South Africa’s agricultural exports are booming, yet rural jobs continue to decline. Buhlebemvelo Dube, trade economist at the National Agricultural Marketing Council (NAMC), unpacks why trade growth isn’t translating into employment.
Statistics South Africa recently announced the Quarter Two (Q2) 2025 labour market status, which has revealed an interesting paradox, particularly for the agricultural sector. Despite agricultural trade volumes having expanded, rural employment stagnated or even contracted.
The Quarterly Labour Force Survey (QLFS) shows agricultural employment down by 24 000 jobs in just one quarter, reducing the sector’s share of total employment to 6.6%. This is not an isolated seasonal dip, but part of a longer-term pattern in which agricultural job growth has been structurally weaker than export growth.
Labour Trade Linkage Theory normally suggests that when exports rise, employment should follow, especially in labour-intensive sectors. However, the theory’s assumptions often break down in contexts such as South Africa’s, where high transport costs, skill mismatches, and concentrated value chains sever the link between market access gains and rural job creation.
South Africa’s agricultural trade and employment nexus offers a revealing test of three core trade-labour models. The Heckscher–Ohlin (H–O) framework, grounded in factor endowments, predicts that countries will export goods that intensively use their relatively abundant factors.
In the South African agricultural economy, unskilled and semi-skilled labour is relatively abundant, while capital is relatively scarce.
The Stolper–Samuelson theorem extends this prediction, asserting that trade openness should raise the real returns to the abundant factor and, in this case, labour, thereby stimulating employment in export-oriented agricultural sub-sectors.
Empirically, the country’s agricultural exports have indeed expanded since 2008 from $5.8 billion to $13.7 billion in 2024, with citrus, wine, and maize forming comparative advantage pillars.
Yet, the QLFS Q2 2025 data reveal a paradox whereby agriculture’s employment share remains at only 6–7% and contracted by 24 000 jobs in just three months, despite South Africa being a net agricultural exporter.
This deviation from Stolper–Samuelson predictions suggests that factor abundance is not translating into proportional job creation, likely due to mechanisation, skills mismatches, and the concentration of export gains in capital-intensive or technologically advanced value chains.
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Sector-specific dynamics and spatial inequalities
The Specific Factors Model (Jones, 1971) provides a more granular lens, emphasising that in the short run, sector-specific resources such as crop-specialised land and location-bound labour are immobile across sectors. Under this model, trade shocks disproportionately benefit owners of factors tied to competitive export sectors, while those in lagging or import-competing sub-sectors may be harmed.
The QLFS provincial breakdown underscores this: the Western Cape, with a diversified and export-driven agricultural base, has an unemployment rate of 21.1%, whereas the Eastern Cape and North West, with less integrated export portfolios, exceed 39% unemployment.
Such spatial disparities confirm that agricultural trade benefits are geographically concentrated, while mobility constraints, whether due to poor rural transport, skills gaps, or weak market linkages, limit the spread of these gains.
This also aligns with the trade outlook data showing persistent bottlenecks in logistics and infrastructure, which reinforce the “stickiness” of regional disadvantage.
Figure 1 below shows that although agricultural exports have expanded significantly, agricultural employment has only inched upward, with formal jobs showing modest growth and informal employment largely stagnant.
Rising agricultural exports alongside stagnant employment reflect the Lewis dual-sector dynamic, where surplus rural labour remains underutilised as capital-intensive export growth shifts gains away from job creation.
Without policies to strengthen labour-absorbing value chains, this disconnect risks deepening structural unemployment despite trade expansion.
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Firm-level dynamics and global pressures
The Melitz Model of Heterogeneous Firms (2003) introduces the productivity-employment trade-off inherent in open agricultural markets. The model predicts that trade liberalisation triggers a “selection effect” in which more productive firms survive and expand into export markets, while less productive ones exit.
This process raises sectoral productivity but can cause short-run job losses if the hiring by competitive exporters does not offset the displacement from weaker producers.
The QLFS’s Q2 2025 figures, showing significant job losses in agriculture alongside ongoing growth in high-value exports, fit this dynamic. Moreover, the WTO trade outlook report warns of intensifying global competition, with US mid-2025 tariff hikes and shifting market flows in the EU and Asia potentially accelerating firm-level consolidation.
Smaller farms and agribusinesses, lacking the capital and compliance capacity to compete, risk being crowded out, compounding rural unemployment pressures.
From a policy standpoint, the South African case demonstrates the limitations of applying any single model in isolation.
The H–O/Stolper–Samuelson logic of factor abundance is undermined by technological change and market concentration. The Specific Factors framework captures the entrenched regional and sectoral inequalities visible in the QLFS data, and the Melitz model explains the firm-level selection effects that can cause trade-led growth to bypass widespread employment creation.
Taken together, these models suggest that without complementary domestic policies in skills development, infrastructure, and targeted support for smallholders, agricultural trade liberalisation risks reinforcing structural inequalities rather than delivering broad-based employment gains.
International headwinds and domestic challenges
The international backdrop compounds these challenges. The US’s mid-2025 tariff hikes on select agricultural imports are part of a global protectionist drift. Even without high direct exposure, South Africa is indirectly affected as displaced exporters from other regions intensify competition in our key markets, particularly the EU and Asia.
In high-value segments such as citrus and wine, this has already pressured margins, limiting the capacity of firms to expand seasonal hiring. The geographic inequality in employment outcomes is stark.
The Western Cape, with diversified, export-oriented horticulture, has kept unemployment at 21.1% – far below the national average of 33.2%. In contrast, provinces such as the Eastern Cape and North West, where agricultural production is less diversified and more domestically oriented, endure joblessness rates above 39%.
The QLFS youth unemployment data underscore a missed opportunity whereby young people aged 15–24 face jobless rates over 60%, yet remain underrepresented in the export supply chain workforce.
If South Africa wants agricultural trade to deliver inclusive employment gains, three policy directions are clear:
- Reduce transaction costs: Port delays, rail bottlenecks, and cold chain gaps erode competitiveness and limit labour demand in export crops.
- Reskill rural labour: Export supply chains increasingly require skills in compliance, packaging, and logistics, areas where rural youth and women are under-trained.
- Broaden the export basket and markets: Over-reliance on a few destinations magnifies the employment volatility caused by global tariff shifts.
Conclusion: Aligning trade with employment
The lesson from these employment figures by Stats SA is not that trade fails, but that trade without labour-market alignment is an incomplete growth strategy. Agricultural exports can raise GDP, but unless they also raise the employment rate, they will not improve the livelihoods of the rural poor.
In labour-trade linkage terms, South Africa’s challenge is not only to generate more trade, but to tighten the coupling between exports and jobs. Agricultural export growth must be matched by strategies that turn trade gains into jobs.
This means investing in rural skills training for youth and women, improving infrastructure such as transport and cold storage, expanding access to export finance for smaller producers, and replicating the Western Cape’s diversified, export-driven model in lagging provinces.
In a world of shifting tariffs and fierce competition, trade policy should not just chase market share, but build the capacity to convert export success into broad-based, sustainable employment.
- Buhlebemvelo Dube is an economist for trade research at the National Agricultural Marketing Council (NAMC). The views and opinions expressed in this article are those of the author and do not necessarily reflect the views or positions of Food For Mzansi
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