South Africa would certainly see an increased level of mechanisation in the agriculture industry since many sectors might have reached the “tipping point” where labour costs now outweighed the cost of mechanisation, PwC national agribusiness industry leader Frans Weilbach said yesterday.
He said the risk associated with the labour unrest might also accelerate this trend.
Presenting the findings of PwC’s 2012 Agribusinesses Insight survey, he said farmers had been more confident about the sector’s prospects for 2013, however, this might have changed as a result of the 52 percent increase in minimum wages announced this week.
“The new development [the wage increase] could certainly have an influence on the timing of agribusinesses’ focus on growth opportunities elsewhere in Africa.”
He hoped that the impact would not be too great since the opportunity for South Africa to play a pivotal role in the development of agriculture in sub-Saharan Africa was enormous.
He said reactions from various agriculture representative bodies indicated that their members would probably endeavour to comply with legislation and pay the new minimum wage by either digging deep into their pockets or by trying to save on other costs.
Some economists, however, warned that the new minimum wage might be unattainable for farmers in some regions and sectors of agribusiness.
“Unfortunately we might very well see job losses on a large scale in some areas where the minimum wage is simply not affordable.
“It is a pity the new minimum wage is not sector- or region-specific,” he said.
Other concerns by agribusinesses were increasing energy costs, the vulnerable global market environment, the inadequacy of basic infrastructure and the availability of skills.
Other frustrations were that government regulations were becoming the main threat to business growth.
“This concern has increased over the years, which may be an indication that the industry has tended to become more regulated and is finding it increasingly difficult to keep up with the demands of compliance.” – Ann Crotty.