Hort Innovation commissioned consultancy firm Ernst & Young (EY) to calculate the predicted seasonal worker shortage in the Australian horticulture industry in light of the COVID-19 pandemic. AUSVEG National Manager – Communications Shaun Lindhe discusses the report and the implications of the pandemic on the labour demands of the Australian horticulture industry.

The COVID-19 pandemic and the cessation of seasonal workers and backpackers arriving in Australia has resulted in a devastating labour shortage for Australian horticulture growers. The horticulture labour market relies heavily on casual and seasonal labour, which represents the majority of the workforce in Australian horticulture.

As of November 2020, Working Holiday Maker numbers remaining in the country were just 60,000, well down on the 141,000 backpackers that were in the country at the start of the year. Workers under the Seasonal Worker Programme were also just 6,500 at the same time, well short of the numbers required to fill the shortage from backpackers.

There is an opportunity for domestic workers to fill the labour demand, but attracting and keeping local workers on-farm has proven difficult despite multiple attempts by government and industry to get more local workers into the industry.

Labour demand study

In response to the need to provide government with robust and accurate data on the industry’s labour demands, Hort Innovation commissioned consultancy firm Ernst & Young (EY) to conduct extensive stakeholder consultation across the sector and help build a foundational understanding of the horticulture labour market to inform discussions and potential actions to proactively support growers in a changing landscape.

The result was the Seasonal Horticulture Labour Demand and Workforce Study, which provided an 18-month outlook on the casual labour demand across different regions and commodities to support industry discussion on longer term COVID-19 response.

The study predicted the casual labour gap in Australian horticulture to reach a peak in March 2021, with up to 26,000 workers required in different regions across Australia.

Labour supply and supply gap

Scenario projections indicate that the casual labour gap will increase from November 2020 and reach a peak in March 2021, likely to represent a gap ranging between 20,000 and 26,000 roles. This would represent a 36 to 59 per cent labour supply shortage between November 2020 and June 2021; this translates to a net gap of 20 to 33 per cent over the next 18 months, meaning only 67 to 80 out of every 100 casual roles can be filled.

The labour shortage is likely to be most acutely felt in Victoria and Tasmania, which exhibit two characteristics likely to make them more vulnerable:

• large producer of high volumes of very labour-intensive products (e.g. table grapes, berries).
• locations where internal border closures could restrict mobility.

The deficit could be even greater if international border reopening is deferred past the report’s assumption of the borders opening by March 2021, which was the best estimate at the completion of the report.

Major regions and commodities

The study forecasts high fluctuations in monthly national casual labour demand across states, driven by the seasonality of the major fruits and vegetables that each state produces. While horticulture products are grown throughout Australia, the study highlights the following seven production regions constitute the majority of the total casual labour demand:

• Queensland – Cairns, Wide Bay
• Victoria – north-west, Shepparton
• New South Wales – Coffs Harbour – Grafton, Murray
• South Australia – south-east

When annualising casual labour demand over a full year to account for differences in seasonality, the study shows that:

• Fruit commodities are forecast to make up approx. 85 per cent of demand, driven on average by a higher labour intensity and a higher reliance on casual labour.
• Victoria, Queensland and New South Wales are forecasted to represent approx. 80 per cent of demand, driven by the combined effect of several labour-intensive fruits and vegetables produced in these states.
• Two major peaks are forecast to occur over the next 18 months: from January to April 2021 and between October and December 2021, which reflects simultaneous peak harvest times in Victoria, Queensland and New South Wales.

A more detailed breakdown of the labour shortages by states, including the major affected crops and the anticipated peaks in labour shortages, can be seen in Image 1.

Additional concerns raised by industry stakeholders:

Labour impacts and challenges

Labour productivity impacted by worker fatigue

As growers try to retain workers in future months, there is a potential loss of productivity if the workers are not replaced with new workers due to fatigue.

New workforce safety protocols

Growers are required to meet the updated health guidelines to ensure compliance with social distancing protocols.

