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8/10/2019 AGRISETA Sector Analysis 290610-Version 2

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SSEECCTTOORRAANNAALLYYSSIISSAAGGRRIICCUULLTTUURREE

June 2010

Prepared for submission to the

Department ofHigher Education and Training

by


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AgriSETA June2010

Table of contents

SECTION1: THEAGRICULTURALLANDSCAPE................................................................................1

1.1 SizeandshapeoftheAgriculturalsector.................................................................................1

Overview............................................................................................................................................

1

Distributionofagriculturalproduction.............................................................................................3

ThestructureoftheagriculturesectorinSouthAfrica...................................................................6

Categoriesoffarmingenterprises....................................................................................................8

Employmenttrends...........................................................................................................................9

Employmentcategoriesandremuneration...................................................................................11

StakeholdersintheAgriculturalsector..........................................................................................13

Nationalgovernmentdepartments...........................................................................................13

Sectorrepresentatives................................................................................................................14

1.2 FactorsimpactingdevelopmentintheAgriculturesector...................................................15

Futuresector

economic

growth

and

development

.......................................................................

16

SouthAfricansectorgrowthplans(IPAP2)................................................................................16

InternationalTrade......................................................................................................................16

Globalrecessionandriseinfoodprices.....................................................................................17

Landreform......................................................................................................................................17

Relianceonimports.........................................................................................................................19

Water................................................................................................................................................19

Thelabourmarket...........................................................................................................................20

Consumertrends.............................................................................................................................21

HIV/AIDS...........................................................................................................................................22

Farmsafety

and

security

.................................................................................................................

23

BroadbasedBlackEconomicEmpowerment................................................................................23

Conclusionsandscenarios...................................................................................................................24

SECTION2: DEMANDFORSKILLS..................................................................................................27

AgriSETAregisteredemployersandemployeecoverage..............................................................27

EmployeecoverageintheAgriSETA...............................................................................................28

2.1 Skillsdemand...........................................................................................................................31

TheNationalEducationandTrainingStrategyforAgriculture(AETStrategy).............................31

AGRISETAsectorskillsplanningdemanddata(20082009).........................................................31

AgriSETAWSPanalyses...................................................................................................................37

Skillsdemand

in

the

commercial

agricultural

sector

.................................................................

37

SkillsdemandforecastingbyAgriSETA...........................................................................................38

Researchneedsgoingforward........................................................................................................39

SECTION3:SkillsGapsandscarceskills..............................................................................................40

ScarceskillsattheDAFF..................................................................................................................40

Scarceskillsinthecommercialsector............................................................................................40

Supplyofskills..................................................................................................................................42

APPENDIX1:SkillsdemandintheDepartmentofAgriculture,Forestry&Fisheries(2008/09).....45

Appendix2: AgriSETAregisteredlearnerships..............................................................................46

REFERENCES.........................................................................................................................................47

Agriculture:SectorAnalysis i


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Agriculture:SectorAnalysis 1

SECTION 1: THE AGRICULTURAL LANDSCAPE

SouthAfricasagriculturalsectorischaracterisedbydualism:amoderncommercialfarming

sectorusinghiredfarmworkersalongsidesmallscalefarmers,mostlyintheformerhomeland

areas.Inaddition,landreformiscreatingthousandsofnewfarmingopportunitiesforemerging

blackfarmersthroughoutthecountryandacrossthescalefromlargecommercialtosmallholder

production.1

Theagroprocessingsectorcomprisesahighlydiversegroupofsubsectorsandindustries.The

majorsubsectorsinclude:

Foodprocessing

Beverages

Aquaculture

Horticulture

Medicinal,aromatics

and

flavourants

Theagroprocessingsectorhasparticularlystronglinkagesbothup anddownstream.Up

stream,thesectorlinkstoagricultureacrossawidevarietyoffarmingmodelsandproducts.

Downstream,thesectorsproductsaremarketedacrossbothwholesaleandretailchains,aswell

asthroughadiversearrayofrestaurants,pubs,shebeensandfastfoodfranchises.

Moreover,thefoodprocessingsectorisnowthelargestmanufacturingsectorinemployment

termswithsome160,000employees,thisincreasestomorethanamillionjobsoncethe

upstream(primaryagriculture)isincluded.2

1.1 Size and shape of the Agricultural sector

Overview

TheSouthAfricanagriculturalsectorisadiversesectorcomprisingseveralbranches,namely:field

crophusbandry;horticulture;animalproduction);dairyfarming,fishfarming,gamefarmingand

agroprocessing.Withinthesebroadbranchesare39subsectorsthatareclassifiedaccordingto

agriculturalandeconomicfocusasfollows.Thesectorencompassesbothprimary(resource

production)andsecondary(primaryprocessing)activities.

Table1:ActivitieswithintheagriculturalsectorbyinternationalSICcode

Subsector

Code

Description

Coffee/Tea 30493 Processingandmarketingofcoffeeandteaincludingcoconuts,cocoa,nuts,olives,dates,etc.

Fibre 30118 Grading,ginningandpackingofwoolandcottonrawmaterial

Fruit 30132Fruitpackedincartons,fruitjuiceconcentratedrummedandfruitjuiceincontainerreadyfor

consumption

Fruit 30133 Fruitexportersandimporters

Grain

30300 Manufactureofgrainmillproductsandstarches

30313 Handlingandstorageofgrain

61502 Wholesale&retailtradeinAgriculturalmachinery

62111 SaleanddistributionofAgriculturalrawmaterialsandotherfarminginputs

Milling 30311 Manufactureofflourandgrainmillproducts,includingriceandvegetablemilling,grainmill

1SETAreestablishmentanddemarcationAsynthesisoftheAgriSETAlandscape,AgriSETAJune2010

22011/122012/13IndustrialPolicyActionPlan,DTI,February2010.Emphasisadded.


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Subsector Code Description

residues

30330 Manufactureofpreparedanimalfeeds

30331 Manufactureofpetfoods

30332 Manufactureofstarchesandstarchproducts

Pest

control

99003

Pest

Control

Poultry 30114 Poultryandeggproductionincludingtheslaughtering,dressingandpackingofpoultry

Primary

11110 GrowingofCerealsandothercrops(notelsewhereclassified)

11120 GrowingofVegetables,Horticulturalspecialtiesandnurseryproducts

11121GrowingofVegetables,Horticulturalspecialties(IncludingOrnamentalHorticulture)and

nurseryproducts.

11122 Sugarplantationincludingsugarcaneandsugarbeetetc.

11130 Growingoffruit,nuts,beverage,andspicecrops.

11210 Farmingofcattle,sheep,goats,horses,asses,mules,andhinnies;Dairyfarming.

11220 Otheranimalfarming,productionofanimalproducts(notelsewhereclassified)

11221 Ostrichfarming

11222 Gamefarming

11300

Growingof

crops

combined

with

farming

of

animals

(Mixed

farming)

11301 Growingofcoffeeandteaincludingcoconuts,cocoa,nuts,olives,dates,etc.

11400 Agriculturalandanimalhusbandryservices,exceptveterinaryactivities

11402 Otheranimalfarming(notelsewhereclassified)

12109 Growingoftreesassecondcropbyfarmers

13000 Fishing,operationoffishhatcheriesandfishfarm

RedMeat

11141 Productionandanimalproducts(notelsewhereclassified)

30111 Slaughtering,dressingandpackingoflivestock,includingpoultryandsmallgameformeat.

30115 Production,sale&marketingofAgriculturalbyproducts(e.g.bones,hides)

30117Slaughtering,dressingandpackingoflivestock,includingsmallgameformeatandprocessing

ofostrichproducts

61210

Wholesaletrade

in

Agricultural

raw

materials

and

livestock

74136 Transportoflivestockassupportingactivity

87120 Agriculturalandlivestockresearch

Seed 11140 Seedproductionandmarketing

Sugar 30420 Manufactureofsugarincludinggoldensyrup andcastorsugar

Tobacco 62208 Processinganddispatchingoftobacco

Source:AgriSETA

Thecontributionofprimaryagriculturetothegrossdomesticproduct(GDP)isabout2.5%andits

contributiontoformalemploymentisabout5%3

.However,agriculturehasstrongbackwardand

forwardlinkagesintotheeconomy.

Theagroindustrialsectorhasahighercontributionofabout12%toGDP4.

Primaryagriculturecontributed2.3%totheGDPin20095

.

ThefigurebelowshowstherelativelysmallproportionofGDPcontributionfromprimary

agriculture.Itneedstobenotedhoweverthatprocessingisnotincludedinthe2.3%asitis

includedinmanufacturing,andotherfarmingactivities.Forexample,farmslinkedtoleisure

facilities,arelocatedunderTradeandAccommodation.

3

National

Treasury,

2010

4GCIS,2010

5NationalTreasury,2010


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Figure1:ContributionofagriculturetonationalGDP

Source:NationalTreasury,BudgetReview2010

SouthAfricaisoneofthetopglobalexportersofsomeagriculturalproduce,whereitisranked

firstinthreeproducts.

Table2:SouthAfrica'sworldrankinginselectedproducts

ExportItem SouthAfricasworldranking

Avocados 1st

Clementines 1st

Ostrichproducts 1st

Grapefruit 2nd

Tablegrapes

3rd

Plums 3rd

Pears 5th

Source:DTI,February2010

Distributionofagriculturalproduction

SouthAfricahas2.76millionhectaresofcultivatedland,ofwhichnearly10.45millionhectares

(82%)isusedforcommercialpurposes.Atotalof0.79millionhectares(only6.19%)is

permanentlyundercultivation,andmorethan10.83millionhectares(85%)israinfed.Morethan

0.7million

hectares

of

land

are

degraded

and

left

bare

by

sheet

and

gully

erosion.

About

4.61

millionhectaresofnaturalvegetationaredegraded,mainlyinindigenousforests,woodlands,and

grasslands;afurther0.19millionhectaresaredegradedbyminetailings,wasterockdumpsand

surfacebasedmining.Landuseinurbanareascomprisesmainlyformalresidentialsuburbsand

townships(1millionha)andinformalsettlements(0.23millionha).Savannas(woodlandsand

bushlands)andgrasslandscover25.70%and19.92%ofSouthAfrica,respectively(Departmentof

EnvironmentalAffairs).

Although80%ofSouthAfricanlandisusedforagricultureandsubsistencefarming,only12%is

arable,andtherestisusedforgrazing.Themainagriculturalactivitiesarecropproduction,mixed

farming,cattle

ranching

and

sheep

farming,

dairy

farming,

game

ranching,

aquaculture,

beekeeping,andwinemaking(GCIS,2010).SouthAfricaisthelargestproducerofmaize,the



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staplefoodintheSouthernAfricanDevelopmentCommunity(SADC)aswellasthemain

ingredientforanimalfeed.Thetablebelowgivesanindicationofthegeographiclocationof

productionofspecificagriculturalproduceaswellastheannualvolumeproduced.

