While South Africa’s agricultural sector has done well for the past two or three years, fruit farmers in particular are likely to face much lower profits because of rising costs over the next decade.
This assessment comes from the Bureau For Food and Agricultural Policy (BFAP), which produces independent analyses of South Africa’s agricultural economics, policies and prospects.
Its latest Agricultural Employment Brief said farming jobs in the first half of 2022 were more or less the same as in 2019, indicating that the sector had retained most of its jobs, despite the impact of the Covid-19 pandemic. This was largely due to good growing conditions and a strong performance over the past three years, with rising wages and improved livelihoods in the agricultural sector.
However, it expects rising wages and other input costs to reduce the profitability of fruit farms in the decade ahead.
“Labour makes up 20-45% of the total variable cost of fruit farming, depending on fruit type, and our analysis on farm profitability in many of South Africa’s major fruit industries suggest that gross margins will decline substantially compared to the previous decade,” BFAP said.
If this came about, the most likely outcomes would be fewer jobs or lower wage increases.
“There is therefore a need for serious dialogue between the relevant stakeholders on how to continue the balancing act of sustaining the financial viability of farm businesses with the need to uplift and improve farm worker livelihoods.”