Supply and demand dictates wages in agriculture says National Farmers' Federation

By Shannon Beattie
March 21 2022 - 10:00pm
Almost all agricultural industries have experienced workforce shortages which had become more extreme with COVID induced border closures. Photo by Gab Savage, Tolga Farm, Kulin.

LAST year, Australia recorded an annual wage growth rate of 2.3 per cent and while that was the fastest seasonally adjusted increase since the September quarter of 2018, it was still representative of the low and slow growth currently forming the national story.

However, for the agricultural industry that number was hard to believe with various sectors, from grain to livestock, noting significant hikes in wages over the course of the pandemic.

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Almost all agricultural industries have experienced workforce shortages.

Those shortages are more serious in some industries than others and vary from region to region and season to season.

National Farmers' Federation general manager workplace relations Ben Rogers said regardless of the industry, the shortages had become more extreme with COVID-19 induced border closures.

"Supply and demand dictates that workers can demand more than the award wage and farmers must pay it to get the job done," Mr Rogers said.

"But this is not a sustainable situation for farmers, who are price takers right across the supply chain.

"The opening of international borders and the return of backpackers and hopefully increased numbers of Pacific workers pursuant to the Pacific Australia Labour Mobility program will no doubt be helpful, however will not alone solve ag's enduring workforce crisis."

In the grains sector, CBH Group experienced significant price increases for labour and transport costs.

The driver wage increase was driven by driver shortages and intensified by border restrictions, rising Consumer Price Index and a strong WA economy.

Last year, the co-operative's new rail service agreement with Aurizon and road transport contracts were re-negotiated to reflect current market conditions.

Meanwhile, WAFarmers grains section president and Esperance farmer Mic Fels said most broadacre farmers were scratching their heads trying to figure out who wasn't paying more, because they certainly were.

"Broadacre farm wages have gone up between 10 and 20pc in the last two years in order to attract and keep staff due to the shortage of labour," Mr Fels said.

"There has been a big ratcheting up particularly of casual salaries, but even permanent staff are on more money now then they were 12 months ago."

Over the past two years, Grain Producers Australia (GPA) has been pushing the government, both State and Federal, to deliver more support and better outcomes to help source the skilled workers grain farmers need onfarm.

It's something which is especially critical with securing workers with the skill and experience needed to operate heavy machinery and help with seeding time and at harvest.

GPA chairman Barry Large said support would be vital as farmers continued to recover from shock loss of labour due to border closures over the past two years of COVID-19.

"While GPA has been advocating support to ease these serious labour pressures, grain producers have also been doing whatever they can to help themselves individually, including paying higher wages and creating the right conditions, as responsible employers," Mr Large said.

"We know more can always be done in this area, to ensure we're not only attracting workers to overcome recent shortages, but also build long-term career pathways to attract and retain workers.

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"This is especially critical as we also compete against the high wages paid by the mining sector."

For the livestock industry, it's been a similar story with all aspects from shearing to meat processing having to pay more to secure and keep workers.

While the borders may have opened, labour shortages in the WA shearing industry aren't expected to ease anytime soon as there doesn't seem to be any more shearers coming into the State.

There is a shearer shortage over east as well, which is where WA usually gets a lot of contractors from.

There doesn't appear to be any shearers heading in from New Zealand at this stage - in fact there appears to be more shearings heading in the opposite direction.

WA Shearing Industry Association president Darren Spencer said a lot of farmers were being forced to pay above the award rate in order to keep staff.

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"The contract award rate is $3.30 per head but there are people paying up to $4, if not more, which represents an increase of at least 20pc," Mr Spencer said.

"On top of that, experienced shed staff are getting paid up to $10 a run above the award, so it's happening on all sides.

"There hasn't been a substantial increase in the award rate for a long time, so part of it is just that wages are finally catching up to where the market is, but the speed at which it's increased has definitely been influenced by the worker shortages."

For sheep and cattle, data from Meat & Livestock Australia (MLA) shows the impact labour shortages have had on prices.

In 2017, family labour represented a cost of 37 cents per kilogram of sheep meat, by the end of 2020 that had risen to 46c/kg.

Overall that equates to a 24pc increase in the use of family labour, which is often representative of farms trying to offset the cost of hired labour.

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In saying that, the cost of hired labour has also increased and for every kilogram of sheep meat produced, hired labour rose 33pc between 2017 and 2020.

MLA market information manager Stephen Bignell said in 2022, labour shortages were expected to be an area of significant concern for the red meat industry right across the entire supply chain.

"The shortages that industry will face will encompass everything from the farmgate and station hands, through to boning room staff in processing plants as well as truck drivers," Mr Bignell said.

"The impacts of a labour shortage on the processing sector are difficult to forecast or quantify, however, securing more staff through visa programs will be critical to ensure and deliver consistent and reliable supply to both the domestic and international markets

"The current labour market is putting pressure on wage costs for red meat businesses and the shortage of workers means that agricultural businesses are competing heavily with the major and much larger construction and mining industries to secure staff."

While the challenges are set to be ongoing moving forward, the Australian agricultural industry offers so much more than good pay.

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It's also a great, healthy lifestyle working on the land, using new technologies and modern machinery and farming innovations to feed the world, all while sharing a positive connection with rural people and communities.

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