SA’s agriculture economic data has been encouraging in 2020. Whether one looks at output volumes, export performance or tractor and combine harvester sales, the picture has been positive. But the jobs data for the third quarter does not paint a uniformly positive picture. The agricultural labour market performance seemingly depends on what region of the country one looks at and the specific type of agriculture that is concentrated in those areas.
For those in field crops and general horticulture, the year has been fairly good, but that is not to suggest that there haven’t been challenges brought by the pandemic. But for the wine industry (and to a certain extent livestock, which is struggling with higher feed prices; but that is a discussion for another day), the good harvest that came in just before lockdown has been overshadowed, primarily because of the ban on sales during various periods of the lockdown.
Broadly, in the third quarter of the year, SA’s primary agricultural employment improved by 1% from the previous quarter to 807,882. This slight quarterly recovery corresponds with the reopening of the economy and sales of certain agricultural commodities during that period. This is important because while the majority of agriculture remained operational since the start of the lockdown period, the sector could not avoid job losses entirely as demand for some products in the sector was disrupted somewhat. When compared to the corresponding period in 2019, employment in this sector was down 8%.
From a regional perspective, the pain points of the Covid-19 regulations are visible, as I’ve previously stated. The Western Cape and Northern Cape, the major producers of wine in SA, saw employment fall 31% and 15% quarter-on-quarter respectively. This corroborates the concerns various wine producers expressed during the lockdown period. When viewed on an annual basis, both provinces' primary agriculture employment fell 37% and 8% respectively. In the case of the Western Cape, agricultural employment was at its lowest levels since the last quarter of 2014, at 136,729.
Other provinces of the country experienced an uptick in employment in the third quarter compared to the previous one, underpinned by increased activity as more sectors of the economy were progressively opening up. Nevertheless, on an annual basis the North West and Free State joined the Western Cape and Northern Cape in shedding jobs.
From a subsector perspective, it is only the forestry industry that recorded an increase in employment in the third quarter compared with the previous year. All other subsectors recorded a decline in employment. Worth noting, however, is that the dynamics at the provincial level differ, as evidenced by the Eastern Cape, Gauteng, Mpumalanga and Limpopo, where primary agricultural employment increased in the third quarter compared with the same period in 2019.
The increased employment in these provinces can be attributed to increased activity in the fields as 2020 was a boom agriculture year in terms of output in almost all subsectors (horticulture, field crops and livestock). The country had its second-largest grains harvest in history. In the case of horticulture, SA has generally had a good fruit harvest in 2020, with the citrus industry recently noting a 13% year-on-year increase in available supplies for export markets in 2020.
There is also a broad recovery in the production of deciduous fruit, with apple and pear production up 5% year on year and 1% year on year respectively in 2020. There is also a general recovery in the livestock industry, although this particular subsector was not as robust as other subsectors, and the higher feed costs presents various challenges.
Had there not been a pandemic, agricultural employment would have increased notably in 2020 on the back of a large harvest. But the unavoidable health protocols that were put in place led to a reduced workforce to comply with social distancing. Disappointingly, the ban on the sale of wine appears to have had a major effect on employment in the Western Cape and Northern Cape.
Looking ahead, the agricultural sector is poised for another good year on the back of an expected La Niña. This means there will be increased activity in the sector, which would sustain employment at least at levels above 750,000 in our view. I continue to worry about the financial conditions of the wine industry as the effect of the lockdown regulations will be long lasting. This will in turn have implications for primary agriculture employment in the Western Cape and Northern Cape.
• Sihlobo is head of economic and agribusiness research at the Agricultural Business Chamber.
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