Table3:Volumeofagriculturalproductionbyproductandlocation

Agriculturalproduct

Dominant

production

locations Average

annual

volume

produced

Maize NorthWest;FreeState;Mpumalanga 13,2metricton

Wheat WesternCape;FreeState 2.1metricton

Barley WesternCape 192000ton

Groundnuts FreeState;NorthWest;NorthernCape 88800ton

Sunflowerseeds FreeState;NorthWest;Mpumalanga;Limpopo 872000ton

Soyabeans FreeState;Mpumalanga;KwaZuluNatal

Sorghum FreeState;Mpumalanga;Limpopo;NorthWest 255000ton

Canola WesternCape;NorthWest;Limpopo 30800ton

DrybeansMpumalanga;FreeState;Gauteng;NorthWest;

KZN;Limpopo;WesternCape;NorthernCape60000ton

Sugar EasternCape;Mpumalanga;KwaZuluNatal 20metricton

DeciduousfruitWestern

Cape;

Eastern

Cape;

Free

State;

Mpumalanga;Gauteng

Wine WesternCape 403.3millionlitresexportedin2009

Citrusandsubtropical

fruit

Limpopo;Mpumalanga;EasternCape;KwaZulu

Natal;WesternCape;NorthernCape46896tonsubtropicalfruit

Potatoes

NorthWest;NorthernCape;KwaZuluNatal;

Limpopo;FreeState;Mpumalanga;EasternCape;

WesternCape

1853000ton

TomatoesLimpopo;Mpumalanga;KwaZuluNatal; Eastern

Cape;WesternCape459217ton

Onions Mpumalanga;WesternCape;FreeState 417579ton

Cabbages Mpumalanga;KwaZuluNatal 138161ton

CottonMpumalanga;Limpopo;NorthernCape;KwaZulu

Natal;NorthWest

Tobacco Mpumalanga;Limpopo;NorthWest 10200ton

Tea WesternCape;EasternCape

Flowers WesternCape

Livestock Allprovinces Largestagriculturalsector

DairyFreeState;NorthWest;KwaZuluNatal;Eastern

Cape;WesternCape;Mpumalanga3129metriclitres

BeefCattleEasternCape;FreeState;KwaZuluNatal;Limpopo;

NorthWest;Mpumalanga;NorthernCape

SheepandgoatsEasternCape;NorthernCape;FreeState;Western

Cape;

Mpumalanga

Poultryandpigs Allprovinces

930000tonbroilers

2.6millionpigsslaughteredfrom

August2007toAugust2008

Fish WesternCape;EasternCape

GameLimpopo;NorthernCape;EasternCape;Western

Cape

Beekeeping WesternCape;KwaZuluNatal 2000ton

Source:GCIS,SAYearbook2009/10

Agricultureplaysanimportantpartinprovincialdevelopmentandformostprovincesprovidesa

sourceofemploymentaswellasbeingapotentialfocusforincreasedemploymentand

sustainablelivelihoods.

Agriculture

therefore

features

as

akey

focus

for

economic

development



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AgriSETA June2010


andgrowthintheallprovinces.AgriculturalcontributiontoprovincialGDPvaries,withtheFree

Statesagriculturalsectorcontributingthemost,asreflectedbelow.

Table4:Agriculture ContributiontoProvincialGDP

Province PercentagecontributiontoGDP

FreeState

9.2

Limpopo 3

KwaZuluNatal 5.5(2004)

WesternCape 4.5(2003)

Mpumalanga 6.1Source:ProvincialGrowthDevelopmentStrategies

Theprovincesallhavedifferentfocusesintheirdevelopmentstrategiesforagriculturealthough

theunderlyingprincipleistheimprovementofthelivesofthepeoplethroughemployment

creationinagricultureandprovisionoffoodsecuritythroughinvestmentinagriculturalprocesses

andtechnologiesthatenhanceefficiency.

FreeStatesfocusonagriculturedevelopmentisagriculturediversificationandagribusiness.

Diversificationinvolvesidentifyingcropswithadefinedmarketinlinewithnewandinnovative

agriculturalpractices.Agribusinessextractsvaluefromprimaryagriculturethroughprocessingof

rawmaterialsandprovisionofservicestoaddvaluetoproduce6

.

TheobjectivesoftheLimpopoprovincewithregardstoagriculturaldevelopmentaretriplingthe

sizeofagricultureby2015,increasingthevalueofagriculturethroughenterprisediversification,

investinginwatersavingtechnologiesandaddingvaluewithintheagrovaluechain7

.

Inthe

Eastern

Cape,

two

thirds

of

the

population

live

in

rural

areas

and

the

development

of

agricultureisakeyfactorinthedevelopmentofthepeoplessocioeconomiclivelihood.

Developmentofagriculturewillprovideemploymentandanincometomanyfamilies.Thefocus

ofthegrowthanddevelopmentstrategyistopromotehouseholdfoodsecuritythrough

expandedsmallholderproduction,developmentofcommercialagriculturethroughoptimaluse

ofagriculturallandinthehomelands,focusonlandredistributionandtenure,andintegrationof

homelandsagricultureintomainstreamprovincialagriculturalactivity8

.

KwaZuluNatalsfocusonagricultureintheGrowthDevelopmentStrategyispovertyalleviation,

asmostareasofpovertyintheprovincearerural.Theplanistolinkupruralsubsistence

agriculturalactivity

with

commercial

agriculture

so

as

to

develop

subsistence

agricultural

projects

intocommercialones.Theotherfocusistolinklandreformprojectstokeyprovincialagrarian

revolutionprogrammessoastomakelandtransferaneconomicgrowthopportunity.The

agrarianrevolutionstrategyinvolvesenablingaccesstomarkets,farmerdevelopmentthrough

thesetupofagribusinesses,improveroadinfrastructuretoimproveaccesstomarkets,and

expeditingthelandreformprocess9

.

6FreeStateGrowthDevelopmentStrategy,20042014

7

Limpopo

Growth

Development

Strategy,

2004

2014

8EasternCapeGrowthDevelopmentPlan,2004 2014

9KZNGrowthDevelopmentStrategy,2006


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NorthernCapesfocusisthedevelopmentofagroprocessing(NorthernCapeGrowthand

DevelopmentStrategy).TheNorthWestisfocusingonenablingaccesstomarketsandassisting

financiallyininfrastructuredevelopmentandmachineryacquisitionaswellasinvestinginagro

processingtechnologyandskills,aswellaspromotingefficientlanduse10

.

Agricultureholds

employment

growth

potential

in

Mpumalanga

province.

It

accounts

for

18.1%

ofprovincialemployment,withforestrybeingthemainagriculturalactivityintheprovince.About

38.3%oftheprovinceslandisusedforforestry.Agricultureisidentifiedasakeyfocusareato

achievethestrategicgrowthdevelopmentstrategyofprovidingabetterlifeforallintheprovince

througheconomicdevelopment.Growthpotentialisthroughagriculturalinvestment,production

andbeneficiationsoastoincreaseagricultureGDPcontributionfrom6.1%to10%bytheendof

the2008/2009financialyear.Otherstrategicobjectivesaretoincreasesustainableemployment

intheagriculturalsectorfrom18%to20%bytheendof2015,improvefoodsecurityby50%by

2014,improvesustainabilityinagribusinessenterprisesby20%,andincreaseparticipationof

historicallydisadvantagedinagriculturetomeetnationalAgriBEEtargets(MpumalangaGrowth

andDevelopment

Strategy,

2004

2014).

ThestructureoftheagriculturesectorinSouthAfrica

TheSouthAfricanAgricultureSector,primarilybasedinruralandperiurbanareas,is

characterisedbyadualagriculturaleconomycomprisingwelldevelopedcommercialfarming,

withanestablishedsupplychain,andsmall(subsistence)basedproduction. TheGeneral

HouseholdSurveyof2009(StatisticsSouthAfrica)andtheCensusforcommercialfarms,2007

(StatisticsSouthAfrica)provideaninsightintothesizeofthesubsistenceandcommercialsectors.

Precisedetailsinrelationtononcommercialandsemicommercialfarmingarenotavailable.

In2009,20.7%ofSouthAfricanhouseholdswereengagedinsomeformofagricultural

production.Table1reflectshouseholdagriculturalproductionpatternsintheprovincesand

showsthatthelargestproportionsofhouseholdsengagedinagricultureareinLimpopo,Eastern

Cape,FreeStateandKwaZuluNatal.

Table5:SouthAfricanhouseholdsinvolvedinagriculturalactivitiesbyprovince(1,000s)

ActivityProvince

TotalWC EC NC FS KZN NW GP MP LP

Involvedin

agricultural

production

39 643 35 274 697 108 248 205 580 2832

2.7%

37.3%

11.4%

31.9%

26.8%

11.4%

7.1%

21.1%

43.4%

20.7%

Livestock

production

* 312 22 26 230 34 27 21 99 778

17.5% 48.5% 62.1% 9.6% 33.0% 31.0% 10.7% 10.4% 17.1% 27.5%

Poultry

production

* 349 11 35 256 23 22 11 146 853

1.8% 54.3% 31.0% 12.9% 36.7% 21.1% 9.0% 5.1% 25.1% 30.1%

Grainsandfood

crops

* 389 * 21 316 34 31 128 465 1390

2.7% 60.5% 12.2% 7.8% 45.4% 31.5% 12.5% 62.5% 80.1% 49.1%

Industrialcrops0 * 0 * * 0 * 0 * *

0.0% 0.2% 0.0% 0.1% 0.6% 0.0% 0.5% 0.0% 0.1% 0.3%

Fruit&vegetable

crops

30 220 * 232 330 40 175 141 173 1350

75.9% 34.2% 25.2% 84.7% 47.3% 36.8% 70.5% 68.8% 29.8% 47.7%

10NorthWestGrowthandDevelopmentStrategy


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AgriSETA June2010


ActivityProvince

TotalWC EC NC FS KZN NW GP MP LP

Foddergrazing/

pasturegrass

animals

* * * * 14 * 11 * * 53

11.2% 0.5% 3.8% 3.5% 2.0% 2.0% 4.3% 2.0% 0.7% 1.9%

Forestry

*

*

*

*

*

0

*

*

*

10

1.2% 0.1% 0.5% 2.1% 0.1% 0.0% 0.4% 0.4% 0.2% 0.4%

Fishfarming/

Aquaculture

* * 0 0 0 0 0 0 0 *

1.5% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Gamefarming* * * 0 * 0 0 0 * *

2.2% 0.2% 1.3% 0.0% 0.1% 0.0% 0.0% 0.0% 0.2% 0.1%

Other0 * 0 * * * * 0 0 *

0.0% 0.2% 0.0% 0.3% 0.4% 0.3% 0.3% 0.0% 0.0% 0.2%

*Numberssmallerthan10000aretoosmallforreliableestimates

Aparticularhouseholdcanbeinvolvedinmorethanoneactivityandpercentagesthereforedonotaddupto100%

Source:StatisticsSouthAfrica GeneralHouseholdSurvey,2009(p.318)

In2007,therewere39982commercialfarms11

inSouthAfricaasopposedtothe45818

registeredin2002.Therehasbeenacleardownwardtrendinthenumberofcommercialfarming

enterpriseswhichunderscorestheneedstogrowthecommercialagriculturesectortomaintain

SouthAfricasfoodsustainabilitypotentialandsupportinterventionstodevelopskillsacrossthe

agriculturalsector,especiallyfortransformationanddevelopmentofthesmallandemerging

agriculturalsector.

