The days of relatively cheap South African food may be over forever. A pineapple grown in South Africa ‘s sub-tropical KwaZulu/Natal that sells for R5,99 (US S0.66) in a Pretoria supermarket hundreds of kilometers away nets very little for the grower. On average farmers receive anything from 30% and lower for their products. (In the case of wine, the net profit amounts to only R0,54c per bottle selling at R29,99!).
(Photo credit: Wikipedia)
The shock announcement by the Minister of Labor that a minimum farm worker wage of R105 (US$12) per day will come into force on March 1 has set off a series of events that could change South Africa forever. Agriculture has shed hundreds of thousands of jobs since minimum wages were introduced in 2000. Now retrenc hm ents of farm workers will increase dramatically, but in fact, farmers have been abandoning labor-intensive farming for some time, and mechanization has grown.
Vegetable and fruit farming is still vulnerable because it is labor-intensive, but more than 45% of the total wine crop in the Western Cape is being harvested mechanically. The industry has already shed about 30% of jobs, according to Rico Basson, executive director of Vin Pro. The wine industry employs more than 24 000 permanent employees and over 6 000 seasonal workers. In 2011, government earned over R4 billion in excise and VAT income on wine and brandy sales, more than the R3,6 billion the producers earned. Yet government simply looked on when this golden goose was set upon in recent violence in the area.
The hasty minimum wage increase was the knee-jerk reaction of a government on its back foot, unable to control the mindless violence and mayhem in South Africa ‘s prime wine and table grape agricultural areas. The country was forced to watch as thousands roamed the streets and farms, leaving destruction in their wake. International confidence in South Africa as a reliable supplier has been shattered, while trust on all sides within the country has dipped. South Africa ‘s farmers were on notice that they were on its own in the face of the sometimes K hm er Rouge-type savagery around them.
WINE AND GRAPES
The Hex River Valley ‘s table grape industry’s 180 or so farms employ about 8 000 permanent workers and usually another 6 000 seasonal workers. In the light of the government’s injudicious minimum farm worker wage increase, these farmers say they can reduce their staff by 20% virtually immediately. Production has been badly affected by the strikes – farms in the De Doorns area have only packed about 600 000 cartons of table grapes this season compared to one million normally.
The violence that accompanied the strikes and protests has sullied farmer/staff relations. Vines were burnt, property and cars destroyed and roads blocked with burning tires. More than 270 people were arrested for public violence, two people died and about R100 million in damages was said to have resulted when the vineyards were set alight. Some workers were threatened with death unless they joined the strike.
CONSUMER WILL PAY
Is the consumer prepared to pay for the hefty food price increases that will result from the recent strikes and protests? The consumer brought the ANC to power twenty years ago, and the chickens have come home to roost. Those who whipped up protestors to demand wage increases must realize they have neither the power nor the wherewithal to feed South Africa . Commercial farming in South Africa is in the main market-related, and the government cannot force farmers to commit suicide. Who will feed South Africa if commercial farming collapses?
South Africa’s Milk Producers Organization says milk prices would need to rise by “at least 14%” to prevent more dairy farmers from leaving the industry. While farmers are paid between R2,75 and R3,50 per liter of milk, they need R4 to make a profit. South Africa had about 30 000 dairy farmers in the 1980’s and has around 2 300 now. Dairy producers in the Free State say that apart from the 52% hike in the cost of labor, veterinary services have risen 15% and energy costs 16%. And in North West province, a strike that started on December 3 last year at the Dairybelle commercial dairy is still not resolved. There has been violence and intimidation and a senior official says the damage to property is estimated to be R10 million Company vehicles were attacked with stones and petrol bombs, this despite a court order in place to protect company property.
The fight has been about wages. Clearly wages are low, but most farmers would pay more if they could afford it. Given the prices they receive for their produce, a radical re-alignment must take place with regard to what costs are involved between what the farmer receives and the price charged by the retailer. Farmers are squeezed from all directions, TAU SA president Louis Meintjes told Business Day. The cost of electricity, diesel, numerous taxes, feed stock and now wages means that retrenc hm ent is the only way to survive. Many farmers run at a loss because of input costs which were higher over the past ten years than profits. Monthly minimum farm wages rose 51,3% between 2006 and 2011.
