COVID-19 travel restrictions have drawn a spotlight to a problem in the Australian agricultural sector – labour shortages. Although it may prove to be the catalyst the sector needs to come up with a solution, increasingly producers seek technology and mechanisation to fill the gap.
- On Monday, the Federal Government announced the establishment of an agricultural visa. The announcement comes in response to workforce shortages in the agriculture and primary industry sectors. It is anticipated that regulations to enable the creation of the Australian Agriculture visa will be in place by the end of next month.
- Although the impact of the seasonal labour crunch has been most visible in horticultural industries, most medium to large scale agricultural businesses across Australia have been impacted to some extent by labour shortages in recent years.
- As an example of labour requirements, ABARES reported in January 2021 that Australian farms employed 326,000 workers on average across 2018/19. Labour requirements peaked at 356,000 in February and reached a low point of 311,000 in June. Broadacre farms were the largest employers in Australian agriculture, followed by fruit grape and nut farms, vegetable farms and dairy farms.
Exposure to the reality of labour shortages has spurred the whole agricultural sector down the road towards technology and mechanisation. Businesses are increasingly finding ways to either reduce labour or attract labour. Some examples from current investments include:
- In New Zealand – which also faces labour scarcity issues – One of our loan investments has introduced a Planar production system in their cherry orchards. The Planar system puts the canopy on a single vertical plane which facilitates the use of mechanised platforms to carry out seasonal activities and harvesting. When competing for labour, this is likely to attract workers.
- Currently in Due Diligence is a small crops business which has adjusted production to deal with labour scarcity. The business has shifted its focus from field tomatoes which are highly labour-intensive, to sweet corn which can be mechanically harvested.
Although well on the way towards reducing exposure to labour markets, labour availability remains central to reaching the agricultural sector’s target of $100 billion in value by 2030. An increased flow of labour will result in higher efficiency, better skill-matching and greater productivity.
It is hoped that the new agriculture visa will also pave the way for migrants to settle in regional communities. It is understood permanent residency pathways and regional settlement is being considered as part of the program.
Cropping industries will be particularly pleased with this new ag visa development. More labour will be welcomed from the broadacre cropping sector to the labour-intensive fruit and veg industries. The sector hopes to see skilled and semi-skilled foreign workers on farms just in time for the Christmas rush.
There have been no changes to the portfolios for the Partners Fund or the Agriculture Credit Fund this week.
