‘Agri-industry must address escalating costs’

Strategic intervention
is crucial to address the
ever-increasing cost of agri
harvesting, production
and transport in South
Africa, according to
Mitchell Brooke, logistics
development manager at the
Citrus Growers’ Association
of Southern Africa.
Speaking at a joint FTW/
JCCI business breakfast
on Transnet Freight Rail’s
road to rail strategy last
week, Brooke told delegates
that the cost of exporting
fruit from South Africa
was increasing at a radical
rate, driven by the high cost
of transport, the country’s
port costs, international
shipping rates to Europe
and the exchange rate.
“We need to be
competitive in terms of
how we get our fruit into
key markets, like Europe.”
He said
that South
Africa
had to
stimulate
food
production,
decrease
the cost of
food prices,
sustain
its agri
business,
and
maintain
food
security.
South
Africa’s
heavy reliance on diesel,
as well as increasing
bunkering costs and
electricity hikes, meant the
sector would soon become
unsustainable, Brooke
warned.
“The
diesel price
inf luences a
lot of the costs
in the fruit
industry’s
supply chain.
The oil price
is returning
to $100 per
barrel, and if
the exchange
rate returns
to R16 to the
dollar, we can
expect a diesel
price of R18 a
litre,” he said.
Brooke added that
electricity costs were rising,
driving up cold storage
costs. Labour costs were
also having a big impact on
farming and production,
he explained. The exchange
rate which has def lated by
110% since 2010 is also not
helping.
“We have got to
implement ways to sustain
the industry and decrease
costs for the agri-sector.
Harvesting production
logistics costs have
increased so dramatically
that viable returns are
hinged on the weaker
rand and the price of the
goods in the market," he
explained.
Government recently
announced an increase in
the general fuel levy of 30c
a litre, as well as a further
9c a litre, which will be
added to the Road Accident
Fund levy on April 1 this
year.
Eskom has also been
granted a 2.2% electricity
price increase.
INSERT
South Africa’s heavy
reliance on diesel —
along with increasing
bunkering costs and
electricity hikes —
will soon make the
sector unsustainable.
– Mitchell Brooke