In addition, the sectoral minimum wage determination now in place was valid for three years from one year ago. This figure has now been arbitrarily upgraded by more than 50% by the Minister of Labor in response to terror and intimidation on the streets. Will she and her government succumb to more demands in the future, at the whim of the radicals and the political opportunists? At the end of January 2013, the Rev. Nosey Pieterse, a self-appointed leader of the protesters, is reported to have declared the government must come up with “something better than R105 per day. We have been able to achieve that several times, without even a push”.
Chairperson of the Hex River Valley Table Grape Association Michael Laubscher says farmers in the area pay wages they can afford. Others pay what they can’t afford: some made a R5 loss on each 4,5 kg carton of grapes during last season. And what do the banks say? Ernst Janovsky, head of agribusiness at ABSA bank says that at this time of the year, farmers are “fully stretched” as they have incurred all of their costs and will only receive income a few months after they have delivered their crops.
SA Table Grape Industry chairman Johan van Niekerk confirmed that at this stage of the season, it would be very difficult for the majority of farmers to raise the cash needed to meet the increased wage now made law by the Minister. At the beginning of the season most of the farmers arranged funding from their banks on the assumption that they will be paying seasonal workers around R70 a day. “Even if the growers in De Doorns wanted to pay R110 a day, their bankers probably wouldn’t let them,” said van Niekerk. At the moment, labor accounts for 40% of input costs in the table grape industry.
WHO WERE THE INSTIGATORS?
The men responsible for inciting the strikes, protests and the resultant violence are Rev. Nosey Pieterse, Tony Ehrenreich and Marius Fransman.
In November 2012, TAU SA president Louis Meintjes wrote to the State President about the clear political agenda behind strikes and unrest already incipient in the Western Cape . TAU SA believed this would spread to the rest of the country, and informed the president that a political solution should be found for the unrest, rather than making amendments to the minimum agricultural wage. People were bussed in to the violence areas and went on the rampage.
“We believe this is for political purposes to destabilize the province because the ANC is not the ruling party in that province”, he said. The people are dissatisfied because promises have been made to the populace and are not kept. “Your government is just an onlooker to the immigration of people from neighboring countries who take job opportunities from South African citizens”, said Meintjes. The letter went unanswered.
The government did little as three men turned the Western Cape ‘s agricultural sector upside down. To add fuel to the fire, the Minister of Agriculture Ms. Tina Joemat-Pettersson encouraged the violence by telling protestors they would not be charged for their destructive activities.
TONY EHRENREICH is the Congress of SA Trade Unions (COSATU) Cape provincial secretary. TAU SA has now laid criminal charges with the police against him: he is reported to have threatened that farmers’ land would be taken away from them if they dismissed their workers. Last month, Ehrenreich threatened that a “war about land” would start soon. In a press release, he said he wanted “to ruin bad farmers” and that COSATU would “take action against farmers guilty of intimidation and discrimination”. He wants to change the agricultural sector “forever”, he says, and he gave notice that he would be “coordinating the mother of all strikes against bad farmers”.
THE REVEREND NOSEY PIETERSE is president of the Black Association of the Wine and Spirit Industry (BAWSI), formed in 1998 to “transform” the industry. He is a pastor of the Evangelical Lutheran Church and has been central to the De Doorns protests. He has been a fixture in the area for some time, purportedly acting on behalf of the workers (although only 6% of workers in the area are formally unionized). He has a mixed reputation.
In his hallmark Chairman Mao cap, he uses his sermons to rage against “the capitalist system” but like so many of his ilk, he is not averse to the perks of this system. At one stage, BAWSI was a well-funded non-profit organization receiving a generous stipend from the SA Wine Industry Trust (SAWIT), set up in 1999 to “support transformation” in the industry. Until it experienced financial problems in 2007, SAWIT was paying BAWSI R200 000 a month purportedly for “development projects”. When proof of these projects was demanded by some journalists, nothing came to light.
After losing the monthly stipend, BAWSI announced the sale of a black empowerment consortium which had bought shares in the liquor group KWV. Nobody knows what happened to the sale of the shares, if they were sold. (They are valued at around R56 million). Pieterse was made chairman of Lindiwe Wines, another empowerment wine label launched in 2003. This flopped, with debts of R5 million. Like so many others within the ruling classes who say they despise capitalism, Pieterse appears to be a master of the financial shake-down.
