Mechanisation ‘a slow process’

A grape harvester drops freshly harvested Shiraz grapes into a bin at the back of a tractor at Foster's Group Ltd.'s Seppelt vineyard in Great Western, Australia, on Friday, April 8, 2011. Foster's Group, Australia's biggest brewer, will spin off the world's second-largest wine business as it focuses on reviving beer earnings. The spinoff to new Treasury Wine Estates is likely to be completed in May. Photographer: Carla Gottgens/Bloomberg

A grape harvester drops freshly harvested Shiraz grapes into a bin at the back of a tractor at Foster's Group Ltd.'s Seppelt vineyard in Great Western, Australia, on Friday, April 8, 2011. Foster's Group, Australia's biggest brewer, will spin off the world's second-largest wine business as it focuses on reviving beer earnings. The spinoff to new Treasury Wine Estates is likely to be completed in May. Photographer: Carla Gottgens/Bloomberg

Published Mar 11, 2013

Share

Wiseman Khuzwayo and Banele Ginindza

The shift from farmers employing large numbers of labourers to mechanisation will be a slow process, with experts saying it will take at least five years as farmers need to implement changes in their practices and methods to accommodate machines.

The sector, which lost 1.5 million jobs over the past 20 years, is likely to accelerate retrenchments as the effects of increased wages kick in.

Agricultural analysts, practitioners and financiers said last week that new technology was more likely in the wine grapes sector rather than table grapes, deciduous fruit, livestock and vegetables sectors, which were more suitable for human intervention.

In the same vein, financiers and machinery agencies confirmed increased enquiries for mechanisation but said the cost of equipment and methodology changes posed a challenge.

“Two to four years ago banks were reluctant to finance equipment but they are more willing now,” said SA Agricultural Machinery Association secretary Jim Rankin.

Risks facing South African farmers include weather-related incidents, rising input costs, stringent labour laws, employment equity legislation, mechanisation and violent farm attacks.

Gert Henning, the managing director of agricultural insurance underwriter Landmark Underwriting Agency, said labour-intensive farming activities would be especially hard hit with the wage increase on top of both fuel and electricity hikes, while information from sugar cane farmers on the KwaZulu-Natal south coast, fruit farmers in Mpumalanga and wine farmers in the Western Cape indicated that the increase in the minimum wage, on top of other increases, was a serious threat to their economic viability.

Charles Hughes, the managing director of Tru-Cape Fruit Marketing, told Farmer’s Weekly last week that the minimum wage would see some farmers exiting the sector.

“Sadly, there are farms that won’t survive the higher input costs, and the industry will see some either going bust or being absorbed by larger units,” he was reported as saying.

Hughes said that in addition, growers would be looking to reduce their workforce through a complete analysis of their farms, which would include pulling out of sub-economic orchards as a way of reducing costs.

Tru-Cape is South Africa’s largest apple and pear supplier.

Ernst Janovsky, the head of agribusiness at Absa, who confirmed financiers’ appetite for equipment funding, said the consultation processes for mechanisation were ongoing.

“We [banks] have the appetite, but of course funding will depend on farmers’ ability to repay,” he said.

He said replacing labour with machines was not an automatic process but this was what farmers were engaged in.

“People are looking at what they need to do to their crops,” he said.

Janovsky confirmed that farmers were increasingly considering pooling resources for the purchase of equipment that was too costly for individuals.

Henning said mechanisation could affect insurance premiums at a time when the agri insurance sector was already expected to increase premiums to accommodate losses suffered over the past number of years, driven by weather-related events such as snow, floods and veld fires

Ellen Matsei, the director of statistics and economic analysis at the Department of Agriculture, Forestry and Fisheries, says in the Economic Review of South African Agriculture 2011/12 that despite its relatively small share of the total gross domestic product, primary agriculture is an important sector in the economy.

Agriculture remains a significant provider of employment, especially in the rural areas, and a major earner of foreign exchange.

The review says the total gross value of agricultural production (total production during the production season valued at the average basic prices received by producers) for 2011/12 was estimated at R158.557 billion.

Related Topics: