by Wandile Sihlobo | Mar 1, 2023 | Agricultural Labour Market
South Africa’s agricultural sector has had a broadly better-than-expected performance in 2022. The exports reached a record US$12,8 billion, and agricultural machinery sales, such as tractors, were at the highest level in 40 years.
This materialised despite the range of challenges that faced the sector, such as excessive rains at the start of the 2021/22 summer crop season, disease outbreaks in the livestock industry, trade barriers in fruits and wool, and logistical challenges at our ports, particularly in the first half of 2022.
The Quarterly Labour Force Survey data released this week by Statistics South Africa also paints a broadly comforting picture, showing that in the last quarter of 2022, there were about 860 000 people employed in primary agriculture, which is well above the long-term agricultural employment of 780 000.
Admittedly, some of the factors I mentioned did weigh on the sector as employment fell by 1% yearly and roughly the same rate from the third quarter of the year.
Except for summer crops and forestry, the decline in employment was in all subsectors with a significant decline in the livestock sector, which underscores the animal disease challenge we noted above. Furthermore, the higher feed cost was, and remains, an additional challenge for the livestock industry, along with a decline in red meat prices, all of which add pressure on farming businesses.
From a regional perspective, except for the Western Cape, Northern Cape, and Free State, all provinces registered a mild decline in agricultural employment in the last quarter of 2022 compared with the corresponding period in 2021.
While the previous years have delivered solid employment conditions in the sector, the outlook remains uncertain. The farming business is challenged by persistent load-shedding, which has increased input costs as some seek various means of energy generation that require extra capital.
Moreover, the recent increases in minimum wages are a concern, specifically for the fruit industry. The farming input costs, such as fertilisers and agrochemicals, although having moderated somewhat from levels we saw in much of last year, remain fairly higher. All these will be added pressures on the farmers that could weigh on employment conditions.
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by Wandile Sihlobo | Apr 10, 2022 | Agricultural Labour Market
On Tuesday, 29 March 2022, Statistics South Africa reminded us of the excellent agricultural season in 2021 when the primary agriculture gross value added expanded by 8,3% y/y (following a year of solid growth of 13,4% y/y).
The agency released the Quarterly Labour Force Survey data for the last quarter of 2021, which showed a similar positive reading of a 7,1% y/y increase in primary agriculture jobs to 868 000, which is well above the long-term agricultural employment of 780 000.
The increased activity on the farms in the last quarter of the year and generally improved financial conditions following excellent harvests were at the core of these robust employment conditions in the sector.
To appreciate the 2020/21 season’s output, consider the primary grains such as maize and soybeans, which saw production reaching 16,3 and 1,9 million tonnes, respectively. For maize, this is the second-largest harvest in the history of South Africa and a record soybean harvest. Other field crops also generated large yields in 2020/21.
The South African Wine Industry Information and Systems reported the 2021 wine grape crop at 1,5 million tonnes, 9,0% more than the 2020 harvest within the horticulture subsector. Citrus, deciduous fruits and various horticulture products also recorded large yields and a record export volume in the case of citrus.
At the end of 2021, the livestock industry was hit by biosecurity challenges, such as foot-and-mouth disease outbreaks and high feed costs. Still, the livestock subsector held relatively well and benefited from the improvement in the grazing veld. Thus, it is unsurprising that the jobs gains in the last quarter of 2021 were widespread in crops, livestock, forestry and horticulture. The aquaculture subsector saw a mild decline in employment compared with the fourth quarter of 2020.
From a regional perspective, Limpopo (-9% y/y), KwaZulu-Natal (-6% y/y), and Western Cape (-0,1% y/y) saw marginal job losses in the last quarter of 2021. These were overshadowed by gains in employment in other provinces. Hence, the overall primary agriculture employment increased by 7,1% y/y, as stated above.
These are historical reflections; the critical question some may ask is whether the coming quarters will likely maintain these robust farm jobs numbers? This is an important question as South Africa experienced a somewhat challenging start to the 2021/22 production season because of excessive rains.
As a result, I think that 2022 might be a break from the two consecutive years of high performance in the sector and possibly a slight decline in employment, specifically seasonal labour. The rising farming input costs such as fuel, fertilizers and agrochemicals will add pressure on farmers. This will also be in a season where field crop harvests could be lower than the 20220/21 season, albeit above the long-term level.