Table6:Commercialfarmingenterprisesbyprovince 2002and2007

Province 2002 2007 Growth/Decline

EasternCape 4376 3896 10.97

FreeState 8531 7515 11.91

Gauteng 2206 2378 7.80

KwaZuluNatal 4038 3560 11.84

Limpopo 2915 2657 8.85

Mpumalanga 5104 3376 33.86

NorthWest 5349 4692 12.28

NorthernCape 6114 5226 14.52

WesternCape 7187 6682 7.03

Total 45818 39982 12.74

Source:StatisticsSouthAfrica,2008

WhilstthelargestproportionsofhouseholdsinvolvedinagricultureareinLimpopo,FreeState,

EasternCapeandKZN(Table1),itisintheFreeState,WesternCape,NorthernCapeandNorth

Westprovinceswherethelargestnumberofcommercialfarmsarelocated(Table2). Nodirect

11CommercialfarmsarefarmingenterprisesthatareregisteredwithSARSforValueAddedTax(VAT)andincometax.


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AgriSETA June2010

relationshipcanthusbedrawnbetweenthenumbersofhouseholdsengagedinagricultureina

provinceandthenumbersofcommercialagriculturalenterprises.AgriSETAWSPdataanalysis

revealsnodirectrelationshipbetweenthenumberofemployersinaprovinceandthenumberof

formallyemployedpersons.

Categoriesof

farming

enterprises

Dualism(Mhone, 2000),isausefulwayofdescribingtheagriculturalsector,bothintermsof

understandingtheeconomicsofthesectorandplanningskillsdevelopmentinterventions.This

termdescribesaformalsectorthatiswellestablishedandaninformaloremergentsector,with

thetwosectorsreliantoneachother,andoninterventionsbythestateforintegration.However

thesetwobroadcategorieshavetheirlimitations.Withinthecommercialsectortherearelarge

establishedfarmingbusinessesandsmalleronesthatstruggletosurvive,andwithintheless

formalsectorthereareemergentfarmersstrivingtoachievecommercialsuccess. Itisnecessary,

therefore,tounderstandtheagriculturalsectorascomprisinganumberofdifferenteconomic

entitiesall

operating

within

the

same

dualistic

economic

framework.

The

following

typology

for

theagriculturalsectorreflectsthecomplexityoftheagriculturalsector:

Table7:Typologyoftheagriculturalsector

ProductionUnit Turnover Ownership&Management NumberBinding

constraintSupportrequired

Largecommercialon

privateproperty>R2million

Familyownedbutincorporated

multiplefarms.

Rentinlandprofessional

management

5400Marketsize

Equitycapital

Exportmarketaccess

Financialmarket

innovation

Mediumcommercial

onprivateproperty

R300000to

R2million

Familyowned,couldbe

incorporated.Somerentinginof

landfamilymanagement

17,000Landcapital

management

Mortgagecapitalfor

landaccess

Managementtraining

Smallcommercialon

privatepropertyR300000

Communalownership

Developmentprojects

Privateownership

Capital

management

infrastructure

Grantsforlandaccess

Propertyrights

Comprehensivefarmer

support

Credit

Physicalinfrastructure

Emerging

commercialin

communalareas

20hectares

Communalownership

Smallfarmersindevelopment

projects

Privateownership

35000

Land

(property

rights)

Capitallabour

management

Employment

opportunities

Grantsforlandaccess

Propertyrights

Comprehensivefarmer

support

Physicalinfrastructure

Institutional

infrastructure

Subsistencefarmerin

communalareas

Allotments

Marketgardens


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AgriSETA June2010

significantchangesoccurring,mainlyduetotheglobaleconomicdownturnandthesmall

marginsthatmanyagriculturalenterprisesoperatewithin.

Itisparticularlyimportanttohaveanunderstandingofthecategoryofemergingfarmers:those

whomaybestrivingtomovefromsubsistencefarmingtoamorecommercial model; thosewho

havebenefited

from

land

reform

processes

and

want

to

establish

an

agricultural

enterprise

on

thelandthathasbeenallocatedtothem;thosewhohavemadeuseofBEEfundingtoacquirea

stakeinafarmandaretryingtoachieveprofitability.Theemergingfarmersectorisneither

establishedcommercialfarmingnorsubsistenceinnatureandisthefocusofmanyofthe

governmentseffortstoachievetransformationwithinthesectorasawhole.

Employmenttrends

EmployeenumbersisamoreimportantmeasureofsizeforthepurposeoftheSETAandskills

planning,eventhoughturnovermaybemoreimportantintermsofeconomicimpactor

contributionto

GDP.

The

cause

of

this

discrepancy

between

turnover

or

GDP

contribution

on

the

onehandandformalemploymentnumbersontheotherisdiscussedextensivelybyMhone

(2000)andotherssuchasWebster(2004).Labourabsorptionlevelsinanenclave(second)

economyarenotoptimal.Oneconclusionthatcanbedrawnfromthisisthatskillsdevelopment

willneedtobelinkedtootherchangeswithinthesectorifitistocontributemeaningfullytojob

creation.Mechanismsneedtobefoundthatlinkgrowthtojobsandthisisnotstrictlysomething

thattheSETAcanaddress.Howeveritisimportanttolinkskillsplanningtootherprocesses,and

opportunitiesforthesewillbeexaminedaspartoftheenvironmentalscanlaterinthissection.

Thepastfewyearshaveseenhugedepreciationinemploymentlevelsandaveryhigh

unemploymentratecurrentlyestimatedat31.1%.Theagriculturalsectorhasalsowitnesseda

decline

in

sector

employment

largely

linked

to

contraction

of

the

sector.

The

sector

is

characterisedbytheneedforhighlyskilledandqualifiedfarmmanagersandtechnicalstaffon

theonehandandlargenumbersofunskilledandsemiskilledworkersontheother. Many

managersofemergingfarmsaremainlyuntrainedandunqualified.

Agriculturereliesmoreonsemiskilledlabourthanotherservicesasreflectedinthetablebelow.

Thesectoralsoreliesonmigrant,casualandseasonallabour.

Table8:PercentageunskilledtosemiskilledlabourbyDTIindustry(economicsector)classification

Sector 1995 2008Growth/declinein

skilledlabour

Agriculture

99.0 94.1 4.9%

Mining 92.0 87.9 4.5%

Manufacturing 87.0 82.1 5.6%

Utilities 80.0 68.8 14.0%

Construction 90.0 88.3 1.9%

Trade 84.0 84.2 0.2%

TransportandCommunication 73.0 76.8 5.2%

Finance 62.0 59.5 4.0%

Communityandpersonalservices 54.0 49.8 7.8%

Total 78.2 73.8 5.6%

Source:NationalTreasury,2010



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AgriSETA June2010


EmploymentinthesectorisbasedonthosewhoworkinadministrationinDAFFandthosewho

workinproductionandprocessingatfarmsandinfactories.InMarch2009,DAFFhad3285

posts,with2735ofthesefilled.ThetablebelowshowstheemploymentprofileatDAFFby

occupation,race,genderanddisabilityasat31March2009.Thedepartmentemployed57%male

employeesand43%femaleemployees.ThereweremoreAfricanemployees,constituting69%of

theentire

department

workforce.

Very

little

progress

has

been

made

regarding

the

employment

ofpeoplewithdisabilities,whoconstituteonly0.4%oftheworkforce.Thisisinlinewithother

departmentacrossgovernmentwheresimilarlylittleprogresshasbeenmade.

Table9:Employeeprofile DepartmentofAgriculture,ForestryandFisheries

Occupational

Category

(SASCO)

African Coloured Indian White Totals

M F M F M F M F M F Total %

Legislators,

seniorofficials,

managers

15 14 2 2 8 3 25 19 44 1.6

Professionals

239

241

11

12

4

14

70

64

324

331

655

24.0

Technicians,

associateprof.190 153 38 19 9 4 86 57 323 233 556 20.4

Clerks 93 204 22 42 0 7 13 171 128 424 552 3.0

Serviceandsales

workers38 19 4 2 1 17 1 60 22 82 3.0

Craftandrelated

tradesworkers42 3 13 58 0 58 2.1

Plant,machine

operatorsand

assemblers

53 1 8 1 62 1 63 2.3

Elementary

occupations

484 96 94 28 1 6 5 585 129 714 26.2

Totals 1154 728 182 105 15 25 214 301 1565 1159 2724

Percentage 42.4 26.7 6.7 3.9 0.6 0.9 7.9 11.0 57.5 42.5 100

Peoplewith

disabilities1 1 1 2 6 4 7 11 0.4

Race 1882 287 40 515

Percentage 69.1% 10.5% 1.5% 18.9%

Source:DeptofAgriculture,ForestryandFisheries(2010)

Inrespectofoccupationsandskillsprofiles,themajorityoftheDepartmentsemployeesare

ProfessionalsandTechnicians/AssociateProfessionals(44.4%),followedbypeopleemployedin

elementaryoccupations

(26.2%).

Employmentacrosstheagriculturalsectorissubjecttogrowthanddeclinevariationsrelatedtoa

widerangeofconditionsandcircumstancesproduceprices,climateandenvironmental

changes,mechanisation,technology,andthelike.Since2002thetrendhasbeendownwards.

Thereareanumberofreasonsforthisincludingmechanisationandcasualisationoflabouron

largerfarms,theeconomicdownturnimpactingonsomesubsectors,andtheglobaltrade

situation,includingchangesintheforeignexchangeratesandthefailureofsuccessiveDOHA

developmenttalkstoaddressinequalitiesinaccesstoglobalagriculturalmarkets12

.

12

The

Doha

Development

Round

is

the

trade

negotiation

of

the

World

Trade

Organization

(WTO).

