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PKF Knysna

A GOOD NEWS STORY: FARMING IS DOING BETTER THAN WE THINK

12 Sep 2016

One of the stories that underpins the current wave of pessimism around our economy is farming. We read stories about:

  • Farmers being murdered and driven off their land.
  • The government plans to ban all foreign ownership of land.
  • New ways are being sought to make it easier (and cheaper) for the expropriation of agrarian land. 
  • In the late 1980s there were more than 65,000 white-owned farms. Today there are less than half of that.
  • The 2011 agricultural strike lead to a 50% rise in the minimum wage rate. This led to the belief there would be increased mechanisation in the farming industry which would result in widespread layoffs of unskilled labour.
  • The government acknowledges that the bulk of subsistence farmers settled on formerly white-owned farms have not been viable farmers.

These points are true but they don’t reflect the full story of what has in fact happened.

The positives

  • Farming output has risen by 40% since 1994
  • On the whole South Africa is an exporter of agricultural products (imagine where the currency would be if this wasn’t the case)
  • Employment in the commercial sector has risen by 250,000 since 2011- from 626,000 to 876,000 earlier this year. This is a 40% increase.
  • South African farmers have adapted to the shifts and demands of globalisation and have shown considerable resilience. For example, there has been a drop in the demand for beef but farmers have shifted into other areas such as horticulture
  • Farming income doubled between 2007 and 2012
  • Just under 1.7 million people make a living from subsistence farming. Add to this the 876,000 working in the commercial sector and you have a significant number of people earning a living on the land. 
  • Agriculture has a significant multiplier impact on the economy. For every R1 generated economic output will grow by R1.81.

Farmers not only face adverse weather conditions but they get little support from the authorities (in contrast to Western Europe and the United States). Yet they have more than coped with this by growing productivity substantially. This productivity leap has enabled the government to begin the process of transformation (nearly 10% of commercial land has been acquired or just under 8 million hectares) without it seems any harmful economic consequences.  

Farmers still confront many challenges – the proposed Expropriation Bill is one example. Yet we can be confident they will weather the storm and continue to be a vital cog in the economy.


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