 110 00:06:21,600 --> 00:06:25,000 Speaker 1: be price takers, they can only do that to a certain. 111 00:06:24,720 --> 00:06:27,680 Speaker 2: Extent, especially in a country that's already dealing with high 112 00:06:27,720 --> 00:06:32,400 Speaker 2: inflation and unemployment. When it comes to independent suppliers and farmers. 113 00:06:32,480 --> 00:06:36,240 Speaker 2: You and im Posset spoke with one person who's on 114 00:06:36,320 --> 00:06:39,000 Speaker 2: the border of Mozambique, and he told you specifically about 115 00:06:39,000 --> 00:06:41,120 Speaker 2: some of the problems that he's been enduring. What stood 116 00:06:41,120 --> 00:06:43,360 Speaker 2: out to you about his comments. 117 00:06:43,839 --> 00:06:47,640 Speaker 1: We spoke to Erklut and he is the operations manager 118 00:06:47,760 --> 00:06:50,599 Speaker 1: at a farm called Blade Filets such as farm in 119 00:06:50,880 --> 00:06:53,640 Speaker 1: spread Lepopo, and one of the things that stuck out 120 00:06:53,680 --> 00:06:56,800 Speaker 1: to me when he was talking about his experience was 121 00:06:56,839 --> 00:07:02,320 Speaker 1: that there seems to be operational inefficiencies that transmits. Just 122 00:07:02,440 --> 00:07:05,760 Speaker 1: last year alone, they had to spend four million more, 123 00:07:05,920 --> 00:07:08,800 Speaker 1: four million rants more than they did the last year 124 00:07:08,920 --> 00:07:12,600 Speaker 1: because they had to find alternative plans for how to 125 00:07:12,640 --> 00:07:16,200 Speaker 1: send their fruits and also accounts for the foods that 126 00:07:16,360 --> 00:07:19,560 Speaker 1: had rotten on the way or had reached the destination. 127 00:07:20,040 --> 00:07:22,120 Speaker 1: A poor quality. If we look at the. 128 00:07:22,280 --> 00:07:24,920 Speaker 2: Side of our rows at this point, we are in 129 00:07:24,960 --> 00:07:25,480 Speaker 2: a process. 130 00:07:25,520 --> 00:07:29,400 Speaker 3: I mean, you can't imagine these and them on the floor. Yeah, 131 00:07:29,800 --> 00:07:31,120 Speaker 3: they need to take this road. 132 00:07:31,640 --> 00:07:33,800 Speaker 2: Really just came to now and then they hit balfaws 133 00:07:33,840 --> 00:07:35,040 Speaker 2: and then they go down. 134 00:07:36,160 --> 00:07:38,000 Speaker 1: Yeah together, that's the way they did it. 135 00:07:38,280 --> 00:07:42,040 Speaker 2: Yeah, I mean our about plants don't even take together. 136 00:07:42,520 --> 00:07:46,000 Speaker 1: Another thing that he spoke of was that they employ 137 00:07:46,040 --> 00:07:48,920 Speaker 1: a lot of people and so they don't want to 138 00:07:48,960 --> 00:07:52,440 Speaker 1: find themselves in a situation where they would face the 139 00:07:52,520 --> 00:07:54,440 Speaker 1: risk of letting go of their people. 140 00:07:54,760 --> 00:07:58,640 Speaker 2: For instance, when we talk about the employment figures. This 141 00:07:58,800 --> 00:08:01,360 Speaker 2: is not in like other to the world where these 142 00:08:01,440 --> 00:08:04,480 Speaker 2: massive farms are able to take a lot of these hits. Right. 143 00:08:04,520 --> 00:08:07,080 Speaker 2: A lot of these are independent farmers and this is 144 00:08:07,120 --> 00:08:09,320 Speaker 2: their main source of revenue, so they can't always absorb 145 00:08:09,400 --> 00:08:11,960 Speaker 2: some of those costs that you were just outlining there. Yeah. 146 00:08:12,040 --> 00:08:14,800 Speaker 1: Yeah, I mean we do have a very big commercial 147 00:08:15,040 --> 00:08:18,400 Speaker 1: farming landscape in the country, but we also do have 148 00:08:18,440 --> 00:08:22,320 Speaker 1: a very big small scale farma side, so that is 149 00:08:22,360 --> 00:08:23,240 Speaker 1: also an issue. 