Fresh look at farms au­gurs well for jobs

Sunday Times - - Business Times - Wandile Sihlobo Ti­nashe Ka­puya Land­bouweek­blad/Mar­leen Smith

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

Pic­ture: Gallo Im­ages/

The hor­ti­cul­ture sec­tor in SA has seen an uptick in em­ploy­ment.

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