Its

objective

is

to

lowertradebarriersglobally.Talkshavestalledoveradivideonmajorissues,suchasagriculture,industrialtariffsand

nontariffbarriers,services,andtraderemedies..Themostsignificantdifferencesarebetweendevelopednationsled
http://en.wikipedia.org/wiki/World_Trade_Organizationhttp://en.wikipedia.org/wiki/World_Trade_Organizationhttp://en.wikipedia.org/wiki/World_Trade_Organizationhttp://en.wikipedia.org/wiki/World_Trade_Organizationhttp://en.wikipedia.org/wiki/World_Trade_Organizationhttp://en.wikipedia.org/wiki/Trade_barrierhttp://en.wikipedia.org/wiki/Trade_barrierhttp://en.wikipedia.org/wiki/Trade_barrierhttp://en.wikipedia.org/wiki/Trade_barrierhttp://en.wikipedia.org/wiki/Agriculturehttp://en.wikipedia.org/wiki/Tariffshttp://en.wikipedia.org/wiki/Non-tariff_barriers_to_tradehttp://en.wikipedia.org/wiki/Non-tariff_barriers_to_tradehttp://en.wikipedia.org/wiki/Non-tariff_barriers_to_tradehttp://en.wikipedia.org/wiki/Non-tariff_barriers_to_tradehttp://en.wikipedia.org/wiki/Non-tariff_barriers_to_tradehttp://en.wikipedia.org/wiki/Doha_Development_Round#cite_note-crs-2-0#cite_note-crs-2-0http://en.wikipedia.org/wiki/Developed_nationshttp://en.wikipedia.org/wiki/Developed_nationshttp://en.wikipedia.org/wiki/Developed_nationshttp://en.wikipedia.org/wiki/Developed_nationshttp://en.wikipedia.org/wiki/Doha_Development_Round#cite_note-crs-2-0#cite_note-crs-2-0http://en.wikipedia.org/wiki/Non-tariff_barriers_to_tradehttp://en.wikipedia.org/wiki/Tariffshttp://en.wikipedia.org/wiki/Agriculturehttp://en.wikipedia.org/wiki/Trade_barrierhttp://en.wikipedia.org/wiki/World_Trade_Organization


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AgriSETA June2010


Itisanticipatedthatgrowthoftheagriculturalsectortomeetlocalconsumerdemand,

governmentinitiativestoexpandagriculturalnicheexportmarketsandthedevelopmentofan

aquaculturesubsectortocounterdepletionofnaturalresources,islikelytoleadtocreationof

employmentinthesector.

Table10:WorkforcechangesintheAgriculturalsector 2001to2010

Year Workers Yearonyeardifference Variation

2001 969000

2002 1153000 +184000 16.0%

2003 808000 345000 42.7%

2004 828000 +20000 2.4%

2005 778000 50000 6.4%

2006 886000 +108000 12.2%

2007

703000

183

000

26.0%

2008 764000 +61000 8.0%

2009 615000 149000 24.2%

2010* 650000 +35000 5.4%

*Quarter1

Source:StatisticsSouthAfricaSurvey(pp.210211)

Employmentcategoriesandremuneration

Itisdifficulttogetdetailedandaccurateyearlystatisticsonemploymentbytype(fulltime,

casual and seasonal employees) or on remuneration in the agricultural sector. The latest

available statistics on commercial agriculture are found in the 2007 Stats SA Census of

Commercial Agriculture. The following tables reflect survey data on the number of

permanent,casual and seasonal agriculturalsector employeesbyprovince aswell as total

remunerationperprovince.

Table11:Numberofpaidfulltimeagriculturalworkersandtotalremunerationbyprovince

Province

2002 2007 Growth/Decline

NumberRemuneration

R'000sNumber

Remuneration

R'000sNumber Remuneration

EasternCape 33718 329351 34253 510404 1.6% 55.0%

Free

State

57

607

580

888

53

944

737

796

6.4%

27.0%Gauteng 20815 344629 22979 534083 10.4% 55.0%

KwaZuluNatal 75799 763439 66685 968455 12.0% 26.9%

Limpopo 62635 525390 35728 625436 43.0% 19.0%

Mpumalanga 61603 599617 46520 853396 24.5% 42.3%

NorthWest 39914 409526 53741 574596 34.6% 40.3%

NorthernCape 31077 320598 26871 339948 13.5% 6.0%

WesternCape 98207 1378816 90943 2029275 7.4% 47.2%

Totals 481375 5252251 431664 7173389 10.3% 36.6%

Source:StatisticsSouthAfrica,Report12.02.01(p.1101)

byEU,USA,andJapanandthemajordevelopingcountriesledandrepresentedbyIndia,Brazil,China,andSouth

Africa.Considerablecontestationexistsoverthemaintenanceofagriculturalsubsidies,operatingastradebarriers.
http://en.wikipedia.org/wiki/Developing_countryhttp://en.wikipedia.org/wiki/Developing_countryhttp://en.wikipedia.org/wiki/Developing_countryhttp://en.wikipedia.org/wiki/Agricultural_subsidyhttp://en.wikipedia.org/wiki/Agricultural_subsidyhttp://en.wikipedia.org/wiki/Agricultural_subsidyhttp://en.wikipedia.org/wiki/Agricultural_subsidyhttp://en.wikipedia.org/wiki/Developing_country


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AgriSETA June2010


Table12:Numberofpaidcasual&seasonalagriculturalworkers&totalremunerationbyprovince

Province

2002 2007 Variance

NumberRemuneration

R'000sNumber

Remuneration

R'000sNumber Remuneration

EasternCape 30936 59680 30565 106497 1.2% 78.4%

FreeState 57871 69595 45150 98996 22.0% 42.2%

Gauteng 8722 20975 11957 93461 37.1% 345.6%

KwaZuluNatal 37602 103946 34383 154286 8.6% 48.4%

Limpopo 38614 107223 31833 124159 17.6% 15.8%

Mpumalanga 46480 86242 32826 176363 29.4% 104.5%

NorthWest 46078 62653 32008 75250 30.5% 20.1%

NorthernCape 68174 121613 47874 123723 29.8% 1.7%

WesternCape 124968 331406 98546 485108 21.1% 46.4%

Totals 459445 963331 365142 1437843 20.5% 49.3%

Source:Statistics

South

Africa,

Report

12.02.01

(p.1101)

ThetablesabovereflectthattheWesternCapewasthebiggestemployeroflabouron

commercialfarmsin2007,withamajorityoftheemployeesbeingcasualandseasonal.The

EasternCapeemployedtheleastnumberofcommercialfarmemployees.Thecomparatorfigures

for2002and2007wouldappeartoshowacontinuouscountrywidereductioninemployment

bothinpermanentemployeesandcasualandseasonalworkers.TheexceptionistheNorthWest

thathasexperiencedanincreaseinfulltimeemployees.

Thecurrentminimumwageforfarmworkers(February2010)isR1316.69permonth13

. Monthly

salariesdiffer

across

sub

sectors

with

highest

paid

workers

in

primary

production

in

the

fisheries

anddairysubsectors.

Table13:ApproximatemonthlywageratesinAgricultureforselectedsubsectors

Subsector PrimaryProduction Processing/Packhouse

Meat R2000

Dairy R2650

Wines R1100 R1400

Flowers R800 R1200

Fisheries

R5000

(crewman) R

1892

Source:DTI,201014

Vink&vanRooyen(2009)indicatethatbeforetheintroductionofminimumwagein2003,the

realcashremunerationforemployeeshadbeenincreasing.Howeverovertimetheunitcostof

labour(theratioofthetotalcostoflabourtothetotalvalueofoutput)hasbeenindecline,

includingasteepdropduringandaftertheintroductionofminimumwages.

13

Department

of

Labour,

2010

14Source:DTI:(DatasourcedfromSAMIC,DairyIndustryJAG,WOSA,SAFEC,SAPelagicFishIndustryAssociation)


15/50

AgriSETA June2010


In1970,foreveryR1ofoutput,16centswasspentonlabour.By1980thishasdroppedto13

centsforR1ofoutput. By1994thefigurehadincreasedto19cents,decliningto17centsin1998

andto11.7centsin2001.By2007ithadreducedto10.8cents.Furtherresearchwillbeneeded

toestablishthecurrentsituation,butthereisreasontobelievethatthedeclinehascontinued,

withwagesbeingverylowbothintermsofunitcostsandinrelationtoothergroupsofworkers

inthe

economy.

StrictlyspeakingitisnottheroleoftheSETAtoengageinthecomplexregulatoryframeworkfor

theagriculturallabourmarket.ItisfortheDepartmentofLabourandNEDLAC,withtheir

employerandorganisedlabourstakeholderstofindwaysofbalancingtheneedforprotectionof

vulnerableworkerswiththeneedtocreateaframeworkthatencouragesthecreationofjobsand

improvedjobsecurity.Thereasonthatmoreresearchisneededinthisarea,andinparticular

detaileddiscussionswithindustryandlabourrepresentatives,istoestablish

Theextenttowhichskillsdevelopmentinterventionscanimprovetheprospectsforjob

creationand

improved

job

security,

and

Themechanismsthatcanbeestablishedtoenableuninterruptedskillstraining,inthe

contextofcasualisationanduseofcontractandseasonallabour.

StakeholdersintheAgriculturalsector

National government departments

ThereareanumberofnationalgovernmentDepartmentsandspheresinvolvedinthechallenges

oftheagriculturalsector.Thefollowingtablesetsoutthebroadcontributionthateach

departmentisintendedtomake.

Table14:GovernmentdepartmentrolesinrelationtoAgriculture

Department Role

DepartmentofAgriculture,Forestry andFisheries Agriculturalpolicyandsupport

DepartmentofRuralDevelopmentandLandReform LandReformandlandclaimssettlements

DepartmentofEconomicDevelopment Economicplanning

NationalTreasury Macroeconomicpolicy

DepartmentofTradeandIndustry Industrialstrategy(IPAP2)

DepartmentofWaterAffairs Themanagementofwatersupply

DepartmentofLabour Labourmarketpolicy

Department

of

Higher

Education

and

Training

HRD

and

skills

planning

and

SETAs

Inrelationtopublicspendingonagriculturetheagriculturalnationalbudgetconstitutesabout

0.5%ofthenationalbudget. Thefigurebelowreflectstrendsinnationalbudgetingforthe

agriculturalsectorbetween1996/7and2011/12.

Someanalysts15

havearguedthatstateexpenditureonagricultureshowslackofprioritisationof

thesector,especiallyconsideringthatthebudgetremainslowerthanitwasinthelate1980s,

whenitnowcatersforagreaternumberoffarmersthanitdidduringapartheidsegregation.

15Greenberg,2010,p.2


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AgriSETA June2010

Figure2:NationalbudgetsforAgriculture,19962011(adjustedforinflation)

Source:Greenberg,2010

TheDepartmentofAgriculture,ForestryandFisheries(DAFF)isresponsiblefortheagricultural

sector.Thedepartmentworkswithvariousorganisationstopromotetheinterestsofthesector:

ItregistersallSouthAfricanPestControlAssociation(SAPCA)qualifiedinspectors.

ItworkswiththeAgriculturalResearchCouncilforresearchtooptimisethecontrolof

migratorypests.

