Farm wages: the real costs

FARMS will go bust if the minimum daily wage increases beyond R104 – but even if workers do get a daily wage of R150 they still will not be able to feed their families properly.

These are some of the findings made in a study by the Bureau for Food and Agricultural Policy, released yesterday, a day before farmworkers were set to resume an indefinite strike. Trade unions and AgriSA agreed in December to instruct an independent research body to look at the conditions of farmworkers and the sustainability of increasing the minimum wage.

Lead researcher Ferdi Meyer said their research pointed to serious dangers for agriculture if wages were increased too much, but stressed that poor rural families couldn’t feed themselves on the current wages. “The time of cheap labour has ended, but there are serious choices that need to be made and higher wages is not the only answer.”

The current minimum wage for farmworkers is R69 a day, but research found that farmers pay their workers on average R84 a day. “There is some scope to increase the minimum wage... (but) if average wages increase by more than R20 a day (to about R104 a day) many of the typical farms will be unable to cover their operating expenses and not be able to pay back borrowings,” it found.

Meyer said their research found that if the minimum farm daily wage was increased above R104, the sector would:

● Decrease the demand for unskilled labour by up to 10.5 percent in some provinces.

● Increase unskilled agricultural labour’s income by 18.9percent while skilled agricultural labour’s income would decrease by up to 3.2 percent.

● Would see a reduction in farm produce.

● See a decrease in agricultural exports of up to 2.8 percent, depending on the product.

● Decrease government’s income by 0.3 percent because of loss in income tax revenue.

● Increase poor households’ income by up to 2.6 percent.

Meyer said unskilled seasonal labour would be the biggest losers if the minimum wage was set too high.

“Farmers might start to mechanise farms where they can and the decrease in demand for unskilled agriculture labour could be as high as 28 percent,” he said.

The report also stressed how little farmworkers could afford on their current salaries.

Nutritionists looked at a “typical rural” family in the Western Cape, where both parents work on farms and they have two children under 18 years, and what foodstuffs they could afford. “None of hypothetical typical rural Western Cape wage-earning households... can actually afford an energy adequate and nutritionally balanced daily food intake – not even a household with

two adults earning a wage of R150 per worker a day.” The research also found commercial farmers had shifted to using seasonal labour.

Agriculture’s share of formal sector employment in South Africa has declined from above 15 percent in 2000 to about 5 percent today. At present South African farmers employ 369 610 permanent workers and 311 908 seasonal workers and pay R13.6 billion in salaries every year. If the minimum daily wage is increased to R150 the country’s agriculture wage bill will increase to R20.8bn.

“It is notable to see how permanent workers at R10bn in wages almost earn triple what seasonal workers earn with their R3.7bn, and there is the problem,” he said.

Meyer said the industry needed drastic changes to ensure it was viable in the long run. “An increase in wages is not the only solution and government might look at tax breaks for farmers who keep workers employed.”