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Manufacturing Indaba 2018

Mulder warns of job losses in agricultural sector

An exorbitant increase in the minimum wage may hold political advantages for the government in the short-term‚ but will inevitably lead to great job losses and mechanisation of the agricultural sector‚ Deputy Minister of Agriculture‚ Forestry and Fisheries Dr. Pieter Mulder said on Wednesday (21 November).
Responding to the unprotected strike by grape and fruit farm workers in the Western Cape which has fuelled fears of spreading in the rest of the province's wine industry‚ he warned that trade unions were increasingly expecting farmers to prioritise and give attention to social issues, which was the responsibility of government.

Speaking at an Agriculture Day in the Eastern Cape Karoo town of Willowmore‚ he said commercial farmers were business individuals who have to make a profit and not provide welfare for workers.

As a result‚ the current agricultural strikes will have far-reaching consequences and bring about changes in agriculture.

Mulder said farmers across the country were saying to him that "the time has come to restrict their dependence on farm workers as much as possible"‚ which meant that they were considering joining their counterparts in developed countries such as the USA and Australia‚ where fewer farm workers were employed. For most international farmers‚ implements or farming machines were used to develop farms leaving owners to manage their operations with fewer workers.

south Africa has seen the number of farm labourers decrease from 1.1m in 2004 to 624‚000 last year‚ a decrease of 46%. Mulder said that although this was an international trend‚ factors such as land reform‚ government interference on farms and the general insecurity about the future of agriculture has made this figure in South Africa much higher than in other countries.

He said greater mechanisation after the strikes on farms would further speed up job losses in South Africa.

About 12% of commercial farmers have an annual turnover of more than R2m. The turnover of the other 82% is less than R2m annually‚ with 52% having a turnover of less than R300‚000.

With the increasing prices in electricity‚ water and fuel‚ Mulder said farmers cannot afford the sudden increase in labour costs. Their choice would be either bankruptcy or reducing the number of farm workers.

Mulder strongly condemned the violence and intimidation during the farm strikes saying the burning of farms and the destruction of property was not going to benefit anyone involved in the dispute.

"Both the farm owners and farm workers will, in the next year, suffer great financial losses as a result of this‚" he emphasised.

According to Graeme Prevost‚ director at national management consultancy firm PSP Icon the farm workers strikes could result in farmers reviewing their current business models with a view to incorporating a higher degree of automation in their operations in to maintain their cost base.

"Famers are entrepreneurs: they are self-employed and they take on significant risks‚" says Prevost.

He said labour on some farms accounted for 50% of input costs; the remainder was usually fuel‚ power and chemicals.

"So a 30% increase in the cost of labour could increase the total input cost by 15%‚ which in turn could eradicate the gross margin being made by farmers," he said.

Prevost said farmers‚ unions‚ farm workers‚ equipment distributors and government‚ needed to think about the implications of the unrest and considered implementing strategies to address reduce the associated risks.


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