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by Wandile Sihlobo | Nov 30, 2021 | Agricultural Labour Market
This year, South Africa’s agricultural sector’s exceptional performance, which is reflected in robust production volumes for the 2021 season and export volumes in the first three quarters of this year, is also evident in the jobs data.
The Quarterly Labour Force Survey data released by Statistics South Africa today showed that in the third quarter of 2021, agricultural employment increased by 3% y/y to 829 000. This is well above the long-term agricultural employment of 780 000.
Admittedly, the third quarter of each year is typically not a busy period for agriculture; hence employment is down 4% from the second quarter – a busy harvesting period for field crops, with seasonal employment opportunities.
Four provinces underpinned the improvement in agricultural jobs in the third quarter, namely, the Western Cape (up 44% y/y), Eastern Cape (up 10% y/y), Northern Cape (up 19% y/y), and Free State (up 48% y/y). Meanwhile, the rest of the five provinces registered a decline in employment in the third quarter of 2021 compared with last year’s corresponding period.
The 2020 surveys were done at a period of heightened uncertainty with numerous harsh lockdowns that severely affected the Western and Northern Cape, where the wine industry is amongst the dominant employers. Hence, the employment numbers for these provinces should be read with the recognition that they are from a lower base.
The game industry, forestry, livestock, and fisheries were amongst the subsectors that registered a notable decline in employment compared to the third quarter of 2020.
In sum, South Africa’s agricultural sector is healthy, and its jobs market reflects optimism. The Western and Northern Cape agricultural employment has recovered following a slump in months after the temporary ban on alcohol sales. This speaks to a rebuilding effort that producer organizations have been undertaking over the past few months.
Notably, the employment data will remain of interest following the 16,1% increase in the farm minimum wage to R21,69 per hour with effect on 1 March 2021. At the time of its publication, various commodity groups indicated that the increase in the minimum wage would cause a further squeeze on cash flow and negatively influence hiring decisions.
But, the actual effects of the current minimum wage increase on jobs will only be apparent with a lag. The favourable agricultural conditions, combined with higher commodity prices, have also improved the farmers’ financial conditions and, thus, temporarily eased the pressure of minimum wage increase. We will continue to monitor the data.
Fundamentally, the agricultural economy is on a solid footing for a second consecutive year. In 2020, the sector’s gross value added expanded by 13,4% y/y. This year will likely also be another year of good performance, with the Bureau for Food and Agricultural Policy (BFAP) forecasting a 7,6% y/y growth.
Note: This not was drafted for Agbiz, but I figured it would benefit the readers of this blog.
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by Wandile Sihlobo | Jun 1, 2021 | Agricultural Labour Market
In this blog post, I reflect on South Africa’s agricultural jobs data for the first quarter of 2021, drawing from insights I drafted as part of Agbiz official notes.
South Africa’s agricultural sector is in its second consecutive year of good performance supported by favourable rainfall and expansion in plantings. In 2020, the sector’s gross value added expanded by 13,1% y/y, and this year will likely also be another year of good performance. While we expect better crop harvests than 2020, the expansion could be 5% y/y because last year’s base is already quite strong.
Yet, the agricultural jobs data continue to disappoint. In the first quarter of 2021, South Africa’s agricultural jobs were down by 8% y/y, with 792 000 people employed. This is the lowest level since 2014, which was a drought year. But we are not in a drought season at the moment. The decline in jobs seems to be concentrated within industries affected by various regulations in the lockdown period, such as the horticulture (wine grapes) and game industries.
From a provincial perspective, the job losses were reported in the Western Cape, Northern Cape, Free State, KwaZulu-Natal and North West, with the rest of the provinces registering an uptick from the first quarter of 2020. To underscore our point about the provinces hard hit by the lockdown regulations being the ones that experienced a notable decline in employment, consider the Western Cape, where agricultural jobs fell by 47% in the first quarter of 2021 compared to the corresponding period the previous year. The Western Cape’s agricultural employment is now at its lowest since 2014, at 136 000. We suspect that the tail-end effects of the ban on wine and alcohol sales continue to constrain farmers’ finances. The same is true for the Northern Cape, which experienced job losses, albeit at a relatively lower scale than the Western Cape.
