LABOUR PAINS – Where are we going to get staff?

Article courtesy of MARKET ANALYSIS | BY Andrew Whitelaw , EP3

The Snapshot

• Unemployment in some of the major economies is at low levels.
• The domestic labour pool within Australia is limited.
• Backpacker numbers have been low in recent years.
• The new free trade agreement with Britain removes the need for British backpackers to conduct a stint in rural areas to get a 2^nd year visa.
• Labour costs are likely to remain expensive.

The Detail

Getting staff is an absolute nightmare. It doesn’t matter what part of the supply chain you are in; from farm to fork, it is extremely hard.

The first chart shows the unemployment rate for some of the major economies. It’s low. It’s really at the point that most that want a job have one.

So as an industry, we are competing with a very small pool of labour, and supply and demand economics works exactly the same way as any other commodity. If the labour supply is low, then the cost of hiring goes up.

One of the biggest sources of regional labour is access to backpackers. These staff have also been in short supply in recent years.

The lockdown of Australia caused a large gap in availability, which can be seen in the chart below. In 2020, there were almost no new backpackers, with largely only those staying on for 2^nd or 3^rd visas being available.

It may take a while before backpacker availability reaches pre-covid levels, as potential backpackers take jobs in their home countries, and the concerns about the economy reduce the capacity to take the ‘risk’ of travelling around the world.

There is another risk to backpacker availability looming over.

One of the biggest sources of regional labour is access to backpackers. These staff have also been in short supply in recent years.

The lockdown of Australia caused a large gap in availability, which can be seen in the chart below. In 2020, there were almost no new backpackers, with largely only those staying on for 2^nd or 3^rd visas being available.

It may take a while before backpacker availability reaches pre-covid levels, as potential backpackers take jobs in their home countries, and the concerns about the economy reduce the capacity to take the ‘risk’ of travelling around the world.

There is another risk to backpacker availability looming over.

Farm labour is an input, it is a cost. Much like diesel, glyphosate or fertilizer. I expect that labour will continue to be expensive and difficult to procure input in summary due to the following:

• Lack of available domestic labour.
• Lack of backpackers.
• A diminished pool of British backpackers.

Episode3 (EP3) is an independent, data-driven market analysis service that provides premium agricultural market insights and reports. Our online reports are provided completely free of charge, with no strings attached. Sign up to the EP3 newsletter now.