Pieterse has regularly called for a boycott of SA products unless a pay rise to R150 is awarded, and this call was repeated in overseas newspapers. The British newspaper The Guardian ran a poll asking readers “Will you boycott South African wines” and 59% of readers said they would. Wines South Africa responded to The Guardian by reminding them that the wine industry contributes an estimated R27 billion to the SA economy and employs 275 000 people. During the height of the unrest, Pieterse was seen distributing food parcels to the value of R10 million paid for by the Minister of Agriculture, using of course taxpayers’ money.
MARIUS FRANSMAN is the ANC’s Western Cape leader and an ANC deputy Minister. He refers to Tony Ehrenreich as “Comrade Tony”. According to the official opposition Democratic Alliance (DA) which controls the Western Cape, he is a racist who has already started his campaign for next year’s national elections: he wants to expose the DA for “favoring its rich white constituency” over poor black communities. He wants the ANC to develop “strong activist structures on the ground” and this is taking root. Blacks from the Eastern Cape have moved into virtually all Western Cape and Karoo towns, places where they have no historical presence and where there are no jobs. These towns have been traditional Coloured areas for centuries. Last year, Fransman’s ANC circulated a letter declaring it would make the Western Cape “ungovernable” and that agriculture would be used to start the campaign.
TAU SA COMMENT
* Some overseas television news programs referred to South African citizens’ “inequality” while filming the recent mayhem in the Western Cape . Geography and history have formed South Africa , and its diverse peoples have to live together, despite their huge cultural, economic and social differences. The living standards of Bangladeshis and Germans differ enormously, as do those of the Canadian Inuit Eskimos and Malaysians. These dissimilar peoples don’t live in the same country however. Talking about inequality as you report on the basic wage problems in South Africa is irrelevant. Market forces dictate wages, and the inequality within South African society is not the fault of the commercial farming sector.
* Will emerging black farmers be able to afford the new wage determination, given their present struggle in an unfriendly agricultural climate? Given that the hundreds of farms already handed over to blacks under the government’s land redistribution program now lie fallow, how will the continuation of this program fare under even more onerous conditions including the government’s new minimum wage?
* Officially every worker in South Africa supports three people. This figure is greater in the rural, poorer areas: thus thousands of people losing jobs means millions of people going hungry. A minimum wage is a fixed element in a mosaic of market-related forces, some beyond the control of the agricultural industry. Wages should be market related. If someone wants to work for R50 a day, then he should have the right to do so. There is no such thing as slave labor on South Africa ‘s commercial farms – workers can leave anytime they want. Rural towns are full of men standing around looking for work. They beg passing farmers for a job. They are hungry and they cannot feed their families and they will work for much less than the minimum wage. But if farmers are found employing these men, they are fined. So nobody wins.
* Why should three rabble rousers be allowed free reign to sow destruction in a crucial South African industry? And why do farmers’ groups give these men money and status with empowerment deals and chairmanships of show organizations simply because they demanded it? Look what they have wrought because they have the status and the funds to support their anti-farming rabble rousing. Do farmers’ groups believe that by placating people like these they will be kept “on side”? Nothing could be further from the truth, and the recent unrest proves that.
* The government is antagonistic towards and non-supportive of commercial farmers. The agricultural control councils which regulated prices were abandoned in a wave of let’s-get-rid-of-the-past moves when the ANC came into power. South African farmers compete in international markets at a severe disadvantage: farmers in the EU for example are heavily subsidized, and it will now be harder to sell South African agricultural products. Irreparable damage has been done to Brand SA, says one newspaper headline. Our reputation for reliability, quality and a competitive price is on the line. The South African government doesn’t deserve its farming community, and many could well move to friendlier climes. Mozambique is being mooted as an alternative fruit and vegetable producing environment. Let Messrs. Ehrenreich, Pieterse and Fransman pay imported prices for their food.
* In the final analysis, the real power rests with the farmers. The government might be “in power” but it doesn’t have power. It cannot feed its population, it cannot create jobs for its followers. It cannot run a municipality, it cannot budget, it needs consultants to do the work its own appointees cannot do. It is helpless, hopeless and hapless in the face of this reality. It is parasitical, and it destroys and consumes, while others produce and create and innovate. And herein lies its Achilles Heel. The golden goose won’t live forever, and when the cupboard is bare, who will take the place of the country’s hard-working agricultural sector? Are there any other takers for this thankless job? We don’t think so!
This article first appeared in TAU SA’s bulletin, February 8 2013
The days of relatively cheap food my be over forever – TAU SA