Loss of Capacity and Skills in Cotton Value Chain “Cost” SA R20-billion

Loss of Capacity and Skills in Cotton Value Chain “Cost” SA R20-billion

Despite the solid growth that the South African cotton industry has experienced in the last seven years, the country still lacks the capacity and skills within the value chain to take full advantage of local beneficiation.

This means that most of the land’s lint cotton is exported for processing before the final product is imported again. This translates into an opportunity loss of about R20,4 billion of beneficiation in the local cotton value chain based on the 2018/19 production year’s output of 51 000 tons of lint cotton.

cotton supply chain

84% of cotton lint exported

South Africa’s cotton production has grown by almost 800% since 2013 following the establishment of the South African Sustainable Cotton Cluster (SCC) to build capacity in the Southern African cotton industry value chain. The SCC was funded by an initial grant of R200 million from the Department of Trade and Industry.

And although the local cotton ginners have up to now been able to absorb the surge in cotton production, South Africa does not have the spinning capacity to convert the lint into yarn, meaning that 84% of last year’s lint cotton had to be exported.

According to Thomas Robbertse, chief executive of IQ Logistica (IQL) – the agtech company which developed the cloud-based SCC Operations Visibility Platform that integrates the cotton supply chains – the set-up of a cotton spinner is very capital intensive, costing anything from R1 billion upwards to install.

“Despite the number of ginners declining from 24 in the heyday of local cotton production to the present seven ginners, it is still able to accommodate the cotton that is currently farmed. However, South Africa lacks spinning capacity meaning that most of the lint cotton is exported for processing and manufactured into clothing items, before being imported again.”

Employment opportunities lost

Robbertse says last year’s cotton lint left South Africa’s shores at about R24/kg, whilst the finished product was imported at around R500/kg. “Based on the export of about 42 840-ton cotton lint and the concomitant value loss of R476/kg (R500/kg – R24/kg), the opportunity loss in local beneficiation to the economy comes to roughly R20,4 billion. Not to mention the many potential employment opportunities that have gone wasted. 

But even if we were to build spinning capacity in South Africa, there would still be a huge skills shortage because of the demise of the clothing textile industry over the last 30 years brought on by trade liberalisation and global competition, which unfortunately also led to cheap imports. This all means that were we to establish spinners in South Africa, we would still have to import skills from Asia that could then also train local labour in the trade.”  

But according to Robbertse, it is not all bad news as the export of cotton lint does earn the country important foreign exchange and helps farmers to offset some of their input costs like fertilizer, fuel and equipment that are all dollar-based.

By Dirk De Vynck

Local Technology Can Increase Food Safety Through Traceability

Local Technology Can Increase Food Safety Through Traceability

Increasingly, consumers are concerned about what is in the food they are eating and how ethically it was produced. There is a growing pressure from the man-in-the-street for food producers and retailers to be more transparent with the origins of their products, and this calls for technology that can deliver such a pertinent task.

According to Thomas Robbertse, CEO of traceability experts, IQ Logistica, there has been a gradual power shift from the supply side to the consumer, which has been brought about by consumers becoming more knowledgeable about food products.

“Consumers are anxious about food safety and want to know the truth about a food product they buy – what exactly they are eating, its origin, product attributes, how it was produced, was it produced in a socially equitable manner, its environmental friendliness, etc,” Robbertse said. 

The advent of the Internet and social media has increased the consumer’s knowledge base, with platforms like Facebook and Twitter giving people a voice that can spread news, for instance on contaminated food, like wildfire.

“The tide has turned and there is no going back. The demands of consumers are on the up, whilst compliance regulation is also becoming stricter. Stakeholders in food supply chains are left with little choice, but to ensure that real traceability of their supply chains is implemented.”

Robbertse believes proper traceability is a win-win situation for the supply chain and the consumer. Traceability gives the supply chain increased certainty because of the greater operational visibility that is established. This in turn builds trust with consumers, which should lead to increased preference towards the specific products. 

Earlier this year, Doug McMillon, president and CEO of the international retail conglomerate Wallmart that has the majority shareholding in the local Massmart group with brands like Makro and Game, predicted that customers will demand increased transparency around pricing and the supply chain into the future. He said they will have less time to research the products they buy, but they will care even more about how they are sourced.

“They’ll choose to shop with retailers who provide that transparency so they can feel good about the items they purchase. This will require retailers to work with manufacturers to source items responsibly and sustainably. Retailers who do this and share the information will further earn customers’ trust,” McMillon said.

