The agriculture sector will keep growing, predicts economist Thabile Nkunjana, of the National Agricultural Marketing Council. However this growth might not result in the job creation that is so urgently needed in South Africa.
The agricultural sector’s GDP during the 2021 first quarter has alarmingly declined in export terms for industries like citrus and grains, despite the sectors’ success in 2020. Analysts have linked the GDP decline to Covid-19 and some are of the opinion that this is just a temporary glitch to be corrected shortly.
Should that be the case, it will provide some relief given the sector’s importance to the country’s employment levels. Nonetheless, as things stand the agricultural sector is shedding jobs at an alarming pace.
My considered view is that the industry is very likely to grow, given the larger output estimations from various sub-sectors. However, this growth might be in value terms and only marginal when it comes to employment in the near-term. This is for a couple of reasons.
Some reasons for the decrease in the sector’s GDP
Following a successful year in 2020, projections are pointing to another great year for some industries. However, this doesn’t necessary equate to growing employment figures, rather more output and relatively higher incomes for producers.
Moreover, observations from the ground are that, following lockdown regulations, some wine farmers are diversifying their production and are slowly adding citrus, stone fruit and flowers to their operation to spread risk and increase profit all year round. The ban in alcohol sales during lockdown had accelerated this approach.
The cotton industry, which is another noticeable job creator, especially from the point of view of emerging farmers’ primary production, has also declined by at least 40% this season due to farmers switching to field crops. Also, the pandemic has hypothetically accelerated the country’s agricultural sector mechanisation, especially commercial operations. These developments have potential consequences for employment across the sector in the upcoming months.
A closer look at the data shows that the decline is prevalent from provinces where the agricultural industry is more inclined towards horticulture (such as the wine grape in Western Cape and Northern Cape) and tourism (in provinces like North West which is linked to the game industry).
During the first quarter of 2021, the Western Cape’s agricultural jobs fell by 23.8% when compared to the fourth quarter of 2020.
|
|
Compared to the first quarter of 2020, it fell by a staggering 46.8%, the lowest in six years.
The number of people working was reduced considerably to comply with the regulations. This had implications on the sector’s productivity, thus the prolonged financial strains in some sub-sectors. During the fourth quarter of 2020, about 810 000 people were employed in the agricultural sector when compared to the 792 000 employed in the first quarter of 2021.
What is the outlook for employment figures?
The agricultural labour market performance depends on what province across the country one looks at, and the specific agriculture subsector concentration thereof. For example, Free State, North West, and Mpumalanga are among provinces where field crops dominate while Western Cape and parts of Northern Cape are more dependent on the wine grape industry.
Employment potential differs noticeable between industries, especially in primary production. Western Cape for example is by margins the biggest producer of winter crops such as wheat, barley, oats and canola, but its employment tend to depend on labour intensive industries such as the wine grape and berries industries, as observed in the past due to employment potential differences. In the near-to-medium term, Covid-19 and its effects are likely to influence employment figures in the agricultural industry and the changing coping strategies are to play a noticeable role.
As things stand it’s not looking good, especially if one takes into account the issue of the country’s overall economic performance.
Also, the grain industry is likely to not perform well in earnings when compared to last season, given the Sub-Saharan African region grain prospects this season. This year’s 2.7 million tonnes of maize projections for exports might not make much difference.
Other industries such as tobacco and game were amongst those affected the most by the pandemic and are important employers. Though restrictions have been relaxed, the black market that has developed during the lockdown has opened new channels for illicit tobacco trading, and as things stand it looks like the state is struggling to control it. This has implications for the industry and employment.
Also, the issue of the recent minimum wage increase might have a counter effect, at least in the short-term, in industries that do not generate reasonable income from exports earnings.
ALSO READ: Mzansi farmers need to diversify to prosper, advises economist
|
|