Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: South Africa is the world's second biggest exporter of citrus fruits,
Speaker 2: but the industry is under threat from the failing South
Speaker 2: African port and rail company Transnet delays that the ports
Speaker 2: have meant tens of millions of dollars worth of produce
Speaker 2: just rotted on the port side before it could even
Speaker 2: begin its journey to customers all over the world, including
Speaker 2: the Middle East and South Korea. Farmers are having to
Speaker 2: resort to desperate measures, trucking their fruit up to twenty
Speaker 2: hours in a car in the hope of getting it
Speaker 2: onto the ships. If you look at the sign of
Speaker 2: rose at this point, maybe me are a process as
Speaker 2: a new report from the World Bank ranked South African
Speaker 2: ports among the worst in the world. On today's podcast,
Speaker 2: we ask, is South Africa's infrastructure failing the industries crucial
Speaker 2: to its growth plans? I'm Jennifer Abasagia and this is
Speaker 2: the Next Africa Podcast, bringing you one story each week
Speaker 2: from the continent driving the future of global growth with
Speaker 2: the context only Bloomberg can provide. South African fruit, in
Speaker 2: my opinion at least, is some of the tastiest out there,
Speaker 2: and it's no surprise that it's challenging Spain for the
Speaker 2: title of the biggest fruit producer in the world. But
Speaker 2: without the ports and infrastructure, instead of the green shoots
Speaker 2: of growth, we're actually getting some rotten fruit instead. Tonda
Speaker 2: Taquana has been speaking with fruit packers in South Africa
Speaker 2: to get to the bottom of the crisis and she's
Speaker 2: joining me now hi in Tonde. Thanks for joining us, Hi, Jane,
Speaker 2: let me speak. So this is a fascinating story. Let's
Speaker 2: just start with the context and how big the South
Speaker 2: African fruit industry is.
Speaker 1: Give us some background if you can. Well, we are
Speaker 1: a very big citrus industry. We plant on over two
Speaker 1: hundred and fifty acres of land planting oranges, soft citrus, lemons, grapefruits.
Speaker 1: It's not a very huge industry, but it's a very
Speaker 1: big employer. South Africa's agricultural industry as a whole contributes
Speaker 1: a lot to employment in the country. And do you
Speaker 1: know what the stats are for South Africa in terms
Speaker 1: of employments. We have one of the highest unemployment rates
Speaker 1: in the world.
Speaker 2: It's fascinating in that sense that it does employ a
Speaker 2: lot of people, especially considering the other industries that it's
Speaker 2: not employing people. What exactly is the focus then of
Speaker 2: the fruit industry here in South Africa? What are the
Speaker 2: big moneymakers?
Speaker 1: The big moneymakers are oranges as well as soft citrus
Speaker 1: like tangerines, clemantines, valentias. Those are gaining a lot of popularity.
Speaker 1: We're seeing grapefruits as well. A lot of people are
Speaker 1: loving them. And there's also a very niche variety called
Speaker 1: the Jackson's Sweet Sunrise. It's a very sweet, very low
Speaker 1: seeded fruit that is gaining quite a lot of popular.
Speaker 2: And Internso what is making it some of these fruits
Speaker 2: so popular? Is it only in South Africa? Or where
Speaker 2: are we seeing the most exports of some of these
Speaker 2: varietals going to.
Speaker 1: It's not only in South Africa. The soft citrus is
Speaker 1: popular because it's convenient to eat. It's an easy peel orange,
Speaker 1: it's less messy than your normal orange. So it's not
Speaker 1: only in South Africa that it's popular. Generally, South Africa
Speaker 1: sends most of its citrus to the EU, mostly the
Speaker 1: United Kingdom, and it also does have a big market
Speaker 1: in your Asias and it's trying to really open up
Speaker 1: its widen its access to the Americas, but at the moment,
Speaker 1: our biggest customers are in the EU region.
Speaker 2: You and Empoe, I'm one of the co writers here
Speaker 2: in this report, talk about how this really should be
Speaker 2: a positive success story for the country, but it's not necessarily.
Speaker 2: There's another side to it. Can you explain what that is?
Speaker 1: Yeah, if you think about it, the citrus industry to
Speaker 1: be doing far better than it is at the moment.