Hennie Ras, principal specialist of traceability and operations visibility at IQ Logistica, says the IQ Thentic  technologically advanced communication system that they have developed, ensures that traceability and sustainability can be proven within a supply chain.

“IQ Thentic can integrate a supply chain that deals with different commodities – from the raw product in its original state to the finished item on the shelf – that all need to be tracked differently, all using the same system and within the same database,” Ras said.

What makes the IQ Thentic technology remarkable is that it can handle all the transformation and value adding processes that a raw product undergoes in a value chain. In simple terms, it means the final food product on the shelf can be traced back to the farm on which it was produced.

“And when it comes to quality issues, the system can drill down to a specific event to identify the problem or to recall products.”

Traceability is tracked by way of a unique identifier. In IQ Thentic’s case, this is a QR code that identifies each individual item within each product line and also establishes an audit trail within and between the different organisations in the supply chain. When fully implemented throughout the supply chain, the product information is available immediately. The QR code on the final product is also the means by which the consumer can track the evolution of the product from its origin.  “We can do this regardless of the number of participants in the chain because the traceability platform is cloud-based – therefore it covers the value chain as an umbrella and links into each role-player’s own system,” Ras added.

By Dirk De Vynck

Listeriosis Outbreak Puts Spotlight on Food Safety

Listeriosis Outbreak Puts Spotlight on Food Safety

The current spike in the incidences of listeriosis, the disease which is transmitted to people through contaminated food and has already led to the known deaths of more than 80 people, serves as a stark reminder of the importance of having the means to timely identify and act on food safety threats.

“When consumers fall ill because of food contamination, prompt action to identify and isolate the food items and the facilities that processed and supplied the food, is needed to effectively deal with the threat. Such means include regulatory processes and procedures and an early warning system(s) to preferably prevent or minimise the impact of such cases,” says Dr Hennie Ras, Principal Specialist: Traceability & Operations Visibility at traceability experts IQ Logistica.

The Department of Health has established that the current listeriosis outbreak can be traced to a single source of food contamination, i.e. a single widely consumed food product or multiple food products produced at a single facility.

However, of concern is that the health authorities have not yet been able to identify the specific foodstuff or the particular production site where the affected food was produced.

“Until the specific food source and production facility where the manufacturing happened are identified, there is not much that can be done in isolating the spread of the disease,” says Thomas Robbertse, CEO of IQ Logistica.

Ras says isolating and recalling the affected product/s in a speedily and efficient manner will depend much on the level of traceability inherent to the affected product/s.

“To efficiently and optimally track and trace the movement of product in a value chain, a flexible item instance level traceability audit trail is required that provides a real-time overview of item-handling events that specific food items are subjected to through the entire value chain, i.e. from primary production through all intermediate stages of value-add up to consumption.”

Rolf Uys, from food safety training and consulting company Entecom, says during his almost 15 years as a food safety auditor in which he audited well over 1 500 food factories, he learnt a great deal about food safety and best practices, but he also saw the dirty food safety underbelly of the industry.

“The listeriosis outbreak, which according to the World Health Organisation is the largest reported listeriosis outbreak yet, has put the spotlight squarely on the importance of food safety, which in most cases leaves much to be desired.”

He added that although South Africa has stringent health and safety regulations, the authorities lack the resources and infrastructure to implement them properly, which opens the door to abuse and shortcuts especially when there is pressure on the financial performance of a company.

Some of Uys’s worst findings as a food safety auditor include urination inside food factories; fly maggots, mould and fermentation in product zones; insect infestation in flour silos and flour trucks; live rats/mice in production areas, dead rats in equipment and rodent droppings on raw materials; cockroaches crawling over food handling equipment; bypassing critical control points (metal detectors, sieves, pasteurizers) to increase production; and faeces behind an electrical panel.

“There are of course many more to add to the list and it is mostly centred around deep cleaning of equipment and the discipline of personnel. It should also be pointed out that these were not first-time audits of small little backyard operations – most were large, well known food manufacturers, with numerous food safety certificates. Unfortunately, if one knows where to look, the food industry is not a very hygienic place.” The international experience shows that foodborne illnesses are on the increase. In the Unites States, figures from the Centres for Disease Control and Prevention show that annually roughly 1 in 6 people get sick, 128 000 are hospitalised and 3 000 die of foodborne diseases.

By Dirk De Vynck