150 00:08:24,120 --> 00:08:26,120 Speaker 2: We'll stay with us in Tondo when we come back. 151 00:08:26,640 --> 00:08:29,560 Speaker 2: We're going to hear what trans Net had to say 152 00:08:29,720 --> 00:08:35,600 Speaker 2: about this and get the perspective on that side. Welcome 153 00:08:35,600 --> 00:08:39,360 Speaker 2: back today. We are talking fruit and how South Africa's 154 00:08:39,480 --> 00:08:43,280 Speaker 2: failing port infrastructure is holding back one of the country's 155 00:08:43,520 --> 00:08:48,040 Speaker 2: biggest export markets. Joining me is Bloomberg's in Toano, Taquana, 156 00:08:48,160 --> 00:08:50,880 Speaker 2: who's been talking us through this story that she and 157 00:08:50,920 --> 00:08:54,040 Speaker 2: our colleague did in Tonto. You were mentioning trans Net 158 00:08:54,360 --> 00:08:57,760 Speaker 2: and we also want to weave in this factor about 159 00:08:58,240 --> 00:09:01,200 Speaker 2: South Africa's ports because the World recently came out with 160 00:09:01,240 --> 00:09:07,000 Speaker 2: a report about just how detrimental these ports have become, 161 00:09:07,520 --> 00:09:09,959 Speaker 2: just how much they've been decimated in recent years. Can 162 00:09:10,000 --> 00:09:12,439 Speaker 2: you walk us through some of their findings? 163 00:09:12,960 --> 00:09:17,440 Speaker 1: Sure? So, it found that operationally these ports. Three of 164 00:09:17,480 --> 00:09:20,400 Speaker 1: our ports were named, and that report it ranked four 165 00:09:20,480 --> 00:09:23,360 Speaker 1: hundred and five ports in the whole world, and Cape 166 00:09:23,360 --> 00:09:26,760 Speaker 1: Town came last. The port of Mocha in the Eastern 167 00:09:26,800 --> 00:09:31,040 Speaker 1: Cape came second worst, and Durban came three hundred and 168 00:09:31,240 --> 00:09:33,760 Speaker 1: ninety eighth. Those are already shocking numbers. 169 00:09:33,960 --> 00:09:36,839 Speaker 2: Yeah, and some of these port operators weren't necessarily happy 170 00:09:36,920 --> 00:09:37,800 Speaker 2: about this report. 171 00:09:38,440 --> 00:09:41,760 Speaker 1: No, they weren't. So one of Transit's issues was that 172 00:09:42,480 --> 00:09:46,840 Speaker 1: the reports itself relied on third party data and that 173 00:09:47,080 --> 00:09:50,120 Speaker 1: they were not really consulted to give this out of 174 00:09:50,120 --> 00:09:55,240 Speaker 1: the story on what was happening in transnits situation. I 175 00:09:55,280 --> 00:09:57,640 Speaker 1: think they were flagging some of the operational issues they 176 00:09:57,679 --> 00:10:01,040 Speaker 1: have from legacy issues that the company has faced. We 177 00:10:01,120 --> 00:10:04,120 Speaker 1: know that Transnates as a company that has suffered under 178 00:10:04,760 --> 00:10:11,000 Speaker 1: financial mismanagement, corruption, and really its breakdown can be pegged 179 00:10:11,040 --> 00:10:14,600 Speaker 1: to that and years and years of under investment, which 180 00:10:14,640 --> 00:10:20,400 Speaker 1: means that it's equipment fails, equipment doesn't get maintained, and 181 00:10:20,480 --> 00:10:23,080 Speaker 1: over time there's been this investment gap, which means that 182 00:10:23,120 --> 00:10:24,320 Speaker 1: they have to play catch up. 183 00:10:24,280 --> 00:10:27,880 Speaker 2: Now in Tondo, extreme weather has not helped the situation, 184 00:10:27,960 --> 00:10:30,080 Speaker 2: of course, what's been the impact of that. 185 00:10:30,640 --> 00:10:34,360 Speaker 1: So in April, for instance, Trusted said they lost about 186 00:10:34,520 --> 00:10:38,640 Speaker 1: three hundred and five hours of production at the Capeton 187 00:10:38,720 --> 00:10:43,040 Speaker 1: port because of adverse wind patterns, and what that means 188 00:10:43,200 --> 00:10:46,240 Speaker 1: is that the whole port goes into what is called 189 