Restricted transport and movements

Ongoing challenge is the impact of international and domestic border restrictions as international workers cannot enter the country and movements of workers around different states is restricted.

Labour cost

As the available labour pool decreases, growers face competition from other industries to employ workers which could lead to increased labour costs.

Other impacts and challenges

Social impacts to casual workers

Loss of income from casual work due to border restrictions, with no feasible alternatives, could cause serious social impacts for entire communities, such as mental health issues, famine, lower education levels and increased crime.

Price increase for horticulture commodities

A gap of supply in casual labour and resulting loss in production could restrict supply and cause upward pressure on prices for consumers.

Negative impacts on growers’ businesses

Loss of production could lead to significant cashflow issues for growers and jeopardise growers’ financial situation.

Impacts on regional and rural communities

Horticulture is a key source of income for many regional and rural communities and provides add-on benefits to their local economy.

About the study

This study aimed to build an understanding of expected casual labour demand across the horticulture sector over the next 18 months. The study relied on ‘bottom-up’ and ‘top-down’ analyses to provide casual labour demand forecasts across commodities and SA4 regions.

The bottom-up analysis was based on actual grower estimates captured through the survey and represented 23 per cent of total production volume. It suggested a monthly national demand for casual labour headcount varying from 6.4k to 10.2k over the next 18 months.

The top-down analysis extrapolated labour demand using a reference dataset on production volumes and applied the productivity ratios (tonnes per headcount) captured from a national survey for each commodity. It suggested a national monthly demand for casual labour varying from 11.4k to 36.8k headcount over the next 18 months.

The study did not include a detailed quantitative review of casual labour supply. The high-level analysis of casual labour and subsequent labour gaps provided aimed to give a high-level estimate of the magnitude of labour gaps as a result of COVID-19, which will help inform discussions around labour shortages that will support the industry.

Previous work

While capturing data on the labour requirements of the industry is challenging, AUSVEG worked with EY and the Australian Fresh Produce Alliance (AFPA) to assess the immediate labour shortage in the fruit and vegetable industry once the consequences of the international travel ban became clear.

This focused on ensuring there were enough workers to get vegetables from the farm to the consumer. AUSVEG worked with AFPA to map the labour requirements for the horticulture industry over the short-, medium- and long-term, including identifying how many workers are required in specific regions.

This work was important for temporarily extending vital foreign agriculture and food processing workers in early April. The Seasonal horticulture Labour Demand and Workforce Study, commissioned by Hort Innovation, followed this initial piece of work.

Find out more

To find out more about the report, please email Hort Innovation General Manager – Data and Extension Anthony Kachenko at anthony.kachenko@horticulture.com.au.

Overview of study’s major findings

1. The horticulture sector relies heavily on casual workers, comprised primarily of Working Holiday Makers who are mainly sourced by word of mouth.
2. Due to COVID-19, most respondents foresee a significant labour gap in the next 6-12 months, largely attributed to border closures and visa restrictions.
3. Over 60 per cent of respondents are expecting that workers from overseas will be primarily missing in the next 18 months and are concerned about what this means for their business.
4. Labour availability is identified as the top factor likely to impact production over the next 18 months, while previous experience is considered as the first driver of labour productivity.
5. Complying with COVID-19 regulations and border restrictions has been challenging for growers, with many calling for targeted support in the next 18 months.
6. Productivity ratios (in tonnes per headcount) in horticulture tend to vary significantly with the grower’s size (in production volume) across all commodities.
7. Growers indicated that they employed an average of 8,200 casual workers per month last year and expect an increase in their labour requirements over the next 18 months.
8. Growers producing fruit commodities are expected to make up over 70 per cent of casual labour demand over the next 18 months.
9. Growers anticipate significant fluctuations in casual labour demand over the next 18 months, reflecting the seasonality of the commodities they produce.

This article first appeared in Vegetables Australia – Summer 2020/21. To read the full publication, please click here.