Labor Shortages Continue to Impact Food Supply Chain in the US, Australia and the UK

Labor shortages continue to plague the global food supply chain in 2023. Reliance on workers continues to grow from farm to fork and rising labor deficits cast a dark shadow over the food and agriculture industry. Several factors, such as depleting interest in farm work, poor immigration laws, and the rising labor costs have resulted in significant labor shortages in key markets, including the US, Australia, and the UK.

The labor force remains vital to the US food industry, as the country is a leading global supplier of corn, soybean, barley, oranges, grapes, and tomatoes. According to the American Farm Bureau Federation, the US requires an agricultural workforce of about 2.4 million, with 80% of the workers usually coming from South America and Mexico. However, the H2-A visa program, targeted at bringing in foreign labor to the country, only accepts 250 thousand workers, leaving a deficit of over two million workers. Along with visa issues, farm work is not as financially appealing as it used to be, deterring many workers in the sector. According to the USDA, for every dollar spent on food in 2023, a farmer receives only 7.6 cents.

A similar situation is occurring in Australia, a country known for wheat, canola, barley, beef, and sheep production. According to Australia’s National Food Supply Chain Alliance, the country’s food supply chain is short at least 172 thousand workers from farm to fork. Most of the shortages occur on sheep, cattle, and grain farms, where about 110 thousand workers are employed from close to 300 thousand in the entire agriculture sector in Australia. Challenges affecting the growth of the country’s workforce are high labor costs and low interest in farm jobs, according to the Department of Agriculture, Forestry, and Fisheries.

In the UK, the labor issue has been escalating since Brexit, given that most farm workers come from neighboring Eastern European countries, such as Bulgaria and Romania. Consequently, in the years since Britain voted to leave the bloc, many Eastern Europeans left the country, leading to a shortfall of about 330,000 workers in 2016, according to the Migration Observatory Analysis of the Office for National Statistics (ONS). The figure has since dropped to slightly over 150 thousand workers but remains significant. As a result, in 2022, approximately GBP 22 million (USD 27 million) worth of fruit and vegetables went unharvested due to the worker shortages.

Source: Tridge, Migration Observatory Analysis of ONS

Addressing these labor concerns will take several years and require multiple strategies to swing the pendulum in the right direction. In Australia, education is at the core of these strategies, as many industry leaders and agricultural bodies have identified that young Australians are misinformed regarding the opportunities in the sector, causing them to opt for other fields. For example, Australian Country Choice, a meat processing company, has now organized a group of research and development corporations and bodies representing food and fiber industries to work on strategies to improve education on agriculture in the country. Additionally, AgForce Queensland, an Australian rural agricultural body, has started to run programs to teach students about food and fiber to address the knowledge gap following the closure of several agricultural colleges in Queensland in recent years. In the US, the National Association of Agricultural Educators Teach Ag campaign is working towards increasing the number of agricultural education courses in the country to raise interest in the industry while connecting students with internships and mentorship programs.

Addressing the pay gap between farm jobs and other sectors is also an issue of concern. In the US, agricultural industries currently average only 60% of what other industries offer in salaries, pushing people away from the sector. As a result, the government is working toward addressing this through improved immigration policy. For example, the H-2A program, bringing seasonal workers into the US, now requires farm worker pay to be higher than the state/federal minimum wage.

This leads to the next major point - immigration. Most countries cannot rely on locals only to fill employee demand in the agriculture sector, causing a heavy reliance on foreign labor. As mentioned earlier, the US government is working on a policy that will allow for the acquisition of more seasonal farm workers from South America and Mexico to fill the employment gap. Similar strategies are being formulated in Australia, where a reduction in overseas contract workers led to a 20% decrease in horticulture workers between 2019 and 2022, according to the Australian Bureau of Agricultural and Resource Economics and Sciences. As a result, the government has made amendments to the Working Holiday Visas, allowing more seasonal workers to enter the country. In 2021/22, approvals rose to 97.36 thousand, up 146% from 39.59 thousand the previous year, according to the Australian Department of Home Affairs. During the first six months of 2022/23, approvals rose to 111.62 thousand.

Source: Tridge, Department of Home Affairs

In the UK, the immigration discussion is at the heart of government policy regarding agriculture, as foreign labor from the EU is vital to the industry. Currently, 45,000 workers can enter the UK through the visa route, and the government is preparing to add 10,000 slots in 2023.

Given that labor shortages could take several years to be rectified, farmers had to resort to alternate means of production to address the issue. One such strategy is integrating agricultural technology (ag tech) to reduce labor burdens. Australian farmers are harnessing the power of robotics to combat these long-term labor shortages. SwarmFarm, a leader in Australian ag tech, has made significant strides in integrating robotics into agriculture. One such innovation is fully autonomous farm equipment, such as farm spraying robots, that function without human assistance.

Source: SwarmFarm

In the UK, a similar approach has been adopted. Based on studies conducted by the Agriculture and Horticulture Development Board, more than 84% of horticultural growers in the country plan to invest in automation or robotics to help offset labor challenges. Recent amendments to the UK's 'White Paper' food strategy include plans against labor shortages, which could result in more automation on British farms. Scientists at the University of Plymouth have also been developing technology to improve robotic fruit and vegetable pickers. Similar advancements in ag tech have occurred in the US. Farmers now use automated harvesters, drones, autonomous tractors, seeding, and weeding to transform how they cultivate their crops.

Source: University of Plymouth

The main downside of the technology argument is the cost involved. A lot of the machinery is expensive and therefore raises production costs. Additionally, physical labor will remain necessary, albeit to a lesser extent, as people would still be required to operate and service most of the machinery. Nonetheless, the benefits still outweigh the negative impact of the current labor shortages.

These labor concerns cannot be remedied overnight, and it could take several years to fill the gap. In the meantime, farmers in the US, Australia, and the UK could still suffer significant financial losses, which will continue to be passed down to the consumer. However, Tridge expects that as agricultural technology advances, the industry will shift more toward automated machinery and less toward physical human labor.

For further reading, please follow the links below:

1. Webinar Recap: The Impact of Trade Wars and Policy Changes on Global Agricultural Commodities

2. Webinar Recap: Trusted Digital Traces on ESG from Farm to Consumer