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Output is explained by land, labour and machinery and efficiency is affected by labour quality, age and education of the farmer, location, the percentage of non-bearing vines and expenditures on electricity for irrigation. There is evidence of a small degree of increasing returns to scale. JEL Classification: Q12

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A survey of 190 wine and table grape farmers in the Western Cape puts the average wage for farm labour at R928 per month in 2003 and R1123 per month in 2004. Output per worker has doubled since 1983. On farms with grape harvesters, labour is 30 per cent more productive (48 ton/worker) than on farms where wine grapes are picked by hand (37 ton/worker). At 9.75 tons per worker, table grapes are four times as labour-intensive as wine grapes. Resident men dominate the workforce on wine farms, while the resident female workforce is 20 per cent larger than the resident male workforce on table grape farms. Seasonal workers contribute a third of labour in table grapes, and brokers less than ten per cent in either case. In a single-equation short-run Hicksian demand function, wage, output, capital levels and mechanisation intensities are highly significant determinants of employment. Higher wages decrease employment and larger output increases employment. More mechanisation, measured by the number of tractors used to produce a ton of fruit, raises labour intensity too. Grape harvesters could not be shown to reduce jobs. The ten per cent rise in the minimum wage planned for March 2005 could reduce employment by 3.3 per cent in the wine industry and 5.9 per cent in the table grape industry, but it is more likely that the wage increase will be offset against fewer benefits. The average expected impact is about the same as for all agriculture and manufacturing as a whole. 1. Conradie BI (2004). The effect of the level of the agricultural minimum wage in the Western Cape wine industry after one year. Presented at AEASA, Somerset West, 22-23 September 2004. Department of Agriculture (2004). Abstract of Agricultural Statistics.

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