Agri SA wants pay rise curbs

Agricultural industry body Agri SA has warned that an aboveinflation increase in the national minimum wage in a difficult economic climate will threaten the financial viability of many farmers as input costs rise.

Agri SA said further increases should be the Consumer Price Index (about 7%) minus two percentage points. The industry body has warned that the rising cost of labour could lead to farmers speeding up adoption of technology and mechanisation.

This could prove disastrous for the government’s drive to cut the soaring unemployment rate and tackle poverty and inequality. The agricultural sector contributes about 3% to GDP and provides nearly 900,000 jobs.

The department of employment & labour earlier this year published an increase in the national minimum wage to R23.19 an hour, a hike of nearly 7%. This comes as the government battles to reduce poverty and extreme inequality.

According to Bureau for Food and Agricultural Policy (BFAP) figures, the average annual inflation of farm labour was 11.6% since 2012, while the general CPI was about 5%.

“Until now, the sector has been able to absorb these increases largely due to the boom experienced by labourintensive horticultural industries in the prepandemic years. But these industries now face significant pressures too, with the BFAP projecting price decreases over the next decade,” Agri SA’s Johan Wege said in a statement on Tuesday.

The trend of above-inflation pay rises in the national minimum wage will affect the sector in the short and long term, Wege said. In the short term, an aboveinflation rise in the national minimum wage in a difficult economic climate would threaten the financial viability of many agricultural operations.

“Farmers already face rising input costs like fuel and fertiliser, and declining delivery of critical services like transport, logistics and electricity. Farmers in parts of the country are also still recovering financially from torrential rainfall earlier this year and now face another potentially record-breaking locust outbreak. Under these circumstances, farmers cannot withstand an above-inflation increase in the national minimum wage,” Wege said.

In the long term a rapid rise in labour costs not accompanied by a rise in productivity will threaten SA’s global competitiveness, he continued.

“As it stands, many of our local markets are threatened by the dumping of cheap products. At the same time, our exporters face growing global competition from more productive countries with cheaper labour such as Chile and Peru, two rising South American fruit-producing countries, Wege said.

“SA’s ability to compete globally, grow its export market share, and once again increase the agricultural sector’s contribution to GDP will depend in large measure on how well we strike the balance between wages, productivity and the ability to produce enough healthy food for local markets at affordable prices, ” he said.

OUR EXPORTERS FACE GROWING GLOBAL COMPETITION FROM MORE PRODUCTIVE COUNTRIES WITH CHEAPER LABOUR SUCH AS CHILE, PERU