Agriculture and agro-processing have been identified as sectors that can spur growth and job creation. How are they doing?
With favourable macroeconomic conditions and targeted government support for exports and foreign direct investment, the agro-food industry has reported increased growth and rates of profit.
But this has not translated into a substantial number of decent jobs and access to affordable food.
According to Department of Trade and Industry information, there have been substantial job losses in the food and beverage manufacturing industry. Formal food manufacturing employment fell from more than 200 000 in 1993 to about 150 000 in the first quarter of 2002. Formal beverage manufacturing employment fell from 40 000 to just more than 25 000 in the same period.
The most common causes for this sharp decline include increased imports and dumping, mergers and acquisitions, concentration of ownership, inappropriate technologies, inadequate skills development and subcontracting.
Employment in commercial farming fell massively from more than a million employees in the early 1990s to about 811 000 in September last year. Reasons include changes in land-use and ownership patterns associated with deregulation and import competition, new technology and machinery, and a cost-price squeeze associated with rapidly rising costs of fertilisers and pesticides.
At the same time as these sharp drops in employment in the food industry, the percentage of income spent on food by the working poor more generally has increased dramatically.
Between 1995 and 2000 the poorest income group increased expenditure on food from 44% to 51% of total income. Rapid food price increases since 2000 have taken basic foods and other basic goods and services well beyond the point where the working poor and destitute can afford them.
As the Congress of South African Trade Unions and its food and farming unions see it, the cornerstones of an alternative growth path for the food industry are threefold. First, the state, business, labour and community need to work together to expand production of affordable, quality basic foods for South Africa’s people, millions of whom regularly suffer from hunger.
Second, in light of highly unstable international markets, food security requires a higher degree of food self-sufficiency in our region.
Third, agriculture and food processing, which are relatively labour-intensive, are important for large-scale job creation.
Bringing this alternative growth path to life requires a sector job summit for the food industry. On its agenda should be comprehensive state measures to improve household food security and increase domestic demand, especially through a basic income grant.
The increased food spending that results from a basic income grant and expanded school food scheme should be linked to measures to achieve meaningful skills development for land reform beneficiaries and food processing workers.
Also for discussion should be how the government can stimulate food production in ways that will cut costs to the poor and create jobs by using supply-side measures.
The Sectoral Education and Training Authorities in agriculture and food processing are also ideally placed to facilitate training for land reform beneficiaries and local communities in association with the Land Bank, Agricultural Research Council, Centre for Scientific and Industrial Research and the departments of trade and industry and agriculture and land affairs.
The summit must look at the possibility of enabling legislation to facilitate the formation of consumer and producer cooperatives and the provision of effective support services.
It should also examine ways of discouraging imports without raising prices or reducing quality for the poor. Practically this would involve the development of a code of procurement for retailers and for government institutions, including the defence force and hospitals.
This would ensure that domestic products are favoured over imports. It would also involve strengthening the Buy South African campaign, as well as a more detailed consideration of food trade policy and tariffs to ensure that they provide adequate protection for food security, the development of local production and employment, and scope for anti-dumping measures.
The parties at the sector job summit should also support sectoral bargaining councils as the basis for sectoral approaches and fair labour standards for all food workers.
Eric Watkinson is the food sector job summit researcher at the National Labour and Economic Development Institute