It costs more to transport maize from the northwestern Free State to Cape Town than to ship it from America to Durban. This was one of the examples Grain SA chairperson Neels Ferreira uses to highlight the reality of the transport and import issues local farmers are facing. A few years ago, about 80% of all grain was transported by railway, but now a mere 20% is transported by rail and the rest by truck. However, because agricultural products do not have a high value, they are more cost-effective to transport by rail. “It now costs more to move grain than it does to produce it!” says Ferreira, who warns that the country’s capacity to move commodities by rail is deteriorating. The lack of government protection against foreign imports is another major concern for Ferreira. “Due to imports, it is no longer profitable to produce certain grains in South Africa,“ he explains. In combination, problems with these two factors, infrastructure and imports, could be fatal, Ferreira warns. If too much food must be imported because of shortages created by the unprofitability of farming numerous agricultural products – including grain – the country could face a crisis. Billy Morokolo, director of marketing at the Department of Agriculture, agrees that the state of South Africa’s infrastructure needs serious attention. “We have the infrastructure, but it is under-utilised.”
Problems identified In February 2006 a document entitled Assessment of the status of agro-logistics strategy in South Africa was compiled for the Department of Agriculture by the University of Stellenbosch, the Council for Scientific and Industrial Research and Agri-Africa Consultants. The study looked at the investment requirements of agriculture in terms of freight logistics. The report stresses that the problems in the national agro-logistics system should be resolved by long-term investment in new infrastructure. It also states that bottleneck areas could be improved by short-term investment in efficiency improvement. Agricultural freight is carried on the two densest general freight corridors, namely Gauteng to Durban and Gauteng to Cape Town. The report also highlights concerns such as fragmented service provision, where some industries are subjected to service-provider monopolies, and the industry’s limited capacity to address logistics inefficiencies. Although there has been significant investment in emerging farmer development, there is little evidence of successful economically sustainable intervention, according to the report. It concludes that all players in agriculture are affected by the limitations of the current logistics system.
Stakeholders will discuss ways to resolve the problems raised in the document at a meeting to be held on 29 May. Morokolo says that a few solutions have been found for these problems. He feels that one of the biggest concerns is trucks leaving for a destination fully loaded and returning empty, which cuts back on productivity. He has already devised a solution for this problem – synchronising loads. Government has developed a model that allows transport operators to communicate their transport needs and share their services. Morokolo wants this programme to be run by a private company and not government. Once the programme is in place, all parties will save on petrol, road and vehicle maintenance.
Rural farms important
The Department of Agriculture is also in discussions with Spoornet to revive underutilised railway lines. Although mining companies might be more profitable customers, Morokolo is trying to show Spoornet the strategic importance of agriculture in rural areas. This is backed by the assessment report: “The importance of the (agricultural) industry exceeds its 6% contribution to the GDP, with indirect impacts that affect approximately 25% of the economy through input industries, downstream processing, food security, employment creation and other backward and forward supply chain linkages.” Although he does not say South Africa could face starvation in a few years’ time, Morokolo shares Ferreira’s fear that a widespread drought could be devastating if South Africa does not invest properly in its infrastructure. The agricultural sector is growing rapidly, while infrastructure is deteriorating through lack of investment. Morokolo sees this as a matter of urgency.
Ferdi Meyer of the Bureau for Food and Agricultural Policy doubts whether South Africa would face starvation within the next three years. “Currently [South Africa] produces 10 million tons of white and yellow maize per year, while we only use 8,5 million.” Demand for white maize has not varied much recently, although the demand for yellow maize has gone up.
However, Meyer says government needs to rethink the way farmers are treated. If South Africa had an import tariff of between 10% and 20%, products might cost a little more, but South Africans would still have work and be able to pay for their food.
Tobias Doyer, CEO of the Agricultural Business Chamber, says government needs to fully support farmers as the latter are under pressure to produce. “It’s easy and cheap to import products, and therefore we are losing farmers and capacity.”
The full report mentioned in this article is available on the Agricultural Marketing Information System’s website: www.agis.agric.za/mis. |fw
