Fresh look at farms augurs well for jobs
Last week, the National Economic Development & Labour Council (Nedlac) convened a presidential jobs summit focused on combating SA’s stubbornly high unemployment rate.
Nedlac’s social partners, business, labour, the government and the community, agreed to initiatives expected to create 275,000 jobs a year, which would drive unemployment down to 6% by 2030.
To what extent will agriculture contribute to this?
A couple of analysts view this sector as a nonstarter when it comes to job creation. They typically raise the issue of the fourth industrial revolution, and the basic development theory that, as nations develop, the role of agriculture, at least from a jobs perspective, diminishes as people move to manufacturing and services sectors. Though that sentiment has some validity, it’s worth noting that many emerging markets and developed countries still have a huge chunk of people working in agriculture, even though this number may have declined significantly.
For instance, Turkey’s agricultural sector employs more than 5.5-million people, the US’s more than 2.5-million and Mexico’s more than 6.8-million, according to the Federal Reserve Bank of St Louis. In SA, about 843,000 people work in the sector, according to the latest data from Stats SA.
What makes the comparisons by country relatively less straightforward are the variables such as land area planted, the level of mechanisation and agricultural activities. Since these factors vary by country, so does agricultural labour participation.
In SA, a closer look at domestic jobs data shows that employment in agriculture has halved over the past 60 years, from 1.6-million in the 1960s. This is due to several factors, including farm consolidation and the adoption of advanced mechanical and biological technology.
The decline in employment over the past couple of decades has not been evenly spread across all agricultural subsectors. For example, the field crop and horticultural subsectors have seen an uptick in employment due to an expansion in the area planted, which was partly driven by growing global demand for food and fibre.
About two-thirds of SA’s agricultural jobs are in this sub-sector, which tells us that, if we are to see gains in agricultural employment, these sub-sectors will have to be a priority.
Given the potential for horticulture, a number of interventions were suggested at the job summit. The government has committed to providing technical support to producers, including expansion of irrigation infrastructure that would increase the area by 50,155ha. And in pursuit of export-led growth, the government has committed to assisting producers in securing various quality certifications.
Another key initiative is the implementation of a blended finance model involving government funding that leverages private-sector capital to extend soft loans to emerging farmers.
The grant component will be disbursed by the department of agriculture, forestry & fisheries (Daff) and the department of rural development & land reform, and a loan component by the Land Bank.
Daff has reportedly already transferred R100m to the Land Bank, and will transfer a further R500m over the period of the medium-term expenditure framework.
Agri-parks, which were another highlight of the summit, are critical to establishing rural agro-processing hubs that are expected to increase economic activity in marginal areas. In addition, land reform, the creation of industrial clusters, the revival of forestry-dependent livelihoods, and the improvement and expansion of grain and livestock value chains all formed part of the agriculture sector package at the summit.
The focus on strategic interventions in key agricultural sub-sectors, the possibility of soft loans to support emerging farmers — with a specified 18 projects that could serve as an illustration of how effective the blended finance model can be — are an encouraging sign of what could be achieved if social partners manage to translate commitments into action.
The agri-parks model and the investment that could be leveraged by public-sector funding will also need to recognise the need to bring underutilised land in communal areas and land-reform farms into commercial production, expand irrigation systems, and identify and support agricultural expansion in areas that have a high potential for growth and employment. This will require investment and strong and efficient institutions.
Given that some of the jobs summit resolutions focus on communal land, it would be worth revisiting the prospects that KwaZulu-Natal, the Eastern Cape and Limpopo offer in terms of expansion and growth potential for the agricultural sector.
Incidentally, it is these provinces that have the highest unemployment; it is only right there is a concerted effort to unlock growth and employment there.
The jobs summit was a breath of fresh air from an agricultural perspective because it has refocused the debate on farmer support and strategic agrarian interventions, even with the uncertainty regarding land-reform policy.
Sihlobo is head of agribusiness research at the Agricultural Business Chamber of SA (Agbiz). Kapuya, an agribusiness trade specialist and adviser, is a former head of investment and trade research at Agbiz
The horticulture sector in SA has seen an uptick in employment.