Reports of turmoil in the Western Cape’s fruit and wine farms over the past two weeks have only served to haul out entrenched stereotypes, according to a report by two respected researchers.
Stephanie Barrientos, senior lecturer at the Institute of Development Policy and Management at the University of Manchester in the UK, authored the report – entitled Capturing the Gains – in collaboration with Margareet Visser, part-time researcher into labour and enterprise policy at the University of Cape Town.
"Besides being unhelpful, more crucially these stereotypes cloud a reality which is very complex," they told the Cape Times, one of Cape Town’s oldest newspapers. "Growers do not operate in a vacuum, but are part of global value chains which are subject to various pressures. Unless this broader context is understood there is little hope of resolving the current volatility."
Referring to what they call a "difficult climate" in fruit, the researchers said the first stereotype was that most fruit farmers were cash rich. "Research conducted by the Capturing the Gains project – which examined the possibilities of social and economic upgrading in value chains – found differently," they said. "Many farmers are struggling."
Divestments
According to industry data, 30 per cent of grape farmers in the Hex River, the fulcrum of the recent protests, sold their farms between 2007 amnd 2011.
"If for example we take a punnet of Hex River table grapes retailed in the UK in 2011, supermarkets captured 42 per cent of the final retail price, 32 per cent went to distribution, whilst just 18 per cent was received by growers (26 per cent if packhouses are included)," the researchers found.
They said evidence of a similar but less dramatic process could be found in the wine industry, where there were reportedly 20 per cent fewer farmers than 12 years ago and, according to industry reports, net income per 750ml of wine had fallen from R1.00 to R0.38 between 2004 and 2011.
"Various factors have impacted on this state of affairs," the report assessed. "Before deregulation of the fruit industry in the late 1990s, powerful marketing boards bargained on behalf of exporting South African fruit farmers.
"Since the disbandment of the boards, farmers’ bargaining power has become fragmented. Simultaneously, supermarkets worldwide have gone through a period of consolidation (including in South Africa).
"Supermarkets negotiate hard on price and require an increasing raft of standards regulating the quality of fruit, food safety and also how ethically food is produced."
The researchers pointed out also that government support to farmers had declined, observing that in the 30 OECD countries government support accounted for 32 per cent of farm income, but it only accounted for 5 per cent of farm income in South Africa.
Costly business
Farmers, they said, also faced increasing costs for inputs and rising living standards, with labour costs rising consistently.
"One industry source estimated that for table grape farms as a whole, wages as a share of total farm costs had increased from 35 per cent to 52 per cent between 2003 and 2011.”
According to the report farmers had, in response to various pressures, restructured their workforces, retaining a core of skilled workers on permanent contracts while employing increasing numbers of seasonal workers.
Some of these wre directly employed on a temporary basis, some casually or through labour brokers.
The number of permanent workers fell from 28 per cent of the total table grape workforce in 2007 to 20 per cent in 2010/11.
The report sought to dispel a second stereotype, namely that all agricultural workers were paid the same low wage.
"The reality is that agricultural workers are split into two groups. The core of permanent workers are better paid, usually have on-farm housing, vegetable gardens, crèches, provident funds, bonuses and training opportunities."
Permanent workers in South Africa could earn 20 per cent to 120 per cent more than seasonal workers, the added.
Conversely, a growing pool of seasonal workers only received the minimum agricultural wage unless they did so-called piece work; these did not have access to a provident fund and many of them lived in poor accommodation.
According to the report, while a larger proprtion of farm workforces were being employed on a casual basis, meeting supermarket standards required a bigger number of skilled workers. Given the South African agricultural sector’s low wages, however, those with skills were found to be leaving for the city.
The high demand for seasonal workers called for constant retraining, Barrientos and Visser noted. "The result is a skills dearth and intensified pressures on workers. Better government resources are needed to support training of seasonal workers and to halt the increasing exit of skilled workers it is critical that they receive higher wages."
Union unrest
The report agreed with the generalisation that most farmers disliked unions intensely, but also suggested that, in the absence of effective independent unions and social dialogue, farm workers were without a voice and bargaining power. "Frustrations become pent up, and are now erupting in the Western Cape," they said.
Given the commercial pressures on farmers, they continued, their ability to pay higher wages was dependent on them negotiating better prices with supermarkets.
“A living wage needs to be factored into supermarket pricing and guaranteed to all workers. All actors have a role to play in improving workers’ remuneration and conditions in value chains."
The Capturing the Gains report argued the government could act both as a facilitator of such an improvement process, but also to ensure that minimum wages reflected the rising cost of living.
"It should also provide better services and support to farm workers. The South African government will also have to rethink its policy on general support for the sector if it is to be a node of employment growth, as stated in its National Development Plan," the researchers concluded.
Global Summit: Capturing the Gains in Value Chains will be held in Cape Town from 3-5 December 2012. During the summit, an international network of experts from the Northern and Southern Hemispheres will promote strategies that improve the position of producers and provide better jobs in value chains. The event will be streamed on the web. For more information go to www.capturingthegains.org
