The tone of my newsletters is typically light, in the wake of recent events I feel it's important that at least one more farmer's perspective is heard.

In Dec/Jan the Elgin/Grabouw area was rocked by the much publicised farmworker strikes. For all farmers in the region it has been extremely unsettling. The basic rural wage determination, set by the Dept. of Labour at R69 p/day, was challenged by Cosatu and other farmworker unions, the latter representing less than 10% of all farmworkers in South Africa.

The response from AgriSA has been abysmal, thus giving Tony Ehrenreich and the like a platform to control the media and the general perception pertaining to worker demands. It is also interesting to note that the Western Cape is the only province to experience large-scale unrest on farms, a province that on average pays 30% higher farm wages than all other provinces in SA.
 


The truth is, in the Grabouw area at least, most strikers were not farmworkers at all, but rather groups of unemployed youths living in the Pineview township, including ANC sponsored troublemakers bussed in from Cape Town. The mass migration from the now defunct Eastern Cape has seen our small town grow by 10,000 inhabitants since 1994, placing further strain on service delivery and job availability.

On 4th Feb 2013 the government announced it will raise the rural minimum wage by 52% to R105 p/day effective 1st March. The knock-on effects are likely to be dire. Farming is a cyclical business, some years are good, some years are bad. In many ways one gambles with nature and the outcomes are uncertain, coupled with the challenges of competing in a global marketplace where agriculture is subsidised in many other countries.

One can generally determine the health of an industry by assessing whether the number of players in the industry has grown. In the case of commercial farmers, since 1994, the numbers have declined from 120,000 to 37,000. South Africa became a net importer of food for the first time in 2007. A one-size-fits-all wage increase is clearly not the answer if government wants to create jobs in an industry that has already shed an estimated 400,000 jobs since 1994.

Using grape growers as an example, over the past 5 years production costs have steadily increased while grape prices have declined, coupled with unforeseen disasters such as the flooding experienced along the Orange River in 2011. These are marginal farms teetering on the verge of collapse. For many farmers, wages can form up to 40-50% of their entire production cost. In an environment where prices are declining, they will be left with no choice but to close their doors or shed further jobs.

An increase in the rural min wage will inevitably lead to a proportional increase in the urban min wage, currently at R90 p/day. Retailers and supermarkets will look for ways to offset these increases further down the value chain, which will, in turn, lead to more pressure on farmers, ultimately causing further job losses.

From a farmer's perspective the options are clear; less labour, a more efficient workforce with increased productivity and innovation through mechanization.
 


I can only speak on behalf of Oak Valley with regard to specific labour practices, but I know that the vast majority of Elgin farmers employ a similar ethos when it comes to looking after their workforce.

  • In season, Oak Valley employs up to 850 workers, 200 permanent and 650 seasonal. Fruit farming is a seasonal business (Nov-May) and thus requires seasonal contract labour.
  • Seasonal workers are paid more than the minimum wage, typically ranging between R80-R90 p/day + picking and sorting incentives.
  • 200 seasonal workers are housed on the farm during harvest where they are given 3 proper meals p/day.
  • Permanent workers are paid, on average, R130 p/day, with some earning up to R400 p/day depending on seniority and skillset.
  • Permanent workers have added benefits including pension and healthcare, predominantly funded by Oak Valley.
  • In 2011, Oak Valley had its first farmworker millionaire who received a R1.3m payout from the Provident Pension Fund. There are two more in line to receive R1m+ this year.
  • Permanent workers live in rent free on-farm housing of an exceptional standard with subsidised electricity and free water. There is no other industry in South Africa that provides housing to the extent that farming does.
  • A community centre was built in 1955 for the hosting of religious activities and social functions, it is used free of charge.
  • A day-care facility, built in 1964, is licensed to accommodate 64 pre-school children where working mothers are entitled to enrol their children free of charge.
  • Sports facilities under lights make provision for rugby, cricket, football, tennis and netball, including a fully equipped clubhouse built in 1986.
  • Transport for schoolchildren to and from school every day using a hired bus is provided at no charge.


My point is not to highlight how well Oak Valley treats its labour, we consider these initiatives a normal part of running a healthy business and ensuring a motivated workforce. It's a win-win. Most of these initiatives were introduced pre-1994. My point is as follows; when one considers the additional costs associated with the abovementioned hidden benefits, the real wage is far higher than what Ehrenreich and his cadres lead the media and general public to believe.

The past few weeks have shown that farmers in South Africa operate in a hostile environment and are in business in spite of, not because of government. The majority of white farmers realise that their futures depend on helping government develop viable solutions, yet they are largely excluded from the policy making process. The responsibility rests with government to form a long-term mutually positive relationship with farmers in order to develop policies to fit different farming circumstances. It cannot be a one-size-fits-all approach. One feels that the reservoir of goodwill by farmers towards sensible cooperation with government is rapidly running dry. This will be tragic for South African agriculture and for the economy as a whole.
 

Best regards,


 
WINE Oak Valley Sauvignon Blanc 2011 Oak Valley Sauvignon Blanc / Sémillon 2008 Oak Valley Chardonnay 2011 Oak Valley Shiraz 2011 Oak Valley Pinot Noir 2010 Oak Valley Merlot Cabernet Blend 2007
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