TheDirectorateonMarketingworkswiththeNationalAgriculturalMarketingCouncil

(NAMC)onissuesrelatedtoequitableaccesstomarketsincludingpolicyformulation,

issuingofpermits,andcoordinatinginterdepartmentalrelationstoenhancemarketing.

HistoricallytheDepartmenthasemployedalargenumberofextensionofficerslocatedin

farmingcommunitieswhohavesupportedandadvisedfarmers.Thisservicehasbeenin

declineinrecentyears,butremainsanimportantaspectofstatesupporttothesector.

TheaboveroleswillbesubjecttosomereviewinthecontextofIPAP2andalsothedebates

aroundtheroleofthestateintheeconomy.Theissueisnotonlylevelsofspending,butalso

clarifyingthe

role

of

government

in

relation

to

the

business

of

the

sector.

Sector representatives

Therearethreemajorumbrellaorganisationsrepresentingtheinterestsoffarmers,AgriSA,

TLUSAandtheNationalAfricanFarmersUnionofSouthAfrica(NAFU).

AgriSAandTLUSArepresentsbothcommercialfarmersandcooperativesintereststhroughits

engagementatnationalandinternationallevel. AgriSAisamemberoftheSouthernAfrican

ConfederationofAgriculturalUnions(SACAU),aregionalfarmersunionforfarmersinSouthern

Africa. AgriSAhasstructuresinalltheprovinces,exceptLimpopo.



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AgriSETA June2010


NAFUisaunionforpredominantlypreviouslyhistoricallydisadvantagedsmallholderfarmerswith

amembershipbaseincludingfarmers,agribusinesses,farmersorganisations,corporationsand

individualswhosupporttheirgoals.NAFUisrepresentedbydifferentunionsinalltheprovinces.

ThereareotheremployerorganisationswhoarenotaffiliatedtoAgriSAandNAFUincluding:

AgriculturalIndustrial

and

Medium

Employers

Organisation

Agricultural,MiningandIndustrialChemicalManufacturersAssociation

AgrilaborEmployersOrganisation

AlgoaMeatTradersAssociation

EastCoastPoultryProducersEmployersAssociation

EastLondonandDistrictMeatTradersAssociation

FertiliserIndustryEmployersOrganisation

LandbouWerkgewersorganisasie(Workinfo.com)

RedMeatProducersAssociation

TheAgriculturalResearchCouncilisanautonomousstatutorybodythatprovidesresearchtoDAFFandtheprovincialdepartmentsofagriculture.FiguresavailableforSouthAfricas

investmentinagricultureresearchanddevelopmentshowthatSouthAfricawasabove

internationalnormsofinvestmentinR&D,whichare0.53%ofagriculturalGDPfordeveloping

countriesand2.36%fordevelopedcountries.InSouthAfrica,in2000,agriculturalR&D

investmentinrelationtoagriculturalGDPwas3.04%16

.

Therearesixmajorsourcesofcreditforfarmers:banks(50%),agriculturalcooperativesand

agribusiness(12%),theLandBank(21%),privatecreditors(8%),othercreditorsandfinancial

institutions(9%)andgovernment(1%)(GCIS,2010)

1.2 Factors impacting development in the Agriculture sectorSeveralinternationalandlocalfactorsimpactontheproductivityoftheagriculturalsectorandits

growth.Keyamongsttheseare:

GrowthoftheSouthAfricaneconomyandrisingconsumerdemand

Internationaltradeandtradeagreements

Theglobalrecessionandriseinfoodprices

Thelandreformprogramme

Relianceonimports Wateravailability

Changingconsumerpatternsanddemands(e.g.organicfoodstuffs)

Technologicalchangesandmechanisms

Qualitystandards

Farmsafetyandsecurity

Broadbasedblackeconomicempowerment

Legislation

Skillsdemandandsupply

HIV/AIDS

16Vink &vanRooyen,2009


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AgriSETA June2010

Thesekeyfactorsareclusteredanddiscussedbelow:

Futuresectoreconomicgrowthanddevelopment

South African sector growth plans (IPAP2)

The2010/20112012/2013IndustrialPolicyActionPlan(IPAP)identifiesfivestructural

challengesthatexistedintheSouthAfricaneconomybeforetheglobaleconomicdownturnand

whichhavebeenexacerbatedbytherecenteconomiccrisis.Thesechallengeswereevidenteven

duringthetimeSouthAfricawasexperiencingrelativelyhighgrowthratesbetween2005and

2007andhavecontinuedduringtherecession.Thesechallengesare:

1. Structuralimbalancesinthegrowthpathincludinggrowththatislaggingbehindother

mediumandlowincomecountries.

2. Unevenperformanceofthemanufacturingsectorwithsomedivisionsliketheautomotive

sectorexperiencing

exponential

growth

while

other

sectors

have

stagnated.

3. Employmentgrowthbeingsustainedbycreditextensionandconsumptionratherthanby

productivesectors,leadingtoalargecurrentaccountdeficit.

4. Lowprofitabilityofmanufacturing.

5. Lowsavingsandinvestmentfromfinancialsectorgrowth.Only5.2%ofprivatecreditwas

extendedtofixedinvestmentin2008.

KeysectorshavebeenidentifiedforIPAPsfocus,includingagroprocessing,whichhasadiverse

groupofindustriesandsubsectorsincludingfoodprocessing,beverages,aquaculture,

horticulture,medicinal,aromaticandflavourants.Keyactionplansfortheagroprocessingsector

areidentified

in

IPAP2

as:

DevelopmentofaNationalFoodControlAgencytoconsolidatethesector;

Developmentofaquaculturetosupplementdwindlingwildfishstocks;

Designatingspecificareasforutilisationofaquaculture;

Developmentoftheorganicfoodsector;

Developmentofthesmallmillingindustry;

Enhancingcompetitivenessinfruitandvegetablecanning;

ImprovingbeneficiationofRooibosandHoneybushproducts(IPAP2,2010).

International Trade

South

Africa

is

a

major

exporter

of

Agricultural

produce.

In

particular

South

African

fruit

and

fruit

derivedproductssuchaswineandfruitjuicearecompetitiveintheglobalmarket.Howeverin

manysubsectorswhereexportpotentialexistsgrainandmeatseriousproblemsfacethe

industry.AkeychallengeistheunevenplayingfieldexperiencedbySouthAfricanexporters.

MajorglobalcompetitorsincludetheUnitedStatesandthecountriesoftheEuropeanUnion,

wheregovernmentsubsidiesinvariousformsareinplace.NosuchsubsidiesareinplaceinSouth

Africamakingitdifficult,ifnotimpossibleforSouthAfricanagriculturalproducestoenter

developedcountrymarketsduetothepricesthattheyhavetoaskforproducts.I

Inaddition,thevalueoftheRandhasfluctuatedfromlevelsofaroundR10totheUSdollartoas

littleasR7tothedollar.WhentheRandisstrongexportbecomesdifficultbecauseitcostsmore,

inthecaseofthemovefromR10toR7a30%costincreasefortheimporter.Itisimpossibleto



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AgriSETA June2010


predictwhethertheWorldTradeOrganisationnegotiations,knownastheDOHARound,will

achieveprogressinthecomingyears.Historicalevidenceisthatduringperiodsofglobalrecession

developedeconomiesbecomemoreprotectivenotless,andsothecurrentoutlookisnotgood.

NorisitpossibletopredictthevalueoftheRand,thoughcurrentthinkingingovernmentisto

movetowardaweakerRandtoencourageexports.Thesearetwokeyvariablesthatwillneedto

befactored

into

the

different

sector

growth

scenarios

for

the

future.

Global recession and rise in food prices

EconomicgrowthsloweddownsignificantlyinsubSaharanAfricaandinSouthAfricain2009but

thereappeartobesignsofrecovery.GDPgrowthintheregiondeclinedfromabout6%in2004

2008toabout1.8%in2009/10.GDPgrowthinSouthAfricawas1.6%in200917

androseto4.6%

inthefirstquarterof201018

,thoughmuchofthisisrelatedtotheincomederivedfromthe2010

FIFAWorldCupandmaynotbesustained.Projectionsaregenerallyforaslowrevivalwithaset

backaftertheslightriseresultingfromtheWorldCup.Areturntothe6%levelsofthe2007/8

couldtakesomeyears.

TheglobalrecessionreducedthedemandforAfricanexportsandreducedcapitalflowstothe

regionbutitisanticipatedthatthedemandformineralresourcesbyAsianandWesternpowers

willresultinboththeexpansionofexportsandexpandedforeigndirectinvestment.The

competitionbetweenIndiaandChinaforAfricanmarketsisalsoexpectedtoboosttradetothe

benefitofAfricansuppliers.SouthAfricaisexpectedtoparticularlybenefitfromdirectforeign

investmentfromChinaandIndia.ChinahasalreadybecomeSouthAfricaslargestmarketfor

exportsandsupplierofimports19

.

Risingfoodpriceshaveforcedgovernmentsaroundtheworldtocontrolpricesofmaize,bread,

rice

and

dairy

products.

In

South

Africa,

food

price

inflation

between

December

2005

and

December2006averaged7.88%20

. Althougheffortsarebeingmadetoreducebarriersto

poorerfamiliesinrelationtobasicfood,therehasbeennomovetosubsidisefoodgenerally.This

maychange,thoughthespaceforsignificantlevelsofsupportisrestrictedbecauseofreduced

revenuefromincometaxesresultingfromtherecession.Theglobalcreditcrunchandrecession

havemeantareductioninpublicexpenditureandfunding,whichhasaffectedtheagricultural

sector21

.

Landreform

InSouthAfricaspecifically,landreformhasasignificantbearingonfoodsecurityandagricultures

contributionto

GDP.

The

objective

of

the

land

reform

programme

is

to

transfer

30%

of

agriculturallandtoblackownershipby2014(deferredto2025)toensuremoreequitableaccess

tolandbyhistoricallydisadvantagedpeopleandtoincreasetheirparticipationinagricultural

activities22

.Landreformhasbeeninformedbyfourprocesses23

17DepartmentofAgriculture,ForestryandFisheries,2010

18StatsSA,2010

19DepartmentofAgriculture, ForestryandFisheries,2010

20DepartmentofAgriculture,ForestryandFisheries, 20102011StrategicPlan

21

Economic

Commission

for

Africa,

2009

22

Xingwana,200823

CDE,2008


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AgriSETA June2010


Landrestitution,involvingreturninglandorprovidingfinancialcompensationtothose

whoselandwasdispossessedduringapartheid;

Landredistribution,transferringmorelandtothehistoricallydisadvantaged;

Tenurereform,modernisinglandtenurerulesandaccesstolandownership;and

Providingfinancialsupportforthedevelopmentofemergingfarmers.

Inrelationtoprogresswithlandreform,bySeptember2009,only6.9%ofagriculturalland(about

5.67millionhectares)hadbeentransferred,andamajorityofthebeneficiarieshavenotyet

occupiedthelandduetolackofinfrastructure,inputortechnicalsupport.Thefollowingtable

givesanindicationoftheprogressoflandreformsincetheinceptionofthefirstdemocratic

government.

