Sowing the seeds of change in South Africa’s horticulture sector

A little over a year ago, I attended a conference on global value chains in Cape Town, South Africa. At the time there was considerable labour unrest across fruit farms and vineyards in the Western Cape province, resulting in tumultuous and sometimes fatal clashes between protesting farm workers and police. I was in South Africa again last week on a business trip with my colleague Candida Barbato (ETI’s Category Leader for Food and Farming). We witnessed a horticulture sector that recognises the need for change, albeit one that still has a long way to go on its journey towards supporting decent employment.

Speaking with people during my December 2012 visit, I learned that the unrest had started almost spontaneously in the De Doorns valley but quickly spread across the Western Cape. It drew in a number of trade union and NGOs leaders, as well as the provincial and national government. Farmers and managers I spoke to at the time seemed genuinely shocked and bewildered at the turn of events. A different story emerged from my conversations with workers and their representatives.  It was clear that there was considerable frustration and a sense that their legitimate concerns were not being listened to. 

What’s changed during the past year?

The picture emerged of a sector struggling with some chronic and systemic issues, made more challenging because it also didn’t have a common vision, or established mechanisms for dialogue, negotiation and bargaining. The passage of a year has seen a 55% increase in the minimum wage which has improved the lot of some workers, though not all. At the same time this has created pressure for fruit and wine producers, who all too often feel caught between the rock of wage pressures and the hard place of price pressure from customers. A number of smaller farms have gone out of business due to this pressure.  Others have passed some of this cost on to workers, clawing back some of the wage increase by making larger deductions to workers’ salaries for housing, electricity and other benefits. Then there are those farms that have simply reduced their workforce. Nowhere have we heard that the cost has been passed up the supply chain to consumers.

South Africa’s horticultural industry has deep roots in the country’s political legacy. There are strong strains of conservatism and the sector has little history of established worker representation or negotiation mechanisms. Union membership is typically estimated at 5% of the workforce. Small numbers of workers on farms across a very large geographic area present logistical challenges, in addition to any access issues the unions face. 

Promise comes with new initiatives

If this feels like a bleak picture, then I need to add a few more brush strokes. Good news comes in the form of a new initiative to better understand the issues and create a space for dialogue between workers and producers. The Future of Agriculture and the Rural Economy (FARE) process involved four months of consultation and deliberation with stakeholders across a broad spectrum of organisations that make up the economy and social fabric of the Western Cape’s agricultural and rural sector.  It has proved valuable and inclusive, resulting in some 118 recommendations (which in itself depicts the complexity of the situation). Other initiatives have also started constructive dialogue.  All those we spoke with on this visit recognised that the events in 2012 had prompted a change in attitudes.

All industries go through change processes, sometimes prompted by market change, sometimes by new technology, sometimes by external pressures. For South Africa’s horticulture sector, there are a number of factors prompting change. The sector’s future must include decent employment for workers who have relevant skills and are able to contribute to the efficient production of quality products. But workers can only enjoy such conditions if business is able to respond to the demands they face and distribute the real operational costs throughout the supply chain.

What of Western retailers and consumers?

This leads to the obvious question – would Western consumers (including British customers) pay more for the South African fruit and wine products they purchase? Many people I spoke with said that if the price of a bottle of South African wine went up by a few pence, that would easily deliver decent wages and benefits for farm workers. Given that the shelf price of a bottle of wine in the UK includes about £2.00 tax, I don’t find this too hard to believe.

South Africa’s horticulture sector is sowing the seeds of change. Many of the solutions need to be locally developed and owned, and there is clear evidence that this is starting to take place. But what is also needed is engagement and momentum at all levels of the supply chain. International business (from exporters and suppliers to retailers) needs to develop stronger partnerships with local producers to ensure that they are delivering on their sustainable and ethical commitments to consumers.

The case for supporting change

Building genuine partnerships with suppliers and producers makes even more sense if we look at trade dynamics and global market competition. The demand for certain high value agriculture products (such as wine and premium vegetables) is rapidly increasing as middle class consumers from emerging markets enjoy greater purchasing power. South Africa is already experiencing this new trend, with some wine producers reporting a higher demand from customers in Russia and China.

Increasing competition among global buyers will inevitably affect product price and the ability of British supermarkets to continue to source these products at affordable prices in the long run. Building genuine partnerships with existing suppliers and supporting the long-term sustainability of producers in sourcing countries is one way that British retailers could protect their future capacity to source these products.

British and European food retailers may need to take difficult decisions and, where necessary, pass some costs on to consumers. But it seems to me that South African horticulture’s journey towards a sustainable sector that delivers high quality products and provides decent employment is well worth supporting and paying for.

This blog was co-authored by Peter McAllister and Candida Barbato.