Labor Shortage Provides Challenges for the Australian Fruit and Vegetable Industry

Published Mar 29, 2022
Australia is facing an overall labor shortage that is affecting the agricultural industry. The labor shortage will cause a drop in fruit production of up to 17% and a drop in vegetable production of 2% this season. The supply shortage will trigger a price increase of 7% to 29%. Australia is trying to supplement its labor shortage by offering monetary incentives to local workers and hiring international workers with programs such as PALM and agricultural visas.

Australia is facing an overall labor shortage affecting the agricultural industry. Predictions by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) state that the labor shortage will result in a decreased production of fruits of up to 17% and a drop in vegetable production of 2% during this 2021/2022 season. The supply drop of fruits and vegetables will result in a price rise of 7% to 29%, which will be allocated mostly to the final consumer price.

Labor shortages have occurred due to a lack of local labor and overseas workers. The government has been offering many incentives to local workers to try to supplement agricultural labor demand. The incentives include a Federal Relocation Assistance package, allowing funds of USD 4,507 available for its citizens to move to regional areas and work. The Victorian Government is also offering USD 1,878 cash incentives to encourage seasonal workers to remain in the agricultural industry. Despite these incentives, the industry has not been able to attract enough local workers.

Before the COVID-19 pandemic, the labor demand of the Australian agricultural industry was met sufficiently by foreign seasonal workers and backpackers with the Seasonal Worker Programme and Pacific Labour Scheme. In April 2022, both programs will join and form the Pacific Australia Labour Mobility (PALM). PALM enables eligible employers to recruit low and semi-skilled workers from Pacific Island countries to work for one to three years in Australia. Due to the travel restrictions placed because of COVID-19, the number of foreign workers decreased from 200,000 to 30,000 over the past two years.

Australian growers have been pressuring the government to approve the USD 65.4 million agricultural visas program to recruit foreign workers and cover the labor shortage. Despite the program being in the works, the government states it will have no impact on the 2021/2022 season since implementation won't occur until 2023.

The Australian government encourages all-size producers to recruit locally and apply for the PALM program to cover their labor needs and not wait for agricultural visas to recruit workers. If the labor force demand is not covered, Australian fruit and vegetable production will be low this year. Low supply will create a price increase, decreasing the export volume and affecting both producers and the local economy. The Australian fruits and vegetables that will be most affected due to their high production and export volume include citruses, grapes, potatoes, celery, broccoli, and cauliflower.

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