Speaker 1: It's one industry that has been planning forward, planting more
Speaker 1: trees and over time those trees yielded a lot of fruit,
Speaker 1: but at some point the situation and the country and
Speaker 1: the logistics sectors coming to a crumble has forced it
Speaker 1: to rethink how much they are planting and scale back. Traditionally,
Speaker 1: fruits producers or just exporters generally would use the country's
Speaker 1: rail network to get products outside of South Africa to
Speaker 1: international markets. But the rail sector has really failed in
Speaker 1: the country. When we were speaking to these people, some
Speaker 1: of them would say, on one day, you'd find that
Speaker 1: there are four or five trains that are running on track,
Speaker 1: and nowadays you are lucky to see just one a day.
Speaker 1: And what that does. It means that producers have to
Speaker 1: look for an alternative way to send their fruits outside
Speaker 1: of the country, and the the only feasible thing then
Speaker 1: is to use road, and that is very expensive. It
Speaker 1: pushes up the cost of the logistics side of things,
Speaker 1: and it also means that the produce is on the
Speaker 1: roads for a much longer period than it would be
Speaker 1: if it was traveling by rail, and such as as
Speaker 1: a very sensitive fruit, you know, every minute matters. The
Speaker 1: more it's on the road, it runs the chance of
Speaker 1: not getting to its destination in its optimal states.
Speaker 2: And when you talk about the price difference, what are
Speaker 2: we looking at here? How much more expensive is this
Speaker 2: actually costing.
Speaker 1: We've asked that question a lot of times from different people,
Speaker 1: and it's hard to come up with a figure because
Speaker 1: the rail sector has not been able to service the
Speaker 1: fruit industry at an optimal level for such a long
Speaker 1: time that people don't actually really know how much more
Speaker 1: they are spending. But certainly the costs are arising year
Speaker 1: by year because a lot of people are coming into
Speaker 1: the markets trying to get this stuff to the ports
Speaker 1: using trains, and those prices are continually increasing because these
Speaker 1: demand for it.
Speaker 2: And rising for who particular for.
Speaker 1: The farmers that need to export these goods, but as
Speaker 1: we know, those costs do actually land up on the
Speaker 1: lap of consumers. As much as producers can try and
Speaker 1: be price takers, they can only do that to a certain.
Speaker 2: Extent, especially in a country that's already dealing with high
Speaker 2: inflation and unemployment. When it comes to independent suppliers and farmers.
Speaker 2: You and im Posset spoke with one person who's on
Speaker 2: the border of Mozambique, and he told you specifically about
Speaker 2: some of the problems that he's been enduring. What stood
Speaker 2: out to you about his comments.
Speaker 1: We spoke to Erklut and he is the operations manager
Speaker 1: at a farm called Blade Filets such as farm in
Speaker 1: spread Lepopo, and one of the things that stuck out
Speaker 1: to me when he was talking about his experience was
Speaker 1: that there seems to be operational inefficiencies that transmits. Just
Speaker 1: last year alone, they had to spend four million more,
Speaker 1: four million rants more than they did the last year
Speaker 1: because they had to find alternative plans for how to
Speaker 1: send their fruits and also accounts for the foods that
Speaker 1: had rotten on the way or had reached the destination.
Speaker 1: A poor quality. If we look at the.
Speaker 2: Side of our rows at this point, we are in
Speaker 2: a process.
Speaker 3: I mean, you can't imagine these and them on the floor. Yeah,
Speaker 3: they need to take this road.
Speaker 2: Really just came to now and then they hit balfaws
Speaker 2: and then they go down.
Speaker 1: Yeah together, that's the way they did it.
Speaker 2: Yeah, I mean our about plants don't even take together.
Speaker 1: Another thing that he spoke of was that they employ
Speaker 1: a lot of people and so they don't want to
Speaker 1: find themselves in a situation where they would face the
Speaker 1: risk of letting go of their people.
Speaker 2: For instance, when we talk about the employment figures. This
Speaker 2: is not in like other to the world where these
Speaker 2: massive farms are able to take a lot of these hits. Right.
Speaker 2: A lot of these are independent farmers and this is
Speaker 2: their main source of revenue, so they can't always absorb
Speaker 2: some of those costs that you were just outlining there. Yeah.
Speaker 1: Yeah, I mean we do have a very big commercial
Speaker 1: farming landscape in the country, but we also do have
Speaker 1: a very big small scale farma side, so that is
Speaker 1: also an issue.
Speaker 2: We'll stay with us in Tondo when we come back.