For other provinces that are not in wine production, it is also plausible that social distancing measures that are in place to limit the spread of the pandemic might have contributed to the decline in employment, especially for seasonal workers. We say this because the Free State, North West and KwaZulu-Natal are among provinces with good activity in field crop, horticulture, and livestock subsectors in a year of favourable rains that allowed for expansion in area farmed areas. That said, it is essential to mention that the different sub-sectors of agriculture have varying levels of labour intensity. The horticulture industries tend to be more labour-intensive, while field crops and livestock are relatively more mechanised.
The employment data will be of interest in the coming months following the 16,1% increase in the farm minimum wage to R21,69 per hour with effect on 1 March. Various commodity groups, especially those heavily affected by the lockdown regulations, have indicated that the recent increase in the minimum wage could cause a further squeeze on cash flow and negatively influence hiring decisions. Nevertheless, the actual effects of the current minimum wage increase on jobs will only be apparent with a lag.
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by Wandile Sihlobo | Feb 23, 2021 | Agricultural Labour Market
Although South Africa’s agricultural economy performed robustly in 2020, possibly grew by between 10-13%, according to our and Bureau for Food and Agricultural Policy estimates, employment numbers remain disappointing. The Quarterly Labour Force Survey data show that South Africa’s primary agricultural jobs were down 8% year-on-year in the fourth quarter of 2020, with 810 209 people employed.
Exhibit 1 shows that there was a decline in employment across most provinces except for the Eastern Cape, Gauteng and Mpumalanga, which registered job gains from the last quarter of 2019. The most considerable headcount losses were in the Western Cape, amounting to about 51 000 below 2019. KwaZulu-Natal followed this, with jobs down by 21 000 compared to the last quarter of 2019.
Except for the Western and Northern Cape, we suspect that social distancing measures that were enforced to limit the virus’ spread might have contributed to the decline in employment. Some farmers that would have typically employed seasonal workers around this period of the year were discouraged. We say this because the Free State, North West, KwaZulu-Natal and Limpopo are amongst provinces with a good field crop and horticulture harvest in 2020. In the Western and Northern Cape case, the constrained cash flow following the ban of wine and alcohol sales at various intervals of the lockdown has possibly contributed to the decline in employment. The producers in the provinces expressed a similar view.
Exhibit 1: South Africa’s agriculture employment by province
Source: Stats SA and Agbiz Research
From a subsector perspective, only the forestry and fisheries industries recorded an overall increase in employment in the fourth quarter of 2020, compared with the previous year. All other subsectors recorded a decline in employment. Worth noting, however, is that the dynamics from the provincial level differ, as evidenced by the Eastern Cape, Gauteng and Mpumalanga, where primary agricultural employment increased in the fourth quarter of 2020 compared with the same period 2019.
Notably, the employment data will be of interest in the coming months following the 16,1% increase in the farm minimum wage to R21,69 per hour with effect on 1 March. Various commodity groups, especially those heavily affected by the lockdown regulations, have indicated that the recent increase in the minimum wage could cause a further squeeze on cash flow and negatively influence hiring decisions. Nevertheless, the actual effects of the current minimum wage increase on jobs will be apparent later this year.
From an agricultural conditions perspective, the outlook for 2021 is positive, with prospects of higher yields in horticulture and field crops and good performance in the livestock industry.
This post is part of our Agbiz notes.
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by Wandile Sihlobo | Nov 12, 2020 | Agricultural Labour Market
South Africa’s agriculture economic data has been encouraging this year. Either one looks at output volumes, export performance or tractor & combine harvester sales, the picture has been positive. But the jobs data for the third quarter does not paint such a uniformly positive picture. Seemingly, the agricultural labour market performance depends on what region of the country one looks at and the specific agriculture subsector that is concentrated in those areas.
For those in field crops and general horticulture, the year has been fairly good, not to suggest that there haven’t been challenges brought by the pandemic. But for the wine industry (and to certain extent livestock, which is struggling with higher feed prices; but this is a discussion for another day), the good harvest that came in just before lock-down has been overshadowed, primarily because of the ban of sales during various periods of the lockdown.
Broadly, South Africa’s primary agricultural employment in the third quarter of the year improved by 1% from the previous quarter to 807 882. This slight quarterly recovery corresponds with the reopening of the economy and certain agricultural commodities during that period. This is important because while the majority of agriculture remained operational since the start of the lockdown period, the sector could not entirely avoid job losses as demand for some products in the sector was somewhat disrupted. When compared to the corresponding period in 2019, employment in this sector was down by 8%.