Table14:Landtransfersandbeneficiaries 1994to2009

ProvinceRedistributionandtenure Restitution Total

# Hectares Beneficiaries Claims Hectares Beneficiaries Hectares Beneficiaries

EasternCape 675 353357 25633 16201 94834 215201 448191 240834

FreeState 799 350291 7721 2662 47615 40893 397906 48614

Gauteng 286 34513 7328 13159 9476 70179 43989 77507

KwaZuluNatal 690 547414 67761 14752 642447 433168 1189861 500929

Limpopo 291 91235 7403 3382 513024 220227 604259 227630

Mpumalanga 444 322839 13950 2694 399876 225877 722715 239827

NorthernCape 271 952744 2773 3682 539620 100554 1492364 103327

NorthWest 300 268566 40539 3709 373642 172963 642208 213502

WesternCape 223 122304 12750 15546 3769 118165 126073 130915

Total 3979 3043264 185858 75787 2624303 1597227 5667567 1783085

Source:Greenberg,2010

Achievementof

the

30%

land

reform

target

is

being

made

difficult

by

land

prices.

Under

the

willingbuyerwillingsellerscheme,thegovernmentwillneedR74billiontobeabletopurchase

enoughland.Whileresourcesmaybeavailable,therearesuggestionsoflackofcapacity.The

DepartmentofRuralDevelopmentandLandReform(DRDLR)wasabletospendonly31%ofits

landreform2009/10budgetinthefirstsixmonthsofthefinancialyear.Goingforward,this

Departmentneedstoidentifywhattherealchallengesarewiththepaceoflandreformdelivery

sothattheycanbemitigatedtomeetthe2025target.Apriorityistheretentionofskills,skills

transferandskillsdevelopmentduringthetransferofland,aswellasretentionofnationalfood

productiontoavoidlossofproduction.

Supportfor

new

beneficiaries

of

land

to

ensure

sustained

productivity

is

derived

from

two

main

sourcesoffundingtheBroadeningAccesstoAgricultureThrust(BADAT)andthe

ComprehensiveAgriculturalSupportProgramme(CASP).CASPisaconditionalgrantfromthe

DepartmentofAgriculture,ForestryandFisheriestoprovincialdepartmentstosupportemerging

farmerdevelopment.ProvincialfarmingbudgetsdedicatedforfarmersupportinMpumalanga,

theFreeState,NorthernCapeandtheWesternCapehaverisensignificantlyandthosein

KwaZuluNatalandGautenghavewitnessedaslightincrease.EasternCapeandLimpopo

agriculturalbudgetshavebeensteady.TheNorthWestistheonlyprovincewheretherehasbeen

asharpdeclineintheshareofthebudgetdedicatedtofarmersupport24

.

24Greenberg,2010


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AgriSETA June2010


Relianceonimports

OveralltheAgriculturesectorcontributespositivelytothebalanceofpayments.

SouthAfricaremainsfoodsecure.Thevalueofourexportsincreasedby46.4%from

R33656millionin2007/08toR49278millionin2008/09.Duringthesameperiod

theestimated

value

of

imports

rose

by

12

%,

from

R34

009

million

to

R38

401

million,

resultinginapositivetradebalance25

SouthAfricadependslargelyonworldmarketsforseedproductionandagrochemicals.Regarding

seedproduction,thereareonlythreecommunityseedproductionschemesinLimpopoand

Mpumalangabeingpilotedwithstatefunding. Tentoplargecompanies,includingtwoSouth

Africancompaniesandmultinationals,haverightstoovertwothirdsofregisteredseedvarieties

inSouthAfrica. Despitethedominanceofgeneticallymodifiedandhybridseedinsomesub

sectorslikemaize,sunflowerandsorghum,openpollinatedvarietieshavebeenresilientinSouth

Africa,enablingthepossibilityofalternativeseedsourcesnotdependentontechnological

processes26.

Inrelationtoagrochemicals,deregulationandliberalisationinthefertilisersectorledtothe

shutdownoflocalproductioncapacity,andSouthAfricabecameanimporteroffertiliserforthe

firsttimein2000. Therearethreelargeplayersinthefertilisersector,SasolNitro,Yaraand

Omnia.SouthAfricaimportsanestimated70%offertilisersandpesticides.Fertiliserpricesrose

byover200%between2006and2008,butdroppedsomewhatafterthat.However,thishike

signifiedthevolatilityoftheagrochemicalsindustryandSouthAfricasdependencyonimports,

andthepotentialriskforemergingfarmersandfoodproductionofthisdependenceonimports,

asthecountrycannotcontroltheprices,makinginputsbothdifficulttobudgetforandinmany

casesunaffordable.

The

price

of

agrochemicals

is

also

particularly

influenced

by

the

prices

of

oil

andtheexchangerate.

ThegeneralunderstandinginrelationtojobcreationisthataweakerRandwillimproveexports

andthereforeenablejobcreation.Ofcoursethedownsideofthisstrategyisthatimports

becomemoreexpensive.Sowhatmaybeanadvantageforthosesubsectorswhoareexpanding

theirexportvolumes,thoserelyingonimportedagrochemicalswillbeunderincreasedpressure.

Water

Waterisbothanessentialandscarceresourcefortheagriculturesectorandisbeingthreatened

byclimatechanges.Cropproductionreliesheavilyonwaterandyetaccesstowaterisnotbeing

addressedinasystematicwayinthelandreformprocesses.Greenbergsuggeststhatthe

relationshipbetweenlandreform,agriculturalsupportandwaterresourceprovisionis

inadequate,andawaytoaddressthiscouldbeestablishedbylinkingwaterprovisiontoland

transferorinvestinginirrigationforbothcommercialandresourcepoorfarmers. However,

investinginirrigationinthecontextofwaterscarcityandclimatechangemaynotbethebest

option.Whatcouldbeneededisfindingwaystomaximiseefficiencyofthe60%ofSouthAfrican

25DepartmentofAgriculture,ForestryandFisheries,StrategicPlan2010/11

26Greenberg,2010


22/50

AgriSETA June2010


waterusedforirrigation,by,forexample,usingmethodssuchasdripormicroirrigation,which

areexpensivetosetupbutwhichreducewaterwastageby510%27

.

TheDepartmentofWaterAffairsisresponsibleformanagingwatersupplyandhastogive

authorisationforagriculturalprojectsandotherdevelopments.Thedepartmentneedstobeseen

asan

important

stakeholder

in

the

agricultural

sector.

Thelabourmarket

SouthAfricarecordedanunemploymentrateof24.3%in2009(narrowdefinition).Ifpeoplewho

arenolongeractivelyseekingworkareconsidered,thebroadunemploymentraterosefrom

26.7%to31.3%,illustratedinthefigurebelow.Asadirectconsequenceoftheglobaleconomic

downturnin2008,870000formaljobswerelostin200928

.Othershavequotedafigureofover1

million.

Figure3:

Official

unemployment

in

South

Africa,

2003

2009

Source:NationalTreasury,2010

Annualemploymentlossfollowedsectorgrowthpatterns,withagriculture,mining,

manufacturingandtradefacingthehighestjoblossesastheirsectorgrowthcontracted.

Unemploymentisespeciallyamajorproblemamonglowerskilledworkersandyoungerpeople.

Youthemploymentinthe1524yearagegrouphasfallenby219000(13.6%),and48.3%of

peopleinthisagegroupareunemployed.Employmentofsemiskilledandunskilledworkershas

contractedby

527

000,

and

male

employment

has

gone

down

by

550

000

(7.1%)

while

that

of

womenhasdecreasedby320000(5.2%).Thenumberofdiscouragedworkers,i.e.thoseno

longeractivelyseekingwork,hasincreasedfrom518000to1.7million29

.

Clearlytheexistenceofaverylargepooloflargelyunskilledunemployedworkershasanimpact

onthefarmingsector.Itdriveswagesdownandcreatesopportunitiesforcasualisationandthe

expansionoflabourcontractagenciesandbrokers.Inadditiontherearesignificantnumbersof

foreignnationals,mainlyfromZimbabweandMozambique,whoareseekingworkandoften

findingitonfarmsandinprimaryprocessingandpackagingplants.Therearebenefitstothe

27

Greenberg,

2010

28

NationalTreasury,201029

NationalTreasury,2010


23/50

AgriSETA June2010


sectorwithskilledandsemiskilledworkerscomingintothelabourmarketandbeingabsorbed

intotheworkforceandhelpingraiseproductivitylevels.Howeveratthelowerskilledendofthe

markettheexistenceofthispoolbringsfurthercasualisationanddownwardpressureonwages.

Tensionsarelikelytoincrease,andfurtherprotestseitherintheformofxenophobicoutbreaksor

actionsagainstfarmersmaywellincrease.

Aviewoftenexpressedbyfarmemployersisthatcurrentlabourlegislationmakesdismissing

workersdifficultandsotheavailabilityoflabourwithoutenteringintocontractsofemploymentis

anattractivewayofavoidingthelegislationanditsobligations.OrganisedLabourisseekingto

restricttheseopportunitiesthrougheitherregulatingoreliminatinglabourbrokers,andefforts

arebeingmadetoregulatetheuseofforeignlabour.Howeverfortheforeseeablefuturethe

trendisforformallyemployedpeopletobereducedinnumber.

Inrelationtotheemergentsectortherewillalsobeareluctancetoenteremploymentcontracts

withworkers.Thefactthatmanyhouseholdsareengagedinsomeformoflargelyunpaid

agriculturalwork

means

that

there

is

significant

casual

work

dating

back

many

years.

Helping

changethissituationintoonewherecasualorunpaidjobsaretransformedintoformaljobswith

regularwageswilltaketime.Itisalsolikelythatassomeemergentfarmsbecomeestablished

theywillactsimilarlytoestablishedfarmsandinstituteaformofcasuallabourratherthan

expandingaworkforceforwhichtheywouldhavetotakealevelofresponsibility.

FromanAgriSETAperspectivetheselabourmarkettrendsmeanthatwhilstlevyincomecanbe

directedatarelativelysmalllabourpool,onethatismanageableintermsofplanningand

implementation,thesizeoftheinformal,casualandunemployedlabourforceinthesector for

whomnolevyispaidandwhohavenoemployertoplanfortheirskillsneedsisverylargeand

itsneeds

almost

unlimited.

Clearly

the

relationship

with

the

National

Skills

Fund

(NSF)

becomes

criticalinrespectoftheentirenonlevyincomesector.Againthelevelofsupportavailablefrom

nonlevyincomesourceswillbeanimportantvariableinlookingatfuturesectorskills

developmentscenarios.

