CAPE TOWN – Christmas may be temporarily delayed in the Western Cape as workers, farmers and government thrash out a wage agreement by the January 3 deadline. Workers agreed on Tuesday to suspend their strike as farmers agreed to continue negotiations for better wages and conditions.
Emotions appeared to have cooled and rhetoric tempered as leaders recognised the dangers inherent in adding fuel to an emotionally charged and volatile environment.
What is clear from the conversation thus far is that both farmers and workers feel hard done by.
The farm workforce has over decades been shaped by paternalist norms and cultures established under apartheid. Workers feel inferior with little social investment provided (including education and skills), and discrimination based on gender and race.
But farmers too have been disempowered through the rise of global value chains which have transformed global trade, production and employment. Increasingly powerful supermarkets coordinate value chains that link production, processing, retail and consumers. They strive for quality, low cost and consistency, governing their suppliers through application of strict standards. The result is that farmers’ margins are squeezed razor thin in an environment of rapidly rising costs.
The challenges faced by the Hex River Valley farmers and workers are not unique. A research paper produced by Margareet Visser from UCT and Stephanie Barrientos from the University of Manchester provides useful insight into the challenges faced by fruit and vegetable farmers and farm workers in South Africa. It can be read here.
The paper makes it clear that the problem is more complex than workers being unreasonable or farmers being exploitative. And raising wages to R150/day is not a sustainable solution.
If a permanent, peaceful solution is to be found it will require that all of the players – the workers, farmers, trade unions and government – work together.
Global value chains
In Cape Town this week academics, farmers and manufacturers gathered at the ‘Capturing the Gains’ summit to discuss the extent to which the rise of global value chains has led to improvements, specifically better access to markets, better commercial terms and decent work, for local producers and workers.
Much of the discussion was informed by research conducted over the last 18 months by dozens of academics around the globe. Their research examined the challenges and opportunities faced by producers and workers, specifically in developing countries, who are producing clothing, mobile phones, fruit and vegetables. Their objective is to come up with strategies that support fairer trade and decent work.
The last ten to fifteen years have seen an increase in supermarkets sourcing product through coordinated value chains.
South Africa is not a small player in these value chains. In 2011 the country was ranked as the world’s 5th largest fresh grape exporter, 10th largest exporter of stone fruit, and 9th largest exporter of apples, pears and quinces (ITC 2011). Over 50% of fruit produced is exported. Traditional markets include Europe and the UK, but this is shifting towards growing markets in Africa, Asia and the Middle East.
Quality trade pressures
Visser and Barrientos note that South African fruit farmers have grown exports considerably in the past decade by producing the fruit these markets desire, in the quality they require. At the same time though, standards have proliferated which dictate strict trade rules covering agricultural products. These improve quality but increase the commercial pressures and costs for growers.
For instance, an ethical audit costs about R8 000 per farm. A supermarket audit will cost R6 000/farm, excluding the costs of the auditor and a pack house audit will cost R12 000.
To adjust to a challenging commercial context farmers have adopted different strategies. Some have set up vertically integrated supply chains with their own farms, pack houses, export and logistics companies integrated into one value chain. Others have established alliances with key players in the value chain.
What is clear though is that size counts. Larger producers are in a better position to respond to changing requirements, while their size allowed them to obtain economies of scale on volume sold.
It is difficult to get an exact picture of the split in profits, but the research sites an example of the value chain distribution of final retail price for table grapes from Hex River Valley to a UK supermarket. Roughly 42% of the final retail price is captured by supermarkets, 32% goes to distribution, whilst 18% is received by growers. If the growers own a pack house, they can capture up to 26% of the final price.
To cope with rising costs farmers are cutting back on permanent labour and increasing their use of casual labour. Regular workers have seen improvements in working conditions. Casual labour however suffers lower wages, no benefits and a greater insecurity of employment.
The challenge facing the fruit industry is that there is an increasing scarcity of more skilled and educated workers, despite high levels of rural unemployment. Younger, more educated and motivated workers are moving to the cities in search of better opportunities with higher esteem.
Growers and pack houses need better educated and skilled workers to manage complex quality requirements of different supermarkets and improve efficiency. Many are providing intensive training in order to upskill both permanent and seasonal workers. But once skilled, workers then have options to seek work elsewhere with better pay and conditions.
Labour turnover is a big problem. Some growers are dealing with scarcity of ‘the right type of workers’ through recruitment of migrant labour from ex-homelands or from Zimbabwe and Mozambique.
The industry is thus facing a double edged sword. While growers downsize their permanent workforce in favour of seasonal workers, they increasingly need more skilled and educated workers. Yet casualisation is fuelling the least capable pool of workers to provide this.
At the heart of the solution lies the fact that both growers and workers need better returns to ensure their farms can keep producing quality products for the worlds markets. But also public and private policy needs to enhance the skills and empowerment of workers, and support social provision to increase the appeal of working in horticulture.
The upshot of all of this is that no one actor is able to provide the solutions alone – and all are dependent on each other. This includes the workers, farmers, supermarkets, civil society organisations like Fairtrade, Women On Farms and Cosatu, as well as government.
On Wednesday Cosatu announced that farmworkers agreed to end a pay strike after farmers’ organisation AgriSA presented proposals to end the impasse, according to Bloomberg. “An agreement was reached that wages will be negotiated farm by farm and workers will earn a share of profit,” Cosatu reportedly said. “Unions will negotiate with the farmers on the different farms. If no agreement is reached by January 9, workers on those farms will revert to taking action,” it said.
However, Bloomberg says AgriSA denies being part of any formal settlement, saying there’s nothing new on the table and that it hasn’t agreed to the January 9 date or the R150 wage.