by Wandile Sihlobo | Feb 11, 2020 | Agricultural Labour Market
We have important data this morning. Statistics South Africa will release its results of the Quarterly Labour Survey for the fourth quarter of 2019. To recap, the third-quarter data showed that South Africa’s primary agricultural employment jumped by 4.5% y/y from the corresponding period last year to 880 000, as illustrated in Exhibit 1 below.
This came as a surprise as the third quarter of each year is usually a quiet period on farms in most parts of the country. These jobs gains were mainly in the livestock, horticulture, field crops, as well as aquaculture subsector.
We think this could have largely been underpinned by the replanting in parts of the horticulture fields following a drought season that caused damage in the fields in provinces such as the Western and Eastern Cape. Other provinces that showed job gains are KwaZulu-Natal, Gauteng and Mpumalanga. Meanwhile, the Northern Cape, Free State, North West and Limpopo saw a reduction in agricultural employment.
Today’s numbers could show mild improvement or remain stable at levels around 880 000 jobs supported by the horticulture industry. While there has been an 8% y/y increase in South Africa’s area planted for summer crops, we doubt that this led to primary agricultural jobs gains in the fourth quarter of 2019 as plantings are typically through highly mechanized tractors that require minimal labour involvement. If anything, the summer crop growing areas could lead to jobs gains in the second quarter of the year which will be harvesting time.
Long-term view
South Africa’s agricultural sector has the potential to contribute to employment creation, as clearly shown in Chapter six of the National Development Plan. But this will require a combination of factors to materialize. These include a boost in agricultural productivity, an improvement in the rural investment climate, expansion of export markets, promotion of labour-intensive agriculture subsectors, investment in irrigation, and expansion of area farmed where possible.
Exhibit 1: South Africa’s primary agriculture employment
Source: Stats SA, Agbiz Research
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by Wandile Sihlobo | Jul 30, 2019 | Agricultural Labour Market
I have been punting that agriculture could help boost employment in South Africa, but the latest jobs data are a reminder that fundamental change is essential.
Today, July 30, we learned that South Africa’s primary agricultural employment fell by 0.2% in the second quarter of 2019 from the corresponding period last year to 842 000, which is in line with the long-term trend. The subsectors that faced a notable reduction were mainly field crops, the game industry and forestry. In the case of field crops, the reduction in employment was unsurprising following a decline in activity in the fields on the back of a poor harvest in the 2018/19 season, all of which is underpinned by unfavourable weather conditions earlier in the season.
But the key question is; will there be a change in the current jobs’ trajectory?
The near-term agricultural jobs trajectory will mainly be influenced by weather conditions, and levels of investment in the agricultural sector. As best as I can tell, there are prospects for good weather conditions in the coming months which could support agricultural activity and subsequent employment. But this might not result in levels of employment which outpace the jobs trends we have witnessed over the past few years.
On an investment front, the outlook hinges on the broader policy direction of the agricultural sector, notably land reform and water rights. There are a number of developments on the land reform front at the moment, but the final policy direction will be an important determinant of the path that South Africa’s agricultural sector takes. The same is true for water policy, and infrastructure thereafter.
Even if we assume positive outcomes from the aforementioned factors in the coming months, the effects on jobs may be marginal. Fundamental change is needed to break away from the current trend, and to reach the agricultural job targets that are envisaged in the National Development Plan. By using the word – fundamental change – I am referring to (1) a need for a boost in agricultural productivity, (2) an improvement in rural investment climate, (3) expansion of export markets, (4) promotion of labour-intensive agriculture, and (5) expansion of area farmed where possible.
At a practical level, if the underutilised land in the former homelands, underperforming land-reform farms, and other parts of the country are not brought into full production with a key focus on labour-intensive subsectors, notable job creation in South Africa’s agriculture sector might not materialise.
Labour-intensive subsectors specifically refer to the horticulture and field crop subsectors which currently employ two-thirds of the primary agriculture labour force of 842 000. The other subsector – livestock – can also be prioritised, specifically in areas where environmental factors do not permit horticulture and field crops. This would all happen at a time where there is a growing demand for horticultural, and protein-rich diets in the global market which is underpinned by the changing consumer patterns towards healthier diets.
Moreover, global beef demand is also gathering steam, particularly driven by China. All this presents an opportunity for South Africa to partially address its twin challenges of rural unemployment and low economic growth.
The provinces containing former homelands that still have tracts of underutilised, arable land that can be prioritised for agricultural expansion are KwaZulu-Natal, the Eastern Cape and Limpopo. These provinces collectively have between 1.6 million to 1.8 million hectares of underutilised land, according to a 2015 study by McKinsey Global Institute.
