It is becoming more expensive for farmers to transport their agricultural goods by the day, with costs driven by the price of fuel and the deterioration of South Africa’s often overburdened roads infrastructure. In this light, agriculture leaders are cautiously optimistic about a new policy direction that could spur a partially privatised renaissance of rail transport in the country.
The department of transport’s White Paper on National Rail Policy, recently published in the Government Gazette, intends to turn the country’s underperforming railway system around by making space for private sector investment.
The long-term policy framework envisions giving private operators concessions to specific rail lines to encourage competition. It also foresees letting private companies provide their own rolling stock as a way to finance the upgrading of the country’s currently neglected rail cars.
Experts say if what the policy recommendation is approved, the agricultural and agro-processing sectors have much to gain from it.
The policy will likely encourage more farmers and exporters to switch from road to rail, as it can be less expensive to transport goods by railway
According to Christo van der Rheede, executive director at Agri SA, the policy could reduce transportation costs to farmers. He said it was also a solution to South Africa’s deteriorating road infrastructure.
“If implemented properly, it can minimise the damage caused by trucks to the roads… We need to have fewer trucks on the roads, because not only does it lead to congestion, but it contributes to increased carbon emissions,” Van der Rheede explained.
He believes that there would also be fewer road accidents and the quality of road maintenance would improve.
“It will enable our exporters, especially commodities such as grain and other non-perishable commodities, to be transported by train in bulk to the closest harbours from where it can be exported overseas,” Van der Rheede said.
Bulk commodities such as grain, maize, wheat, wool and cotton, can all be moved by rail instead of trucks. Van der Rheede also believes that the policy posed an opportunity for South Africa to curb its greenhouse gas emissions.
Dwindling agricultural use of railways
Meanwhile, as it stands, the policy gives specific attention to the exploration of rail technologies which will allow for large-sized goods to be moved and containers to be double-stacked.
According to Transnet Freight Rail (TFR) approximately 30 customers railed agricultural products between 2021 and 2022. Customers ranged from logistics service providers, manufacturing companies and cooperatives.
Over the past ten years, TFR moved only approximately 5 metric tonnes of agricultural products, including timber products per year.
Clement Maphaba, TFR’s manager for corporate affairs, told Food For Mzansi that this number decreased to just under 3 metric tonnes between 2021 and 2022. This was largely due to a decrease in the volumes of maize and timber moved by rail.
“The main reason for the decline in rail transportation of agricultural products is partly due to the change in the manner in which the agricultural sector organises themselves,” Maphaba said.
Previously, farmers would send all their products to central points or silos where the goods could be aggregated and loaded onto trains. Gradually the industry moved away from a centralised model and looked to load their goods as individual producers at their sites, he explained.
“The central points or silos had bespoke rail infrastructure which made it easier for Transnet to collect, unfortunately the new model does not,” Maphaba pointed out.
Reliable electricity supply critical
Annelize Crosby, head of legal intelligence at Agbiz, said while they were still studying the detail of the proposals in the policy, they welcomed the transport department’s intention to support the farming sector.
“Agbiz welcomes the announcement by the minister of transport [Fikile Mbalula] on the White Paper on National Rail Policy, [and] that there is an intention to open up space for private sector investment. Also with regards to the transport of freight, that support to the agricultural and agro-processing sectors will receive maximum traction with the implementation of the policy,” Crosby said.
Van der Rheede said they too welcomed the proposal that public-private partnerships should be established in terms of rail systems. However, he cautioned that this must be an attractive and lucrative proposition.
“You cannot have a situation where people make a huge investment to buy trains or wagons, but they only get a limited period to operate on a specific rival line,” Van der Rheede said.
He also stressed the importance of electricity supply and that all trail tracks, stations, storage facilities should be supplied with electricity.
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