Consumertrends

SouthAfricacurrentlyproducesenoughfoodtomeettheneedsofitspopulation.However,

consumptionofthreemainstaples,maize,wheatandvegetableshasbeenvolatilesince1985

andremainsbelow1990levels.ConsumptionofmaizeandvegetablesbySouthAfricansis17%

and

32%

less

respectively

than

in

1985

30

.

Themainreasonsforthislieinthegrowinglevelsofpovertyandthedifficultiesthatfamilieshave

inpurchasingnutritiousfood.Whilstgovernmenthasincreasedthelevelsofsocialgrantsand

increasedthenumberofpeoplereceivinggrantstoaround13million,theincomesofpoor

familieshavebeenbadlyhitbyarangeoffactors,includingjoblossesandrisesinfoodprices.The

approximately1millionpeoplewholosttheirjobsin2008/9meantalossofincomeformany

millionsofdependents.Risesinfoodpriceshavealsohadadisproportionateimpactonthepoor.

Whilstfoodisavailableitisoftennotaccessibletofamiliesontheincomelevelsthattheyhaveto

managewithin.Theresultisthatless,andlessnutritious,foodispurchased,whichinturn

impactsontheabilityoffarmerstoselltheirproductslocally.

30 Greenberg,2010


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AgriSETA June2010


Whilstthereisnoevidencethatgovernmentwillreduceitseffortsinrelationtopovertyreliefand

socialbenefits,includingsuchprogrammesasschoolfeedingschemesandfoodparcelsduring

periodsofdrought,thestateofpublicfinancesmaynotenabletosupportthepovertythatgrips

manyruralareas.Ifrealincomelevelsforthepoorweretoriseitcouldhaveasignificantimpact

onthe

economy

of

the

agricultural

sector.

Equally

an

improvement

in

the

rural

economy

with

increasedagriculturalproductionandjobs,woulddramaticallyimpactonthecapacityofpeople

tobuynutritiousfood.Achievingapositivegrowthpathinruralareasisahugechallengefor

government,andonethatiskeytogovernmentsMediumTermStrategicFrameworkand

IndustrialPolicyActionPlans.

HIV/AIDS

SouthAfricahasahighprevalenceofHIVandAIDS.TheHIVprevalenceamongpeopleagedtwo

andabovewasestimatedat10.9%in2008.

Table15:EstimatedHIVpercentageprevalencebyagegroup(20022008)

Age 2002 2005 2008 Change

Children(214years) 5.6 3.3 2.5 3.1

Youth(1524years) 9.3 10.3 8.7 0.6

Adults(25andolder) 15.5 15.6 16.8 1.3

1549yearolds 15.6 16.92 16.9 1.3

Total(ages2to49) 11.4 10.8 10.9 0.5

Source:Avert,2009

Thetable

above

shows

that

HIV

prevalence

is

highest

amongst

those

aged

25

years

and

older.

Givenyouthlabourmarketanalyseswhichpointtopeoplefrompreviouslydisadvantaged

backgrounds,mainlyAfricanmales,accessingformalemploymentforthefirsttimeatage2527,

thispopulationcanbeheldtorepresentpeopleinemployment.Research31

hasestimatedthat

by2020,thepandemicwillhaveclaimedatleast20%ofemployeesintheagriculturalsector

SouthernAfrica.

in

HIVandAIDShavesignificantramificationsintheagriculturalsectorforbothcommercialfarming

andsubsistencefarming.Theimplicationsinclude:

Decreaseincultivatedland

Focuson

less

labour

intensive

crop

and

animal

production

Decreaseinwomensagriculturalproductivityastheytakeonamorecaregivingrole

Lossofskills

Increaseinabsenteeismfromwork

Decreaseindailyworkoutput/productivitybecauseworkersareweakerfrominfections

TherearesuggestionsthattheimpactofthepandemicinSouthAfricademandssectoral

intervention,althoughthismaybedifficultintheagriculturalcommercialsectoras:

Seasonalworkers,whoseemtobemorevulnerabletoinfectionbecauseoftheirlow

socioeconomicstatus,arenotinoneplacelongenoughforcareprograms.Further,

31IngeloziManagementSolutions, 2008


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AgriSETA June2010


farmersandemployersmaynotfeelresponsibleforseasonalworkersinthesameway

theywouldinvestintheirpermanentemployees.

TheremaybeuncertaintyaroundlandreformwhichmayputHIVinterventiononfarms

onthebackburner.

TherearenopoliciesthatenforceHIVeducationandcareonfarmsinthesamewaythat

legislationlike

BEE

does

for

ownership.

As

aresult,

HIV

intervention

may

be

left

to

goodwillandemployersmayfeelitismoreimportanttocomplywithissuesthatare

monitored.

Farmsafetyandsecurity

SouthAfricahasbeenplaguedbyunacceptablyhighlevelsofviolentcrimeandmurderformany

yearsnow.Farmshaveexperiencedthisandthoselivingonfarmsfeelandareextremely

vulnerable.TheSouthAfricanChamberofCommerceandIndustry(SACCI)hasarguedthat

"UsingthenominalGDPfigurefor2009ofR2.4trillion,a3.22percentcontributionof

agricultureto

GDP

and

an

estimate

of

39,982

farms

(as

at

2007)

in

South

Africa,

the

cost

ofamurder/attackonafarm,totheeconomy,wasR1,932,869perannum."

SACCIacknowledgesthatthisestimateisflawedasitdoesnottakeintoconsiderationthefact

thatfarmingunitscontributedifferentlytoGDP,andthatnoteveryattackormurdercontributes

tofarmshutdownorlossofproductivity.However,ifnotaddressed,theseattackscouldleadto

lossoffarmingsectorsasfarmersmigratetosaferregions.ThiswillaffectemploymentandGDP

contributionofthesector.Theneedforsafetyandsecurityonfarmsmayalsoshiftfarmersfocus

inskillsdevelopmenttoincludepersonnelwhohaveskillsinsafetyandsecurity.

Broadbased

Black

Economic

Empowerment

TheaimoftheAgriBEECharter(gazettedin2008)istoincreasetheinvolvementofblackbusiness

inagriculturethroughownershipandcontrolasexecutivesandseniormanagersofnewand

existingagriculturalbusinesses.TheextenttowhichAgriBEEistransformingthesectorisnot

known,asitistooearlytotell,butarecentsurveyconductedbyABCandtheIDCshowedthat

amongtheABCrespondents,in200746%ofenterpriseswerebusyconstructingaBEEstrategy,

and46%claimedtobeimplementingaBEEstrategy.

AsurveyofthedairyindustryintheWesternandEasternCapein2008showedthatonly6%of

firmshadaBEEstrategyinplace.Italsoseemsfromsurveydatathatcompaniesarefocusingon

theskillsdevelopmentandsocioeconomicaspectsofBEEratherthanonownership32.Itwould

appearthatalthoughtherehavebeensomesignificantBEEpurchasesofviablefarms,andsome

employeeempowermentprojects,includingsomequitehighprofileonesintheCapeWinelands,

theextentofownershipchangehadbeenlimited.Oneofthefactorsistheveryhighlevelof

singlepersonorfamilyownershipintheagriculturalsector.BEEismorestraightforwardinthe

corporateworldwheresharescanbeexchanged.Forafamilybusinessitisamatterofsellingoff

partoralloftheland,andthetendencyistoselloffthoseareasofthefarmthatareexpendable

fromabusinesssustainabilityperspective.

32Greenberg,2010


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AgriSETA June2010

Whilstthereisdiscussioningovernmentabouttheendingofthewillingbuyer,willingseller

concepttheConstitutionitselfprovidesforpropertyrights,andsoalthoughsomepressuremay

beexertedthroughlegislationandregulationtheextentandspeedofchangemaynotbefast.

Themechanismsforencouragingthetransferofsignificantlevelsofownershiphavenotyetbeen

created.ThefocusoftheSETAisthereforelikelytobemorethebeneficiariesoflandreform,and

emergentfarmers,

though

projects

of

aBEE

nature

can

be

targeted

as

they

arise.

Conclusions and scenariosItisusefulwhenlookingatpossiblescenariostoexaminethekeyvariablesoruncertaintiesandto

projecthowvariationsonewayortheotherwillhaveanimpactonthedevelopmentandgrowth

ofthesector.Fromthesectoranalysisandfactorsthatarecontributingtochangeinthesector

therearesomekeyfactorsthatseemtoemerge.

Firstappearstobetheeconomyandrelatedissuesofthelabourmarketandthechallengesof

labourabsorptioninanenclaveeconomy.Thesefactorsdetermineontheonehandwhether

therewill

be

growth

and

development,

and

on

the

other

whether

such

improvements

will

result

inimprovedemploymentopportunitiesandthecreationofavirtuouscycleofdevelopment.

Secondistheroleofthestateandthevariousgovernmentdepartmentswhoseplansandwork

impactontheagriculturalsector.Relatedtothisislandreformthatisinevitablydrivenbythe

stateandnottheownersoflandorthelandless.Theviewexpressedbymanyengagedin

agrarianreformisthatthestatemustplayasignificantrole.Itbecomesclearthatasuccessful

agriculturalenterpriserequiresanumberoffactorstobeinplacetobesuccessful.Theseinclude

accesstoland(DepartmentofRuralDevelopmentandLandReform),agriculturalsupportwithin

asupportiveagriculturalframework(DepartmentofAgriculture,ForestryandFisheries),accessto

consistentwater

supply

(Department

of

Water

Affairs),

access

to

finance

(Department

of

Trade

andIndustry,variousstateagencies),conducivelabourmarketregulation(Departmentof

Labour),soundindustrialpolicy(DepartmentofTradeandIndustry),economicplanningand

macropolicy(DepartmentofEconomicDevelopment,NationalTreasury),andappropriate

education,trainingandskillsdevelopment(DepartmentofHigherEducationandTraining,the

HumanResourcesDevelopmentCouncil,NSAandtheSETA).Thereareothergovernment

departmentsaswellasprovincialandmunicipalstructuresthatalsoplayarole.

Thefollowinganalysesshowhowthefourvariables

economicgrowthanddevelopment;

roleof

the

government;

labourmarketchanges;and

landreform)

impactpositivelyornegativelyonthegrowthofthesectorandthedemandforskills.



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AgriSETA June2010


HHIIGGHHGGRROOWWTTHHSSCCEENNAARRIIOO

Theeconomicsofthesector Roleofgovernment

TheeconomyinSAandgloballycontinuestorevive,

albeit

slowly

for

the

next

few

years

Rolesandintegrationofnationalgovernment

departmentsareclarified.Specificfunctionsare

agreed,

processes

put

in

place

and

personnel

appointedwiththerequiredskills

Internationaltradeagreementsarestillweightedin

favourofUSandEUbutprogressisbeingmadeand

specificblockagesareaddressedinbilateraltalks

TherolesofDepartments(DWA,DAFF,DRDLR,DoL,

DTI,DED,DHET)areclarifiedwithappropriatejoint

plansandcoordinatingstructures

Theruraleconomygraduallyimproveswiththe

buyingpowerofthepoorincreasingandmorestable

marketscreatedforlocalproduce

Foreachofthefunctionsagreedineachofthe

relateddepartmentsappropriatestructuresand

systemsareputinplaceandstafftrained

ExportsincreaseinkeyareasidentifiedinIPAP2,and

theRandexchangeratestabilisesatalevelnottoo

muchdifferentthanitistoday

Specificcapacityisputinplaceatlocallevelto

supportimplementation oflandreformandrural

development

Thereisagrowingunderstandingoftheconceptof

dualismand

the

need

to

intervene

with

labour

absorptionanddevelopmentmechanisms

Landclaimsareallfinallysettledandownershipand

tenureis

resolved.

