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SA is bleeding jobs, but agriculture may just surprise us

Fin 24

Wandile Sihlobo

24 June 2020

One of the key questions that consistently arises amid the Covid-19 pandemic impact on the economy is about the effects on employment.

In agriculture, I think there could be some resilience compared to other sectors of the economy because of the major two reasons.

First, the sector was largely operational even during the strict Level 5 lockdown, except a few subsectors such as the wine industry, tobacco, wool and floriculture, amongst others.

These subsectors subsequently opened when the country’s lockdown moved to Level 4 and 3, except for the tobacco industry whose sales remains prohibited, while harvest and fieldwork are permitted. Second, South Africa expects its second largest grains harvest in 2019/20 season, a harvest process that in fact started recently. Also, there is an expectation of a record citrus harvest, general improvement in output in other fruits following drought years, and also a recovery in wine grapes output.

This means that there will generally be increased activity in the farming sector compared to the previous year. With that said, the social distancing regulations introduced at the end of March 2020 to prevent the spread of the coronavirus could mean that farmers and agribusiness might not increase employment, especially of seasonal labour in the same way they would have in the absence of the pandemic. The impact of these dynamics, however, will only be reflected in the second quarter labour data, as well as the following quarters of the year.

Vibrant activity – until Covid-19

We expect the first quarter employment data, which is due for release by Statistics South Africa on Tuesday, 23 June, to reflect stable jobs levels that are roughly unchanged from the fourth quarter of 2019 employment of 885 000.

There was vibrant activity in the sector until the coronavirus hit South Africa and the regulations to control it were instituted at the end of the first quarter. This means the disruptions in the sector from this pandemic should be minimal be if any on an employment perspective in the first quarter.

Moreover, the horticulture and field crops, which accounted for roughly a third of South Africa’s agriculture in the fourth quarter of 2019 are the ones that are set for a record harvest in some crops and general improvement in output in other crops and products. Hence, we are inclined to believe that the numbers due for release this week should show stable jobs in the agriculture sector.

Better use of land

With South African policymakers currently at a stage of drafting the post-Covid-19 recovery phrase for agriculture and other sectors of the economy, the focus is also on the drive for economic growth and job creation.

Growth and job creation in agriculture hinges on the level of investment in the sector, agricultural productivity, expansion of export markets, promotion of labour-intensive agriculture subsectors, investment in irrigation and an increase in the area farmed where possible.

The potential for the expansion in productive farmland lies in the underutilised land in the former homelands and underperforming land reform farms (I’ve highlighted the process of revitilising these lands here).

By labour-intensive subsectors, I am specifically referring to the horticulture and field crop subsectors. The other subsector – livestock – can also be prioritised, specifically in areas where environmental factors do not permit horticulture and field crops. This could all happen at a time where there is a growing demand for horticultural, and protein-rich diets in the global market which is underpinned by the changing consumer patterns towards high protein and healthier diets.

The provinces containing former homelands that still have tracts of underutilised, arable land that can be prioritised for agricultural expansion are KwaZulu-Natal, the Eastern Cape and Limpopo. These provinces collectively have between 1.6 million to 1.8 million hectares of underutilised land.

The focus for provinces that already have extensive farming could be on increasing productivity on restituted and redistributed farms and ensuring that there are export markets for products being produced.

South Africa has already advanced on this end, as nearly half of the domestic agricultural products, in value terms, are exported. This export drive as part of the post-Covid-19 recovery phase should include a focus on ensuring that ports infrastructure is up to date and efficient – an issue that has proven to be a challenge in the recent past, particularly in 2019, with further glitches during the pandemic. This is an area that the government infrastructure investment drive could also focus on.

In a nutshell, South Africa’s agricultural sector could show some level of resilience from a jobs perspective this year as the expected large output will mean labour will be required in the fields.

Those that typically participate in the sector in the form of seasonal labour will, however, be affected by the social distancing and other health regulations. This is a component of the labour market that could lead to an overall decline in agriculture employment this year compared to last year, albeit the share of the decline could be negligible relative to other sectors of the economy.

Wandile Sihlobo is chief economist of the Agricultural Business Chamber of South Africa (Agbiz) and author of FINDING COMMON GROUND: Land, Equity and Agriculture.