Speaker 2: We're going to hear what trans Net had to say
Speaker 2: about this and get the perspective on that side. Welcome
Speaker 2: back today. We are talking fruit and how South Africa's
Speaker 2: failing port infrastructure is holding back one of the country's
Speaker 2: biggest export markets. Joining me is Bloomberg's in Toano, Taquana,
Speaker 2: who's been talking us through this story that she and
Speaker 2: our colleague did in Tonto. You were mentioning trans Net
Speaker 2: and we also want to weave in this factor about
Speaker 2: South Africa's ports because the World recently came out with
Speaker 2: a report about just how detrimental these ports have become,
Speaker 2: just how much they've been decimated in recent years. Can
Speaker 2: you walk us through some of their findings?
Speaker 1: Sure? So, it found that operationally these ports. Three of
Speaker 1: our ports were named, and that report it ranked four
Speaker 1: hundred and five ports in the whole world, and Cape
Speaker 1: Town came last. The port of Mocha in the Eastern
Speaker 1: Cape came second worst, and Durban came three hundred and
Speaker 1: ninety eighth. Those are already shocking numbers.
Speaker 2: Yeah, and some of these port operators weren't necessarily happy
Speaker 2: about this report.
Speaker 1: No, they weren't. So one of Transit's issues was that
Speaker 1: the reports itself relied on third party data and that
Speaker 1: they were not really consulted to give this out of
Speaker 1: the story on what was happening in transnits situation. I
Speaker 1: think they were flagging some of the operational issues they
Speaker 1: have from legacy issues that the company has faced. We
Speaker 1: know that Transnates as a company that has suffered under
Speaker 1: financial mismanagement, corruption, and really its breakdown can be pegged
Speaker 1: to that and years and years of under investment, which
Speaker 1: means that it's equipment fails, equipment doesn't get maintained, and
Speaker 1: over time there's been this investment gap, which means that
Speaker 1: they have to play catch up.
Speaker 2: Now in Tondo, extreme weather has not helped the situation,
Speaker 2: of course, what's been the impact of that.
Speaker 1: So in April, for instance, Trusted said they lost about
Speaker 1: three hundred and five hours of production at the Capeton
Speaker 1: port because of adverse wind patterns, and what that means
Speaker 1: is that the whole port goes into what is called
Speaker 1: wind bound and there is no production that happens. And
Speaker 1: the tricky thing is that, for instance, the fruit industry,
Speaker 1: you've got a very small window of opportunity to get
Speaker 1: these fruits onto the ships and have them leave. So
Speaker 1: timing is a very crucial factor. But in having said that,
Speaker 1: they did say that there are aware that this is
Speaker 1: a problem and that their conscious sits still and not
Speaker 1: do anything. So here's what Oscar Borcart said one of
Speaker 1: trans executives.
Speaker 3: It was a challenging doing it a lot, and I
Speaker 3: think that's where it really so equipment needs the fruit
Speaker 3: industry also add to make choices to.
Speaker 2: Divert food and tando. You're mentioning investment there when we
Speaker 2: talk about hopes for future investment into the sector in
Speaker 2: order to improve a lot of the issues that you've
Speaker 2: outlined there, What is the likelihood we'll see that anytime soon.
Speaker 1: I think that it's really encouraging that the private sector
Speaker 1: is showing a willingness to participate and help translate out
Speaker 1: and in a way they're also helping themselves because they
Speaker 1: do need the logistics sector in the country to really work.
Speaker 1: And that is a really you know, good indication of
Speaker 1: where things are going. And the industry is really also
Speaker 1: upbeats up. That's the fact that is happening. When we
Speaker 1: were speaking to Trust executives, they were also saying that
Speaker 1: there's a whole list of orders, equipment orders that is
Speaker 1: in the pipeline and that they're starting to receive more
Speaker 1: and more equipment to help them.
Speaker 2: Tondo, thank you so much for your reporting. Really great
Speaker 2: to get you on the podcast this week.
Speaker 1: Thank you.
Speaker 2: As Intundo said, fruits are the bright spot in an
Speaker 2: economy that's stagnated for quite some time. Agriculture is a
Speaker 2: key part of South African GDP, so perhaps the ushering
Speaker 2: in of a new government and increase private investment in
Speaker 2: infrastructure may finally help sweeten the returns for the fruit
Speaker 2: sector down the road. This program was produced by Adrian Bradley.
Speaker 2: If you like the podcast, don't forget to comment and subscribe.
Speaker 2: Wherever you are listening, I'm Jennifer's Abasaja. Thank you so
Speaker 2: much for listening. We'll see you next time.