By Lebogang Mashala
The increase in unemployment, as reported in the latest Statistics SA Quarterly Labour Force Survey, comes as no surprise to the agricultural industry. It follows low economic growth and the effects of the El Niño-induced midsummer drought.
According to Cobus de Bruyn, head of client value propositions for agriculture at Nedbank, while the energy situation has improved, the same cannot be said for the economy or employment.
De Bruyn said there will be a significant lag effect after the end of load-shedding. “Load-shedding resulted in low economic growth, and alternative energy solutions increased operating expenses while solving for energy,” he said.
When conditions improve, a lag effect is a reality, and it takes time for businesses to recover before they can grow. “So, while Eskom can now provide sufficient power, the increase in electricity costs is harming many businesses, and one of the solutions is, unfortunately, to lay off people.”
In terms of the impact of unemployment on the agriculture sector, De Bruyn said fewer people employed means fewer people can afford to buy food. “The increase in unemployment impacts the agricultural industry as fewer people have purchasing power, which means demand for food decreases.
“In addition, the drought at the beginning of the year and the recent extreme cold have severely impacted agriculture, and the high energy costs linked to these conditions are impacting the profitability of agriculture.”
Wandile Sihlobo, chief economist at the Agricultural Business Chamber (Agbiz), said the effects of the El Niño-induced midsummer drought are starting to show in agricultural jobs data. This week’s StatsSA report showed that employment in primary agriculture was down 5% quarter-on-quarter to 896 000 in the second quarter of 2024.
“On an annual basis, the performance is also weak, although up 0,2% from the second quarter of 2023. Still, the primary agricultural employment of 896 000 people remains well above the long-term jobs of 799 0000 and generally reflects the harsh summer season we are leaving behind,” said Sihlobo.
Subsectors showing a decline in employment included field crops, livestock and forestry. “The job performance in these subsectors is unsurprising as the midsummer drought has notably impacted them, specifically field crops. Moreover, the livestock industry faces relatively higher feed costs and lingering animal diseases, which all explain these subdued job data in the subsector,” said Sihlobo.
De Bruyn said while it’s disappointing that 45 000 jobs were lost in the agricultural sector (+21 000 in Q1), it was important to note that the sector is highly concentrated with seasonal labour and unskilled labour, which explains why employment might vary from quarter to quarter.
“We also can’t ignore the skills shortage in agriculture, which can be seen as multi-dimensional given the rapid changes in technology and an ageing workforce, resulting in a lack of technical skills in advanced farming techniques and agronomic practices,” he said. “We also see the younger generation showing less interest in agriculture from a career perspective.”
However, De Bruyn said a trend cannot be identified based on relatively short-term variations; longer-term employment statistics in the sector should be considered.
“Also, the industry needs to focus on making agriculture more desirable from an employment point of view and concentrate on training and upskilling, especially given technological changes such as precision farming and biotechnology,” he said.
Sihlobo said the agricultural sector remains crucial for employment creation in rural communities. However, he said the sector must be on a growth path to sustain and create new job opportunities. “In the near term, a range of constraining factors for businesses require policymakers’ attention for the sector to grow,” said Sihlobo.
“These include continuing the positive momentum in resolving the port inefficiencies. The sector also struggles with poor rail and road infrastructure and worsening municipal service delivery.”
According to Sihlobo, this must be an area of focus for the government of national unity. He said improvement in this area would add much-needed positive momentum in agriculture. “Rising incidents of crime, lingering animal disease challenges and increased geopolitical uncertainty remain top-of-mind challenges for agribusinesses,” said Sihlobo.
“The South African government and the private sector should work collectively to address these growth-constraining factors, particularly those in the domestic policymakers’ reach, to support long-term agricultural sector prosperity and job creation.”
