South Africa’s primary agricultural employment in the third quarter of the year increased by 1% to 807 882 compared to the previous quarter. This slight quarterly recovery corresponds with the reopening of the economy and certain agricultural commodities during that period.

This is important because while the majority of the agricultural sector remained operational since the beginning of the lockdown, it could not entirely avoid job losses as demand for some products was somewhat disrupted. When compared to the corresponding period in 2019, employment in this sector was down by 8%.

Agricultural employment by region

From a regional perspective, the effect of the COVID-19 regulations is visible. The Western and Northern Cape, which are the major producers of wine in South Africa, saw employment fall by 31 and 15% quarter-on-quarter, respectively. This corroborates the concerns that various wine producers expressed during the lockdown period.

When viewed on an annual basis, the Western and Northern Cape’s primary agricultural employment fell by 37 and 8%, respectively. In the case of the Western Cape, agricultural employment was at its lowest level since the last quarter of 2014, at 136 729.

Other provinces in the country experienced an uptick in employment in the third quarter compared to the previous quarter, underpinned by increased activity as more sectors of the economy opened up. Nevertheless, on an annual basis, the North West and Free State joined the Western and Northern Cape in terms of employment reduction, as illustrated in Exhibit 2.

From a subsector perspective, only the forestry industry recorded an increase in employment in the third quarter of 2020, compared with the previous year. All other subsectors recorded a decline in employment. Worth noting, however, is that the dynamics differ at provincial level, as evidenced by the Eastern Cape, Gauteng, Mpumalanga and Limpopo, where primary agricultural employment increased in the third quarter of this year compared with the same period in 2019.

Status of the agricultural market

The increased employment in these provinces can be attributed to increased farming activity as this year was a boom year for agriculture in terms of output in almost all subsectors (horticulture, field crops and livestock). The country recorded its second-largest grains harvest in history. In the case of horticulture, South Africa generally had a good fruit harvest this year, with the citrus industry recently noting a 13% year-on-year (y/y) increase in available supplies for export markets this year.

There is also a broad recovery in the production of deciduous fruit with apple and pear production up by 5% y/y and 1% y/y, respectively, this year. There is also a general recovery in the livestock industry although this subsector was not as robust as other subsectors.

Had there not been a pandemic, agricultural employment would have increased notably on the back of a large harvest. However, the health protocols that were put in place, and rightly so, led to a reduced workforce in order to comply with social distancing. Disappointingly, the ban on wine sales appears to have had a major impact on employment, specifically in the Western and Northern Cape.

Future perspective

Looking ahead, the agricultural sector is poised for another good year on the back of the expected La Niña conditions. Consequently, there will be increased activity in the sector, which would sustain employment, at least at levels above 750 000, in our view. We continue to worry about the financial condition of the wine industry as the impact of the lockdown regulations on the industry will be long lasting. This, in turn, will have implications for primary agricultural employment, specifically in the Western and Northern Cape. – Press release, Agbiz