Survey shows rising costs of agriculture
2006-09-14
AT the recent agricultural summit at Elsenburg, farmers shared their experiences on farms and, amongst others, ESTA legislation, the All Pay system, the establishment of new farmers and relations with local government.
The general response of the audience to Agri Wes-Cape’s presentation on the economic position of primary agriculture in the Western Cape was one of shock.
Many suggested that the presentation be repeated to the full Western Cape cabinet and also to national government.
During the presentation to agriculture minister Cobus Dowry, the CEO, Carl Opperman, pointed to the fact that the South African government’s support of agriculture is the third lowest in the world at a time when it is faced with distress calls for rural development and the establishment of new farmers.
He further stated that agriculture is the primary economic activity in most rural towns.
With its 7 185 farming units, the Western Cape has the second most farms and labourers in relation to other provinces, but also the highest farmers’ debt in the country.
Western Cape farm labourers are the most highly paid, with a wage 28,6% above the national average. He said the perception that agricultural units in the Western Cape are large and profitable, is untrue.
“At least 77% of farms have a turnover of less than R1 million, which leads one to wonder if they will be forced out of the industry.
“Due to the economic realities, which in turn will lead to an economy of scale, it will inevitably result in greater units.
“It’s all about survival. The effect is already visible in the impoverishment of rural areas, gradually also affecting local governing authorities.
“To reverse this situation, one should primarily focus on low tariffs, where cheap products of inferior quality force down our higher-quality products; national costs (managed prices) which producers cannot control, and agriculture, which is a price taker that does not determine its own price,” he said.
“Other issues that need attention are research and development, which will promote competitiveness in respect of exports. This is one of the reasons why Agri Wes-Cape is against the fuel levy, toll roads and the indiscriminate levying of property tax due to the impact on production costs.”
Wine, fruit, horticulture and livestock are the most important industries in the Western Cape. The majority of these industries are labour intensive and geared to the export market, and generate 60% of the agricultural income of the Western Cape.
Vinpro research showed that primary wine production during the past three years have not been profitable at all, and that these farmers have had to resort to other sources of income to survive; once again due to ever increasing input costs against a constant, and even falling wine grape price.
This proves that the profitability of the wine industry has declined to such an extent that its sustainability is questioned. The same goes for the production of table grapes, apples, pears and winter grain industries.
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