00:10:46,320 --> 00:10:49,440 Speaker 1: wind bound and there is no production that happens. And 190 00:10:49,679 --> 00:10:53,000 Speaker 1: the tricky thing is that, for instance, the fruit industry, 191 00:10:53,040 --> 00:10:56,760 Speaker 1: you've got a very small window of opportunity to get 192 00:10:56,880 --> 00:11:00,560 Speaker 1: these fruits onto the ships and have them leave. So 193 00:11:00,720 --> 00:11:04,160 Speaker 1: timing is a very crucial factor. But in having said that, 194 00:11:04,360 --> 00:11:06,040 Speaker 1: they did say that there are aware that this is 195 00:11:06,080 --> 00:11:08,880 Speaker 1: a problem and that their conscious sits still and not 196 00:11:08,960 --> 00:11:12,200 Speaker 1: do anything. So here's what Oscar Borcart said one of 197 00:11:12,240 --> 00:11:13,520 Speaker 1: trans executives. 198 00:11:13,800 --> 00:11:16,400 Speaker 3: It was a challenging doing it a lot, and I 199 00:11:16,440 --> 00:11:21,640 Speaker 3: think that's where it really so equipment needs the fruit 200 00:11:21,720 --> 00:11:24,240 Speaker 3: industry also add to make choices to. 201 00:11:24,400 --> 00:11:28,360 Speaker 2: Divert food and tando. You're mentioning investment there when we 202 00:11:28,600 --> 00:11:33,080 Speaker 2: talk about hopes for future investment into the sector in 203 00:11:33,200 --> 00:11:34,959 Speaker 2: order to improve a lot of the issues that you've 204 00:11:34,960 --> 00:11:38,720 Speaker 2: outlined there, What is the likelihood we'll see that anytime soon. 205 00:11:39,360 --> 00:11:42,360 Speaker 1: I think that it's really encouraging that the private sector 206 00:11:42,679 --> 00:11:46,520 Speaker 1: is showing a willingness to participate and help translate out 207 00:11:46,880 --> 00:11:49,040 Speaker 1: and in a way they're also helping themselves because they 208 00:11:49,040 --> 00:11:52,280 Speaker 1: do need the logistics sector in the country to really work. 209 00:11:52,840 --> 00:11:56,520 Speaker 1: And that is a really you know, good indication of 210 00:11:56,559 --> 00:11:59,440 Speaker 1: where things are going. And the industry is really also 211 00:11:59,520 --> 00:12:02,600 Speaker 1: upbeats up. That's the fact that is happening. When we 212 00:12:02,600 --> 00:12:05,280 Speaker 1: were speaking to Trust executives, they were also saying that 213 00:12:05,320 --> 00:12:08,920 Speaker 1: there's a whole list of orders, equipment orders that is 214 00:12:08,920 --> 00:12:11,839 Speaker 1: in the pipeline and that they're starting to receive more 215 00:12:11,840 --> 00:12:13,800 Speaker 1: and more equipment to help them. 216 00:12:14,040 --> 00:12:17,040 Speaker 2: Tondo, thank you so much for your reporting. Really great 217 00:12:17,040 --> 00:12:18,400 Speaker 2: to get you on the podcast this week. 218 00:12:18,559 --> 00:12:18,920 Speaker 1: Thank you. 219 00:12:20,440 --> 00:12:23,760 Speaker 2: As Intundo said, fruits are the bright spot in an 220 00:12:23,760 --> 00:12:28,120 Speaker 2: economy that's stagnated for quite some time. Agriculture is a 221 00:12:28,200 --> 00:12:32,079 Speaker 2: key part of South African GDP, so perhaps the ushering 222 00:12:32,120 --> 00:12:35,160 Speaker 2: in of a new government and increase private investment in 223 00:12:35,320 --> 00:12:39,319 Speaker 2: infrastructure may finally help sweeten the returns for the fruit 224 00:12:39,400 --> 00:12:45,440 Speaker 2: sector down the road. This program was produced by Adrian Bradley. 225 00:12:45,640 --> 00:12:48,920 Speaker 2: If you like the podcast, don't forget to comment and subscribe. 226 00:12:49,040 --> 00:12:53,120 Speaker 2: Wherever you are listening, I'm Jennifer's Abasaja. Thank you so 227 00:12:53,280 --> 00:12:55,600 Speaker 2: much for listening. We'll see you next time.