Improving Agricultural Market Performance:
Creation and Development of Market Institutions
165
their control over the productive cycle globally so as to limit the risks inherent in agricultural
production.”509
The financial system – including commercial banks, insurance companies, investment funds,
and the SAFEX derivatives exchange – has come to play an increasingly central role in these
developments, in large part by enabling large agribusinesses to “centralize all services needed
by farmers, such as supply of inputs, technical assistance, and sales, in a single organization…
the company provides inputs directly to the farmer and guarantees the sales price by taking a
forward position in the futures market. During the production cycle, the company…monitor[s]
production. Engineers are sent out to carry out inspections, operations are monitored via
satellite observation, and the farmer’s accounts are audited. After the harvest, the company
takes charge of the sale of the crop, over which it holds the rights. Once the production is
disposed of, the management company repays the loan provided by the bank, plus interest.”510
There is no question that these developments have fundamentally altered the position of
smallholders and family farmers in South Africa. “Traditionally, the family unit formed the
foundation of the agricultural world, from the apartheid era to the present time, [but] the
transition of the autonomous family farm to a unit absorbed into an entrepreneurial structure
has inevitably forced changes in relationships in the agricultural world. Along with farmers
and landowners, agricultural laborers have also experienced a worsening of their situation.
Moreover, the precarious nature of farmworkers’ existence is perpetuated by the application
of cutting-edge agricultural technology, to the point where only a very small, often seasonal,
labour force is required.”511
Although this ongoing transformation has proven disruptive of traditional practices and of
many individuals’ and families’ livelihoods, it is not wholly negative. First, there is evidence
that industrialized agriculture has created new employment opportunities, even if many such
opportunities are as salaried workers rather than self-employed farmers. An estimated 1.4
million people were employed in agriculture in 1975, a number that fell to 628,000 in 2005.
But since then the numbers have increased to an estimated 953,000, as of September 2016.512
Agricultural value added per worker rose from US$4,946 in 2000 to US$9,451 in 2015
(constant 2010 dollars),513 while maize and wheat yields per hectare doubled between 1995
and 2015.
Though not well-paid, South African farm workers receive a minimum salary comparable to
that of unskilled or semi-skilled workers in other sectors. The current (March 1, 2017 to
February 28, 2018) minimum wage for farm workers is R3,001.13 per month/R138.52 per
day/R15.39 per hour. This compares to minimum wages for a driver of a light vehicle in the
retail/wholesale sector of R3,049.31 per month/R15.63 per hour.
South Africa’s highly-developed physical infrastructure – including road and rail transport
networks, efficient ports, ICT, water, and electricity – has helped lower production and
distribution costs and made its agro-food products more competitive in both domestic and
international markets. “Poor infrastructure is in fact found to be more constraining to
agriculture prosperity than trade barriers.”
509 Ibid
510 Ibid
511 Ibid
512 DAFF (2017), Abstract of Agricultural Statistics, Pretoria: Department of Agriculture, Forestry, and Fisheries.
513 World Bank (2017), World Bank Open Data, available a [Accessed May 2017].