Countries that are located at a considerable distance from the major global markets of Europe, Asia and the America’s, such as South Africa, have little choice but to make exceptional efforts in order to compete in highly globalised systems of world trade. Simply having a comparative advantage, in the production of a particular product, is not enough when that product has to travel for thousands of kilometers to reach its final destination. With this context in mind, after some years of reports on the decline of South Africa’s transport infrastructure, the news that the citrus industry has managed to overcome some of the hurdles faced by exporters is indeed important to reflect on.
South Africa’s challenging infrastructure context
Investment in South Africa’s transport-related infrastructure has been a major theme of Government economic programmes in the past two decades. In the 2000s this resulted in unprecedented levels of public investment in port, road, rail and airport projects. In response to the 2008 global recession, the Government’s 2012 National Infrastructure Plan promised an R827bn injection of funds into the wider infrastructure system via a series of Strategic Infrastructure Projects (SIPs)1.
However, despite these lofty aims, the past decade has not been a particularly good one for the country’s logistics systems. Not only did much of the promised infrastructure not get delivered, but a number of critical projects were severely hampered by poor delivery and problems of corruption. South Africa’s ranking on the World Bank’s Logistics Performance Index dropped from 20th in 2016 to 33rd in 2018, with notable declines in features such as Infrastructure, Logistics competence and Timeliness2.
Alongside this, the World Economic Forum’s Global Competitiveness Report ranked the country a lowly 69th (down from 64th in 2016) for its infrastructure generally, and 45th for transport infrastructure3. The Organisation for Economic Cooperation and Development (OECD) recently noted that South Africa’s “quality of infrastructure has been deteriorating” and highlighted transport infrastructure performance as a key concern4.
Some possible lessons from the citrus industry
South Africa is one of the largest citrus producers globally. In 2018 the country was ranked the second largest global exporter of oranges, the 5th largest exporter of lemons and limes and the second-largest exporter of grapefruit5.
In the last decade, the country has witnessed consistent increases in the volume of exports from a figure of 70 million cartons of citrus in 2007 to a figure of 146 million cartons of fruit exported in the 2020 season6. Exports are projected to continue to grow as new markets emerge around the world with a projected export figure of 200 million cartons targeted for 2030.
The Port of Durban has been the major port of export for South Africa’s citrus for many decades, handling 60% of the exports in 20187. This status had much to do with the fact that a large amount of the growing capacity has historically been located in the eastern parts of the country and because Durban had the most frequent and diverse shipping traffic. However, the ports in Gqeberha (Port Elizabeth) and Cape Town have also been important for the citrus industry. All these ports, and the associated logistics systems interacting with them, have experienced considerable challenges in recent years just as the citrus industry was witnessing escalating global demand.
The citrus industry in South Africa began to raise concerns about the logistics systems some years ago. The industry was particularly concerned about the combination of high port costs and poor efficiencies that were being experienced. This was harmful to the cost competitiveness of South African citrus and resulted in unnecessary product losses. After some years of frustration, the Citrus Growers Association (CGA) began to assert a stronger role in facilitating improved and coordinated action by the array of industry, logistics and government stakeholders. Whilst the cost to the industry actors was significant, they deemed it necessary to avoid a catastrophic loss of confidence in South Africa’s citrus export capabilities. The value of these processes was really witnessed when in 2020, during the middle of the national lockdown in response to Covid-19, the industry saw record export performance.
The kinds of actions by the citrus industry stakeholders point to the importance of a much greater level of integration between producers, logistics industry actors and infrastructure operators. The combined efforts of stakeholders highlighted that state-led efforts to build infrastructure are, by themselves, insufficient and that the management and performance of the integrated logistics system require innovative partnerships to meet cost and quality requirements. Against this backdrop, President Ramaphosa has placed some considerable emphasis on infrastructure renewal, having recently stated that, “We have made improving the efficiency of our ports a priority of Operation Vulindlela, and have focused on rebuilding Transnet”8. Time will tell if these exceptional efforts, achieved for the citrus industry, can be replicated amongst other exporters across the agricultural and manufacturing sectors that are so critical to South Africa’s growth prospects.
1 Figures from https://www.gov.za/issues/national-infrastructure-plan.
2 Figures from https://lpi.worldbank.org/.
4 Organisation for Economic Cooperation and Development (OECD), 2020. OECD Economic Surveys South Africa. OECD: Paris. Accessed from http://www.treasury.gov.za/comm_media/press/2020/20200731%20OECD%20Economic%20Survey%20SA%202020.pdf (pages 5 & 8).
5 Department of Agriculture Forestry and Fisheries 2019: A Profile of the South African Citrus Market Value Chain. Accessed from https://www.dalrrd.gov.za/doaDev/sideMenu/Marketing/Annual%20Publications/Citrus%20Market%20Value%20Chain%20Profile%202019.pdfon 12 June 2020. (Page 54)
6 Department of Agriculture Forestry and Fisheries 2019 (Page 96 – see footnote 5) and Smith, C, 2021. Bumper citrus season: Exported SA cartons would go around the earth if lined up. News24 published on 1 February 2021. Accessed from https://www.news24.com/fin24/companies/agribusiness/bumper-citrus-season-exported-sa-cartons-would-go-around-the-earth-if-lined-up-20210201 on 9 April 2021.
7 Citrus Growers Association, 2019. Key Industry Statistics: 2018 Export Season. Accessed from http://www.citrusresourcewarehouse.org.za/home/document-home/information/cga-key-industry-statistics/6009-cga-key-industry-statistics-2019/file on 16 April 2021 (page 45).
8 President Cyril Ramaphosa quote from Burger, S, 2021. Ramaphosa confirms Durban port turnaround progress, flags infrastructure investment. Engineering News, 19 April 2021. Accessed from https://www.engineeringnews.co.za/article/ramaphosa-confirms-durban-port-turnaround-progress-flags-infrastructure-investment-2021-04-19/rep_id:4136