Also, worth noting is that these particular provinces are characterised by higher levels of unemployment and poverty, which in my view, would make sense for the government to prioritise them for agricultural development in the near term. As noted above, the starting point for this process would be to articulate a clear policy framework on land reform and water rights, which will encourage investment in the agricultural sector. Concerted investments would be required for land preparations and provision of irrigation infrastructure, amongst other aspects, to unlocking growth and employment, and associated positive welfare effects.
The focus for provinces that already have extensive farming could be on ensuring that there are export markets for products being produced. Further, the ports infrastructure for delivering the agricultural produce to export markets should be part of the “fundamental change” to boost South Africa’s agricultural fortunes and jobs. This is specifically the case to, but not limited, the Western Cape. The province is a leading agricultural jobs creator, but for that to be sustained, there must be market access for the produce of the province.
Animal and plant health as key pillars of trade need consistent attention. The effects of animal health were felt earlier this year in the livestock sector, specifically in the wool and beef industries, where a lapse in biosecurity controls severely compromised the industries’ export potential.
Overall, the quest for boosting employment in South Africa’s agricultural sector will need various interventions. Fortunately, many of these are within the policymakers’ reach.
Written for Agbiz and the Daily Maverick.
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
by Wandile Sihlobo | Jul 27, 2019 | Agricultural Production
In her budget vote speech last week, Ms Thoko Didiza, the new minister of agriculture, land reform and rural development, noted that, among other things, she intends to expand SA’s agricultural footprint in export markets. This is a fitting message as the growth of the SA agricultural sector is generally export-driven. The country exports about 49% of its produce in value terms.
The profile of the exportable products is mixed, comprising horticultural products, wine, livestock and field crops. However, when the minister negotiates market access for agricultural products in the coming months and years, there will need to be a targeted approach for products that will have the most impact, not only in value terms, but also in terms of employment numbers.
On this end, the discussions in the recent past have largely been on prioritising horticultural products because they are generally labour intensive. Within the horticultural subsector, the market dynamics of citrus, table grapes, wine grapes, stone fruit and nuts, among others, are well documented, as these products have been the backbone of SA’s agricultural trade success.
The rarely discussed, yet exciting fruit, is the blueberry. The dearth of information about this berry is understandable because the blueberry industry is still at its budding stage in SA. The area planted to blueberry in 2017/2018 is estimated at only 1,600ha, according to data from the US agriculture department. But this has grown tremendously over the past few years. In 2012/2013, SA had only planted about 400ha of blueberries, but the area planted has since expanded four-fold.
Also encouraging to observe is that blueberry production is widely spread across SA, though the Western Cape dominates, producing two-thirds of SA’s blueberries. Trailing the Western Cape is Limpopo, accounting for 15% of production, then North West (10%), Gauteng (8%), Eastern Cape (4%), Free State (2%) and Mpumalanga (1%). This is according to data from the US department of agriculture.
The enormous increase in production over the past four years is export-driven, which is a common theme for many of SA’s agricultural products. SA exports about 70% of its blueberries, according to data from the Western Cape agriculture department. The EU accounts for about 90% of SA’s blueberry exports, and the rest is spread across Africa, Asia and the Middle East.
But the encouraging part of the blueberry expansion story is that it is labour intensive. Its expansion over the past four years has brought jobs, not only at the farm level but also to the downstream value chain. A recent paper by the Western Cape agriculture department’s economists, Louw Pienaar, Mzwanele Lingani and Philip Swart, shows that each hectare of blueberries planted results in the direct employment of 2.64 full-time equivalent workers, on average. This is the highest employment intensity among the major fruits grown in SA and far outpaces grapefruit, flowers, apples and pears, to name a few.
In terms of economic fortune, Pienaar, Lingani and Swart estimate that SA’s blueberry industry has significantly outperformed other fruit industries by growing its gross value of production from an estimated value of R15.8m in 2008 to R1.25bn in 2018.
So when we think of agricultural subsectors that can boost rural economic fortunes and job creation, it is important we not only focus on well-established industries, but also explore the small, yet promising industries such as blueberries and other so-called superfruits (nuts, berries, avocados, et cetera). These superfruits are enjoying strong demand in global markets as consumers opt for healthier diets.
When Didiza thinks of expanding market access for SA products, she should ensure her efforts prioritise the crops and fruits that will have the greatest impact on both economic fortune and labour participation. After all, it is the government’s responsibility to ensure that agriculture is central to boosting rural economic participation and job creation.
This essay was written for and first published on Business Day on 24 July 2019.
Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za
