Business

Wage hikes will not necessarily fix rural poverty

Lynley Donnelly

A new minimum wage of R105 a day for farm workers may heighten concerns about rural poverty.

De Doorn farmworkers went on strike recently to demand their daily wage increment. (David Harrison)

The cost of South African labour in certain agricultural sectors is on a par with other countries in the world, but this looks set to change with the introduction of a new minimum wage for workers of R105 a day.

In the case of cash crops, or grains such as oats or maize, South Africa pays roughly the same in labour costs as a number of its competitor countries, particularly those in the developing world, said Christo Joubert of the National Agricultural Marketing Council.

When measured in dollars per tonne of grain produced, South African labour costs between $8.14 a tonne and $29.95 a tonne, an average of justover $19 a tonne. This is in line with countries such as Russia and Argentina, Joubert said.

The numbers are dependent on the size of farms relative to the number of workers employed, but it is clear that South Africa is "not the cheapest but not the most expensive either", he said.

The increase in wages by 50%, however, is likely to move the country into a higher wage bracket, which will heighten concerns about rural poverty as farmers may look to mechanise, which will aggravate unemployment in rural areas, Joubert said. A grape harvester costs about R2.4-million and can do the work of 70 people Bearing in mind the average size of a farm and the fact that harvesting does not take place all year round, such a machine could be paid off in 16 months.

The agricultural sector cannot, however, address the issue of rural poverty alone, Joubert said. Farmers also face increases in fuel and electricity costs, which are likely to affect the competitiveness of the agricultural sector.

A recent report by the Bureau for Food and Agricultural Policy, which analysed agricultural wages in South Africa, noted that agriculture is still "one of the most labour-intensive sectors of the South African economy, and is one of the more labour-intensive agricultural sectors globally". It noted that Japan uses 4 500 tractors for every 100km2 of arable land, compared with 270 in the United States and 43 in South Africa.

The bureau found that should wages increase to about R100 a day – one of the report's assessment ­scenarios that was closest to the minimum wage set last week – additional labour expenditure for an average farm in the North West would increase by more than R1-million over five years.

The report found, however, that increased labour expenditure does not necessarily mean farms will mechanise because their financial positions may not allow it. In reality, farmers will not be able to absorb these kinds of increases and will simply have to quit production.

The National Agricultural Marketing Council's most recent input cost monitor was published in September last year. In examining the costs involved in livestock farming, it measured "not directly allocated costs", which are those costs that cannot be allocated to only one specific enterprise.

According to the report, permanent labour made up the largest portion of these costs at 23.1% over a three-year moving average, followed by the cost of fuel, oil and lubricants at 18.8%.

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