There

is

aserious

drive

to

establisheffectiveagriculturalenterprises

Anunderstandingisreachedontheroleofagencies

andlabourbrokersandabuseiscurbed

The "willingbuyerwillingseller"approachisresolved

andenablesviablelandtobecomeblackowned

Somerelaxationoflabourmarketregulationsare

agreedthatmaintainsomeminimumstandardof

employmentbutassistabsorption

Landtransfertoblackandemergentfarmersisdone

inamannerthatintegratesthenintothesupply

chainsofthesector

Mechanismsarefoundtoaddressskillsneedsinthe

contextofcasualandseasonalworkpatterns

Financingoflandreformandtransferisdoneonthe

basisofagreeddevelopmentplans,includingskills.

Labourmarketreform Trajectoryoflandreform

LLOOWWGGRROOWWTTHHSSCCEENNAARRIIOO

Theeconomics

of

the

sector

Role

of

government

departments

TheeconomyinSAandgloballystagnatesatcurrent

levelsandtheeconomystrugglestopickupafterthe

temporary2010WorldCupboost

Alackofpurposeatgovernmentlevelmeanslimited

progressforanotherfiveyears.Landreformremains

acommitmentwithoutaplan

Internationaltradeagreementsarestillweightedin

favourofUSandEUandprotectionismincreasesasa

resultoftheglobalrecession

TherolesofDepartments(DWA,DAFF,DRDLR,DoL,

DTI,DED,DHET)areunclearandthereisnoproper

coordination

SAsGinicoefficientcontinuestoworsen,withrural

povertyincreasingandlocaleconomiesdeclining

Thereisalackofeffectivestructures,systemsand

processestoimplementpolicyacrossdepartments

Randvolatilitycausesproblemsforimportersand

exporters.Wellestablishedmarketsaremaintained

butexportsdecrease

Atlocallevelthedeclineintheagriculturalextension

officerfunctionscontinuesandlimitedpractical

supportisavailable

Understandingoftheruraleconomyissodiversethat

stakeholderscannotagreetheproblem,letalonethe

solutiontolowabsorptionlevels

Landclaimstaketoolongandlandreformprocesses

leavepotentiallyproductivelandpoorlydeveloped

andmanaged

Casuallabourandlabourbrokersremainsanissueof

dispute.Confrontationresultsinbitternessand

resentment

Theimpassecausedbyarigidinterpretationsof

propertyclausesintheConstitutioncontinuestostall

achievementofthe30%blackownershiptarget

Labourmarketregulationcontinuestobea

contributing factortoreducinglevelsofemployment

Blackownedfarmsfinditdifficulttobecomepartof

supplychainsandareunabletoperformadequately

Unstableemploymentpatternsinthesectormake

skillsinterventionsdifficulttomanageandlargely

ineffective

Financingoflandreformandlandtransfercontinues

tobewastedasitisnottiedtothebuildingof

appropriatecapacity

Labourmarket

reform

Trajectory

of

land

reform


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AgriSETA June2010

Theseanalysescanbetranslatedintofourpotentialgrowthanddevelopmentscenariosforthe

agriculturalsectorwhicharebasedontherequirementsforastrong,developmentstate:

Scenario3:Weakgovernmentsupport

andsoundeconomy

Economicfactorsglobally,nationallyandlocally

Scenario1:Integratedgovernment

supportandsoundeconomy

TheeconomicupturntriggeredbytheWorldCup

continuesandgloballythingsimproveenabling

anexpansionofexports.Thegovernment,

becauseofalackofintegratedpolicyplanning

andimplementation,provideslimitedsupport

forsectordevelopment.Thegainsgotothewell

establishedenterpriseowners,withfewgainsfor

emergingfarmersandlocalcommunities.

Governmentdepartmentscoordinatetheir

effortstoachievemaximumimpact.Thereare

favourableeconomicconditionsthatcreate

opportunitiesforadvance.Withinthispositive

environmenttheroleoftheAgriSETAbecomesa

centralcomponentofacomprehensivestrategy

forgrowthandskillsinterventionsaretargeted

toachievemaximumeffect.Resultsingrowthin

sustainableenterprisesandexpanded

employmentopportunities.

Governmentpolicyandsupport Governmentpolicyandsupport

Combinationofdisjointedgovernmentpolicy,

planningandaweakandincreasingly

marginalisedruraleconomy.Economic

conditionsresultinunsustainablefarming

conditionsandemploymentdeclinesalong

withproductivity.Foodshortagesandthelack

of

development

in

rural

areas

leading

to

increasingsocialtensions.Aviciouscycle

developswiththesectorgoingintolongterm

decline.

Governmentdepartmentscoordinatetheir

effortstoachievemaximumimpact.However

economicconditionshamperprogress.Efforts

bytheAgriSETAareunderminedbypoor

labourabsorptionandjobinsecurity.Some

significantsuccessesarerecordedincluding

some

NSF

funded

projects

that

result

in

sustainableenterprises.Aplatformislaidfor

futureimprovementswhentheeconomic

conditionsimprove.

Scenario4:WeakstateandeconomyScenario2:Strongstatebutweak

economy



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AgriSETA June2010


SECTION 2: DEMAND FOR SKILLS

AgriSETAregisteredemployersandemployeecoverage

In2009,

17

234

employers

were

registered

with

the

AgriSETA,

comprising

15394smallemployers(lessthan50employees)

1202mediumsizedemployers(50 149employees)and

638largeemployers(morethan150employees).

Consideringthattherearearound40,000commercialfarms33

,the17234employersrepresent

around43%ofcommercialfarms.Notwithstandingchangesinthesectorasaresultofland

reformandsectorshrinkage,thisisasizableproportionandisheldtobesufficiently

representativeforthepurposeofskillsdevelopmentplanning.

Howeverthis

paints

an

incomplete

picture.

It

understates

the

representative

nature

of

large

enterpriseregisteredwiththeSETAandoverstatestherepresentativenatureofsmallregistered

enterprises.4175(24.2%)oftheenterprisesarelevypayingmembers.Further,only1673(11%)

workplaceskillsplans(WSPs)weresubmitted..

Table16:Registeredemployersbysizeandsubsector

Sub

sectorDescription

Employers

Small Medium Large

Coffee/TeaProcessingandmarketingofcoffeeandteaincluding

coconuts,cocoa,nuts,olives,dates,etc.33 4 3

Fibre Grading,ginning,packingofwoolandcottonrawmaterial 1676 16 18

Fruit

Fruitpacked

in

cartons,

fruit

juice

concentrate

drummed

and

fruitjuiceincontainerreadyforconsumption271 36 57

Fruitexportersandimporters 6 0 1

Grain

Manufactureofgrainmillproductsandstarches 119 5 7

Handlingandstorageofgrain 67 7 23

Wholesale&retailtradeinAgriculturalmachinery 213 9 4

SaleanddistributionofAgriculturalrawmaterialsandother

farminginputs182 9 3

Milling

Manufactureofflourandgrainmill products,includingrice

andvegetablemilling,grainmillresidues120 15 11

Manufactureofpreparedanimalfeeds 110 19 0

Manufactureof

pet

foods

42

9

0Manufactureofstarchesandstarchproducts 7 1 1

Pest

controlPestControl 209 4 0

PoultryPoultryandeggproductionincludingtheslaughtering,

dressingandpackingofpoultry305 49 37

Primary

GrowingofCerealsandothercrops(notelsewhereclassified) 902 160 34

GrowingofVegetables,Horticulturalspecialties,nursery

products943 120 72

GrowingofVegetables,Horticulturalspecialties(Including

OrnamentalHorticulture)andnurseryproducts.11 5 0

Sugarplantationincludingsugarcaneandsugarbeetetc. 9 4 2

33SARSstatistics,2007


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AgriSETA June2010


Sub Description Employers

Growingoffruit,nuts,beverage,andspicecrops. 1795 255 143

Farmingofcattle,sheep,goats,horses,asses,mules,and

hinnies;Dairyfarming.2252 59 18

Otheranimalfarming,productionofanimalproducts(NEC) 433 25 12

Ostrich

farming

5

0

0Gamefarming 16 0 0

Growingofcropscombinedwithfarmingofanimals(Mixed

farming)2920 256 109

Growingofcoffeeandteaincludingcoconuts,cocoa,nuts,

olives,dates,etc.2 0 0

Agriculturalandanimalhusbandryservices,except

veterinaryactivities438 22 9

Otheranimalfarming(notelsewhereclassified) 11 1 1

Growingoftreesassecondcropbyfarmers 126 18 4

Fishing,operationoffishhatcheriesandfishfarm 913 10 6

Redmeat

Productionandanimalproducts(notelsewhereclassified) 6 0 0

Slaughtering,dressing

and

packing

of

livestock,

including

poultryandsmallgameformeat.317 40 17

Production,sale&marketingofAgriculturalbyproducts(e.g.

bones,hides)61 2 0

Slaughtering,dressingandpackingoflivestock,including

smallgameformeatandprocessingofostrichproducts2 1 0

WholesaletradeinAgriculturalrawmaterialsandlivestock 193 7 10

Transportoflivestockassupportingactivity 224 0 0

Agriculturalandlivestockresearch 215 9 3

Seed Seedproductionandmarketing 149 12 6

SugarManufactureofsugarincludinggoldensyrupandcastor

sugar

45 5 21

Tobacco Processinganddispatchingoftobacco 46 8 6

TOTALS 15394 1202 638

Source:AgriSETA,WSPdata

Thelargestnumberofregisteredsmallandmediumenterprisesarefoundinthemixedfarming

subsector,whilemostlargeenterprisesareinthegrowingoffruit,nuts,beverageandspice

cropssubsector.

EmployeecoverageintheAgriSETA

Collectively,the

17

234

employers

registered

with

AgriSETA

employed

atotal

of

239

076

employees.Thisrepresents39%oftheagriculturallabourforcein2009.

The1673employerswhosubmittedWSPsin2009employed97898employees,representing

41%ofthetotalnumberofpeopleemployedbyregisteredemployers.Whilethenumberof

registeredemployerssubmittingWSPsissmall(11%),theyemployasizeablenumberof

employeesa