From a regional perspective, the pain points of the COVID-19 regulations are visible, as I’ve previously stated. The Western and Northern Cape provinces, who are the major producers of wine in South Africa, saw employment fall by 31% and 15% quarter-on-quarter, respectively. This corroborates the concerns that various wine producers expressed during the lockdown period. When viewed on an annual basis, the Western and Northern Cape’s primary agriculture employment fell by 37% and 8%, respectively. In the case of the Western Cape, agricultural employment was at the lowest levels since the last quarter of 2014, at 136 729.
Other provinces of the country experienced an uptick in employment in the third quarter compared to the previous, underpinned by increased activity as more sectors of the economy were progressively opening up. Nevertheless, on an annual basis, the North West and Free State joined the Western and Northern Cape on employment reduction.
From a subsector perspective, it is only the forestry industry that recorded an increase in employment in the third quarter of 2020, compared with the previous year. All other subsectors recorded a decline in employment. Worth noting, however, is that the dynamics from provincial level differ, as evidenced by the Eastern Cape, Gauteng, Mpumalanga and Limpopo where primary agricultural employment increased in the third quarter of this year compared with the same period in 2019.
The increased employment in these provinces can be attributed to increased activity in the fields as 2020 was a boom agriculture year in terms of output in almost all subsectors (horticulture, field crops and livestock). The country had its second-largest grains harvest in history. In the case of horticulture, South Africa has generally had a good fruit harvest this year, with the citrus industry recently noting a 13% year-on-year (y/y) increase in available supplies for export markets in 2020. There is also a broad recovery in the production of deciduous fruit with apple and pear production up by 5% y/y and 1% y/y respectively in 2020. There is also a general recovery in the livestock industry although this particular subsector was not as robust as other subsectors, and the higher feed costs present various challenges.
Had there not been a pandemic, agricultural employment would have increased notably in 2020 on the back of a large harvest. But the health protocols such that were put in place, and rightly so, led to the reduced workforce to comply with social distancing. Disappointingly, the ban of the sale of wine appears to have had a major impact on employment, specifically in the provinces of the Western and Northern Cape.
Looking ahead, the agricultural sector is poised for another good year on the back of an expected La Niña. This means that there will be increased activity in the sector, which would sustain employment, at least at levels above 750 000, in our view. I continue to worry about the financial conditions of the wine industry as the impact of the lockdown regulations will be far lasting on the industry. This, in turn, will have implications for primary agriculture employment, specifically in the Western and Northern Cape.
Note: News organisations are welcomed to republish these blog posts in their platforms.
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by Wandile Sihlobo | Apr 14, 2020 | Agricultural Labour Market
I’ve published an essay — Agriculture After the Pandemic — on Project Syndicate, the World’s Opinion Page. You can access it here.
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
by Wandile Sihlobo | Feb 11, 2020 | Agricultural Labour Market
We don’t normally bombard you with emails (or posts, for those reading this online), but since our note this morning previewed South Africa’s primary agricultural jobs situation (see here), we deem it appropriate to provide an update. Data released this morning by Statistics South Africa shows that the country’s agricultural jobs were up 1% (or 5 000) from the third quarter of 2019 and up 4% (or 36 000) from the last quarter of 2018, estimated at 885 000.
The notable jobs gains were in the Western Cape, KwaZulu-Natal, Free State and Limpopo. This was largely in the horticulture and field crops and livestock subsectors.
We believe that the Western Cape, Limpopo and KwaZulu-Natal jobs were mainly in horticulture and field crops subsectors (specifically winter crops), while the livestock subsector job gains might have mainly been in the Free State. The Eastern Cape, Northern Cape, North West, Gauteng and Mpumalanga agricultural sectors registered job losses, but this was offset by improvements in other provinces. Hence, on balance, the country’s agricultural sector registered employment net gains from the previous quarter and the corresponding period in 2018.
We are generally optimistic about the near-term agricultural jobs outlook. The potential improvement in summer crops production, following an 8% expansion in area plantings, coupled with the expected increase in wine grapes production and other fruits could lead to an increase in employment, albeit some of this could be seasonal.
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