Agriculture on a knife-edge

The increase of the national minimum wage, continued loadshedding and a proposed expropriation bill are all placing significant pressure on the agricultural industry.

This has exacerbated issues that local farmers were already facing, including associated flood damage costs and inflationary prices on inputs.

Sugar cane farmers who sell their produce to Tongaat Hulett mills have weathered a worrying few months too, although it has been confirmed that the company is able to facilitate the 2023/24 growing season.

Together it paints an uncertain future for the wider agricultural industry, which employs just over 5% of total working adults in the country.

This number has dropped from a high of 12% in 1991, per data collected by the World Bank in 2019, and is primed to drop further should farmers continue to face rising pressures.

An increase of 9.6% in the hourly national minimum wage, from R23.19 to R25.42, effective from March 1, has seen widespread condemnation from industry stakeholders.

“The increase will have a negative impact on the livelihoods it aims to serve, as the agricultural sector struggles to keep afloat following other recent, key contributing factors,” said Kwanalu (KZN Agricultural Union) CEO, Sandy La Marque.

“Statistics show that specific pressures have, year on year, resulted in a decrease in agricultural employment since 2019 in KZN,” she said.

Echoing her sentiment, agricultural federation Agri SA said the increases would eventually pass onto the consumer.

“As the sector battles to contain the costs associated with loadshedding, crumbling infrastructure and high input costs, this increase will further undermine food security and put much-needed jobs on the line.

“Whereas farmers were previously in a position to absorb these increases thanks to the sustained growth in a number of agricultural industries, that period is now over,” said chairperson of Agri SA’s Centre of Excellence, Johan Wege.

The 9.6% exceeds the national consumer price index (CPI) of 6.9% in 2022, which is reflective of the country as a whole.

“Kwanalu believes there is insufficient evidence to equitably enforce a greater than CPI inflation on rural employment, a 0% base rate should have been the departure point. This is relevant as the rural cost of living is lower than the urban cost of living, so it may well be prudent to give agriculture its own minimum wage determination,” said La Marque.

Per the iLembe Chamber of Commerce business confidence index, which surveys local industry confidence, the sector of agriculture, forestry and hunting dropped by 14 index points to 40.5.

This is partially owing to Tongaat Hulett’s business rescue proceedings, but indicates growing concerns about the future of local agriculture.

Loadshedding is among the leading causes for concern, as it impacts on almost every facet of food production, from irrigation to harvest.

“One of our growers has bananas and is losing much higher percentages of stock than they would have previously,” said Maphumulo’s KwaCele Farming CEO, Khethiwe Ngema.

“The ripening cannot be as well controlled, so by the time delivery comes around, less and less is of market quality. It is so frustrating, because we are doing everything we can to shelter the consumer but all of our processes are affected,” she said.

This aside from potentially broken cold chain procedures which cut into the margins of the retailer and time on one’s shelf once purchased.

Much of the North Coast escapes the worst of loadshedding issues given low irrigation levels on local sugar cane farms, but the South African Canegrowers Association still estimates a loss of R723-million for the national sugar industry in 2023.

Finally, a vague expropriation bill proposal in the National Council of Provinces has stakeholders concerned about land rights, which they believe will minimise further investment in the sector.

“Beyond food security, the Bill will also undermine the very objective it seeks to achieve: the transformation of the agricultural sector. Without constitutionally protected property rights, fewer emerging farmers will be able to access the capital needed to build sustainable farming operations,” said Agri SA risk and disaster manager, Andrea Campher.

It remains a difficult time for the farming sector, one of South Africa’s largest and most crucial employers.

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