The threat of deteriorating municipal service delivery, corruption in public offices and the failures in the network industries - such as roads, rail, water, electricity and port - in the Eastern Cape (EC) was leading to increasing costs of doing business in the province, Agricultural Business Chamber (Agbiz) chief economist Wandile Sihlobo said yesterday.
This as Hume International yesterday called on the Department of Agriculture, Land Reform and Rural Development (Dalrrd) to appoint more state veterinary inspectors in Gqeberha or grant businesses’ request for a special concession.
Agbiz spent time with agribusiness and farmers in the EC last week. The province accounts for about 6% of the sector's annual gross value added, roughly the same as Limpopo, North West and Gauteng.
Sihlobo said there were also regulatory constraints, such as the dysfunctional State Veterinary Service and the need to modernise Act 36 (Act 36 of 1947) for Fertilisers, Farm Feeds, Agricultural Remedies and Stock Remedies Act.
“We lag behind our competitors due to the delays and large backlogs in the Registrar's office, resulting in crucial productivity-enhancing inputs not being released to the agricultural industry. The failures in national vaccine production also remain an issue, and the livestock industry is again at risk as the rainy season starts,” he said.
Sihlobo said EC agribusinesses highlighted the need for South Africa to expand export markets to accommodate the growing fruit and livestock output.
Moreover, EC farmers said there needed to be an improvement of relations between industry and shipping companies so that the Eastern Cape ports could also receive prominence in services.
“There have been occasions where the province's ports have struggled to get shipping lines essential for the movement of agricultural products to export markets,” they said.
Red tape
Fred Hume, the managing director of Hume International, warned in a statement yesterday that administrative restrictions on the number of shipping containers that food distributors could import or export were driving up prices, causing supply chain blockages, and strangling trade and economic development in the EC.
Despite calling for a concession since May, the company’s pleas had fallen on deaf ears.
He noted that unlike businesses in other regions, such as Durban or Cape Town, companies that dealt with frozen meat and dairy products in Gqeberha were limited to a set number of imports and exports per day.
“Rules unique to Gqeberha mean that the state veterinary inspector must be present when unpacking or packing containers with animal-based products. But each company is only allocated one visitation per day, which means that the number of containers that meat distributors in the area can import or export is limited to their number of loading bays – in our case, seven,” he said.
“By contrast, Durban and Cape Town do not require state inspectors to be present at the time of unpacking, and businesses can perform multiple unpacks on each loading bay every day.”
Hume said investment was needed to expand cold storage facilities and building new loading bays in the area, but this required Dalrrd approval first to secure the necessary inspection services. “And the department seems reluctant to grant any businesses this approval, as, despite their claims to the contrary, they only seem to have sufficient capacity for current needs – not for any business growth or expansion,” he said.
For example, the Hume International had planned to invest in expanding its cold storage facilities in 2021 and had even purchased the necessary land but shelved the project when it became clear that the company would not be able to obtain additional inspection services.
In addition to curtailing investments, the company said the result of local trade restrictions was that despite high global oil prices, many food distributors were being forced to offload meat products in Durban and send these products via road to Gqeberha at considerable expense to keep production lines running smoothly, driving up prices.
Meat exporters in East London sent their products to Durban for shipping rather than the nearby Port of Coega or Port Elizabeth harbours–even as Durban experienced additional backlogs in the wake of the recent Transnet strike.
“The solution is simple – the department either needs to appoint more state veterinary inspectors to Gqeberha or, if the issue is financial constraints, then grant a concession to businesses in the area,” Hume said.
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