Opinionista Wandile Sihlobo 5 April 2020

Will Covid-19 structurally change the agricultural labour market?

Agriculture is well placed to provide livelihoods to those struggling to enter the workforce, and the entire food value chain has been classified as ‘essential’, which has enabled activities to continue in this sector.

Most European and North American countries are generally regarded as food secure and hold a prominent place in the Global Food Security Index. This means these regions should be able to weather the Covid-19 pandemic with minimal concerns about food security. However, the growing challenge in the agricultural sector in countries like Germany, Italy, France and the Netherlands, among others, is the shortage of farmworkers due to border closures which attempt to contain the spread of Covid-19. 

This will have immediate and significant implications since it will limit the movement of many farmworkers from Eastern Europe. This challenge is not limited to Europe; parts of the US also fear the shortage of labour which is typically seasonal from Mexico. This is a country that had started raising concerns about farmworker shortages pre-Covid-19 and now faces the prospect of not being able to access around 10% of crop-farmworkers due to challenges in processing the so-called H-2A visa for temporary farmworkers coming from neighbouring countries.  The pandemic will likely exacerbate the situation. Farmers across these countries worry that crops may rot in the fields, and that could weigh on their finances.

This phenomenon raises a broader question of whether the current labour shortages might lead to increased automation in the sector post-Covid-19 as a measure to curtail such challenges in the future. Admittedly, automation wouldn’t be an easier step across the agricultural sectors. 

The sub-sectors such as horticulture (fruit and vegetables) are likely to remain labour-intensive, but where possible, technological diffusion will probably accelerate. There is no evidence of this effect as yet but it is an area that will be worth observing in the coming years. This is specifically the case for policymakers in countries such as South Africa, which in its National Development Plan (NDP) expressed a desire to increase employment in agriculture and agro-processing sectors by roughly one million by 2030. This was underpinned by the need to increase investment in the sector, to increase agricultural productivity and the area farmed, to expand export markets, promote labour-intensive agriculture sub-sectors, and invest in irrigation.

Since the publication of the NDP in 2012, there has been an increase in the areas farmed for commodities such as citrus, macadamias, apples, table grapes, avocados and soybeans to levels or above levels assumed during the publication. What’s more, employment in primary agriculture grew from 718,000 in the last quarter of 2012 to 885,000 in the last quarter of 2019, a 23% increase. 

The potential for the expansion in productive farmland lies in the underutilised land in the former homelands and underperforming land reform farms. The provinces containing former homelands that still have tracts of underutilised, arable land that can be prioritised for agricultural expansion are KwaZulu-Natal, Eastern Cape and Limpopo. These provinces collectively have between 1.6 million to 1.8 million hectares of underutilised land, according to a 2015 study by McKinsey Global Institute.

Fortunately for South Africa, there has not been a scarcity of farmworkers since the Covid-19 pandemic started to intensify. On the contrary, South Africa is in the unique and challenging position of having a labour market with a large pool of unskilled and often unemployed workers and an excess demand for skilled labour, of which there is currently a shortage. Agriculture is well placed to provide livelihoods to those struggling to enter the workforce and the entire food value chain has been classified as “essential”, which enabled activities to continue in this sector.

While conditions in the domestic market seem largely unchanged, the current labour shortage challenge in Europe and the US might spark increased automation post-Covid-19. With South Africa’s agricultural sector integrated into the global market, any changes in major agricultural producing countries will in the long run influence or be transferred to the domestic market. When the time comes for the post-Covid-19 recovery phase, policymakers and industry will have to pay close attention to this aspect. Be that as it may, agriculture will remain an important industry to increase economic activity across rural South Africa. DM

Sihlobo is chief economist of the Agricultural Business Chamber of South Africa (Agbiz) and author of Finding Common Ground: Land, Equity and Agriculture.

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