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Agri Eastern Cape says the 8.5 percent increase in the national minimum wage is out of touch with the economic realities experienced by businesses in South Africa.
The increase from R25,42 to R27,58 per hour was published in the Government Gazette on Friday and will be effective from 1 March 2024.
The agricultural organisation says it believes that remuneration must be fair and reasonable, among others.
However, it says there is no way that above-inflation increases will not have a significant impact on employment within the sector.
"While the official unemployment rate approaches 40%, the real unemployment rate within many of our rural towns is probably closer to 65%", Agri Eastern Cape said.
It says commercial farmers have had to absorb huge increases in production input costs, while product prices have not moved accordingly for some of the sectors.
Agri EC says although mechanisation and optimisation of resources is a worldwide trend, the increased cost of labour above inflation still needs to be factored in.
Meanwhile, AgriSA chief executive officer, Johann Kotzé says on the one hand, it has the potential to improve the spending power of households, but on the other hand, it could mean job losses, especially in smaller farm businesses.
He says many rural areas rely heavily on the sector for employment and economic stability.
"If farmers are forced to cut back on labour or scale down operations due to increased labour costs, it can have a ripple effect on local economies. Reduced farm incomes may lead to decreased spending in rural communities, affecting businesses that depend on agriculture-related activities such as equipment suppliers, food-processing plants, and transportation services", Kotzé said.
