Factors such as land reform, government interference on farms and the general insecurity about the future of agriculture, were combining to speed up the decrease in the number of farmworkers, Deputy Minister of Agriculture Pieter Mulder said.
He added that the latest demands for “exorbitant” increases in the minimum wage for farmworkers was also likely to speed up the process of mechanisation in the agriculture sector, which would aggravate the trend in job losses.
Graeme Provost, the director at management consultancy PSP Icon, said that the farmworkers’ strike could result in farmers reviewing their current business models and increasing the level of automation in order to maintain their cost base. He said that typically labour accounts for 50 percent of input costs, the remainder is fuel, power and chemicals.
“So a 30 percent increase in the cost of labour could increase the total input cost by 15 percent, which in turn could eradicate the gross margin. As a result one can expect farmers’ natural response will be to increase automation where possible, which unfortunately would eliminate jobs, especially season work,” said Provost.
He added that when a fundamental shift occurred to one of the factors of production, then the business model came up for review. – Ann Crotty