FARMERS believe the increase in minimum wages has driven the Eastern Cape agricultural sector “one step closer to collapse”, with many considering retrenchments and downscaling their production to compensate for rising costs.
Farmers – who have now been forced to increase their workers’ wages by 52% after violent protests in the Western Cape – believe that some agricultural operations could even be forced to leave the business.
Coupled with other pressures, including climbing electricity and water tariffs as well as fuel price hikes, they believe the effects of this decision by the Labour Department will have widespread negative effects.
These could include large-scale job losses and increases in food prices, while the cost pressures could even place food security at risk if production is scaled down dramatically.
Workers have welcomed the increase, but said it was still not enough to help them survive.
From next month, the minimum wages will increase from R69 a day to R105, it has been announced.
Doug Stern, a livestock farmer near Graaff-Reinet who also serves on the human resources portfolio of Agri Eastern Cape, said he had been inundated with calls from farmers trying to find out what the retrenchment process entailed.
“There is definitely a sombre mood,” Stern said. “Expecting farmers all of a sudden to pay so much more for wages is ludicrous.”
Stern has already started downscaling his workforce and now operate with only six employees on 7500ha of farm land.
“I need to say that I believe the Labour Minister [Mildred Oliphant] acted beyond her jurisdiction and did not investigate the issue thoroughly. It was a decision made due to political pressure and does not make any economic sense.
“There is no way farmers will be able to afford this and there is no other industry that just has to accept a 52% wage increase like this.”
Agri Eastern Cape president Ernest Pringle said the feedback from farmers had been “extremely negative”.
He said another major problem exacerbating the wage increase issue was that farmers could deduct only 10% from a worker’s wage for lodgings, water and electricity, and the same percentage for food.
“This is way less than the cost, and we are expected to pay the rest. This doesn’t even take into account the services in kind we provide for our employees, like transporting them to shops and to clinics. We are not compensated for these.”
Pringle said labour-intensive farming – fruit, vegetables and dairy – would be hardest hit and that agriculture in the province was “one step closer to collapse”.
Paterson dairy farmer Colin Lovemore said his wage bill for his 15 workers was about R30000 a month, but from next month would be about R46000.
“I am going to have to cut my workforce down to 10 and introduce shorter working hours. I just can’t afford it otherwise,” Lovemore said.
Gamtoos Valley citrus farmer Petrus du Preez said he was currently spending about R60000 a month to pay his 40 employees, but from next month this would increase to about R90000.
“This is a massive increase which is not in anyone’s budget or part of any farmer’s planning, so we will have to look at adjustments,” Du Preez said.
Xolisa Memane, a dairy farm worker in Addo, said she was happy about the new minimum, but it was still not enough to support her family.
“Costs keep on rising. I have two children and to have to feed and clothe them on such low wages is nearly impossible,” Memane said.
Addo fruit picker Thobeka Mantile agreed and added she was struggling to survive, and would continue to do so despite the increase.
“Things are just getting more and more expensive every day and we have not been compensated accordingly for years now,” Mantile said.
Food and Allied Workers’ Union (Fawu) provincial secretary Luyanda Matuntuta welcomed the increase, but also believed it was not enough.
“Farm workers have been suffering for some time now,” Matuntuta said.
On potential retrenchments, he said the union would deal with these when and if they took place.
Economists have also warned of potentially devastating effects.
Nelson Mandela Metropolitan University (NMMU) economics head Dr Pierre le Roux said the impact of wage hikes would be an increase in unemployment.
“Expect increases in behaviour, like crime, linked to social causes as a result. The intentions of the minimum wage are good but the secondary effects are damaging. Someone requires some basic economic lessons.”
Rhodes University economics unit head Professor Hugo Nel said it was very difficult to balance the needs of workers and the needs of farmers.