UK growers see high wage inflation.

Since 2016 UK growers of fruit and vegetables have seen their labour costs rise by at least 34% since 2016. This is when farmgate prices have stayed virtually the same.
This increase threatens domestic production in the UK growers and they need a higher price to halt them locating overseas or finding another revenue stream with the land that they have.

Between 2015 and 2020 there has been an increase in the hourly rate for workers of 34% rising from £6.50/hour (NZ$12.40) to £8.72/hour (NZ$16.63). However many growers have seen a 40-50% rise in employment costs since 2015 as:

  1. Lower output and reduction in productivity with newly recruited UK labour because of Brexit. Fruit and vegetables are normally picked by some 70,000 to 80,000 migrant workers, mainly from eastern Europe who tend to be much more productive than local labour. From this year any foreign worker wanting to come to the UK will have to meet a minimum salary threshold of 25,600 – well above what farm pickers would normally be paid.
  2. A weaker £ also makes it less attractive for foreign workers as when they convert their income in £ it buys them less of their own currency.
UK Farmers Weekly

Labour costs account for 40-70% of a growers revenue which mean some are seriously looking at the financial viability of their business. This is concerning as the domestic growing industry contributes more than £3.8bn to the UK economy. What is true is that although some agricultural sectors are highly mechanised there is still a need for manual jobs carried out by labour. A report, by farm consultant Andersons suggested that a farmgate price increase of between 9% and 19% is needed simply to offset the increase in the National Living Wage (NLW) hourly rate – it will rise to £8.91/hour (NZ$17.12) from 1 April 2021. The problem with the NLW is that it doesn’t take into consideration the differences in the cost of living in a country e.g. London as compared to Manchester. However evidence suggests that workers are more motivated when the living wage is being paid and staff retention is higher.

Source: UK Farmers Weekly 15th February 2021

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