Friday, 16 August 2013

New farm wage ‘human capital’

LEADING agricultural economist Mohammad Karaan on Wednesday appealed to farmers to accept the controversial minimum wage for farm workers that was introduced this year.

"But don’t fight the minimum wage," he told delegates on the second day of a Produce Marketing Association conference in Somerset West on Thursday. "It is more important for agriculture to be humane in terms of wage levels and to develop human capital, and then we can build from there."

Prof Karaan, the dean of agricultural sciences at Stellenbosch University and a presidential appointment to the National Planning Commission, expressed sympathy for farmers trying to create employment and admitted that the R105/day minimum wage announced in February would inevitably lead to job losses.

Although the wage increase would play havoc with the commission’s goal of creating a million jobs in agriculture, the sector had been "lucky" that it had come at a time when it was affordable, he said.

Tommie van Zyl, head of the Limpopo-based ZZ2 farming dynasty and one of South Africa’s leading farmers, said it was "imperative" that local farmers paid "market-related’ wages. "Our market is not only domestic but international too, and as our sector becomes more competitive internationally, the higher wages will become more affordable," Mr van Zyl said.

He said, however, he would be "pleased" if the higher wages were part of a long-term strategy that involved the government, agricultural economists and the workers, "not just in response to a popular uprising". Mr van Zyl was referring to the farm workers’ strike in the Western Cape late last year and earlier this year.

"The minimum wage has been a shock. In ZZ2 it has wiped out our profit for this year.

"Luckily in the past year there has been a price adjustment not related to wages — the rand collapsed, which was a huge bonus for exporters, and hail and frost (in Limpopo) cut production and pushed up the prices of tomatoes," he said.

ZZ2 is South Africa’s biggest tomato producer, also marketing onions, a range of other vegetables and fruit, such as avocados. He says the 52% increase in the wage bill will have to be carefully managed.

Prof Karaan said agriculture still has the greatest labour-absorbing capacity, and it can also resolve the land question. The most compelling argument for agriculture is that most other "advancing nations", such as Brazil and Mexico, have done so on a healthy, industrialised, exporting agricultural sector.

He pointed to recent unrest in Egypt and Brazil, where it broke out ostensibly over bus fares. It was difficult to predict where the "next eruption" would come from.

The goal of 1-million jobs that he had presented to the commission, was based on bringing more available land into agricultural production, making more water available to the sector and expanding export markets, Prof Karaan said. "It seems that hypothetically, despite the setback of the wage increase, if these other conditions are met, we can still create that 1-million jobs."
Original Article Here

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