Labour costs: Farmers battle to keep workers as wages soar past 40%

Farmers are in fierce competition to attract workers, as labour costs hit new highs. See which jobs pay the most now.

Farmers are paying at least 40 per cent more in labour costs, and in many cases considerably more, to secure workers amid a shortage that shows no signs of easing.

Labour costs have increased almost 70 per cent for apple and pear farmers just to have their crop picked, while the salary of an unskilled farmhand has soared more than 50 per cent since Covid led to the closure two years ago of Australia’s international border.

DroverAg director John Boote said the recruitment firm had witnessed a 40 per cent increase in wages across the farming sector in the past six to 12 months alone, but believed rates were finally plateauing.

“They’re starting to flatline now, which is good because it was becoming a joke. It’s an employees’ market and they’re very selective on location and what’s there for a family; access to school buses, good housing. They’re not willing to go to the middle of nowhere anymore,” Mr Boote said.

For an experienced worker to fill any cropping-related job, he said employers would be looking at paying at least $100,000 a year as well as providing good housing, while an entry-level farmhand was now fetching $65,000-$70,000, up from $40,000-$50,000 before Covid.

Mr Boote said workers were out there, but to lure them away from cities farmers needed to think about workplace culture, the accommodation they were providing and wages that matched the work.

“Workplace culture is what we’re putting across to our clients,” he said. “And so many farmers are sitting on millions of assets with a fibro house for their staff. Get in touch with builders for good accommodation.”

Meanwhile in dairy, Mr Boote said the corporatisation of the industry and demands of the job were leading to an exodus of workers.

He said wages were up 40 per cent, and roles were also being advertised in New Zealand due to a lack of interest domestically.

“We’re seeing a big pull out of dairy. People who have been involved their whole lives are sick to death of the corporatisation of it and milking cows two-to-three times a day,” Mr Boote said.

While strong commodity prices are providing a buffer against rising inputs for cropping, livestock and dairy producers, horticulture growers are battling record low farmgate prices as well as a lack of harvest workers, with backpackers yet to return and local workers taking roles in better-paying industries.

Orchardist Peter Hall. Picture: Dannika Bonser

To attract and retain staff, Mooroopna apple and pear grower Peter Hall estimated the average price farmers were paying per bin was $50, compared to about $35 pre-Covid when backpackers and international students worked alongside Pacific island workers across Australian farms.

“There’s such a chronic shortage (of workers), that farmers are paying at least a 20 per cent premium on labour costs with no real movement in (farmgate) prices,” Mr Hall said.

For many farmers, labour is their biggest cost burden. With so few Australians willing to pick and pack fruit, just 23,000 backpackers in the country as of the end of March – compared to about 140,000 prior to Covid, according to the Department of Home Affairs – and the shortfall of Pacific workers far greater than the predicted 24,000, farmers are engaging in a bidding war for those willing to stick around.

Lake Boga stone-fruit grower Ian McAlister said workers were getting paid about 50 per cent more than they were just a few years ago for the same job.

“What’s happening at the moment is a worker will leave you for an extra $2 an hour. We’re suffering where it’s a Dutch auction. Table grapes can pay more than we can in stone fruit so we’re outbid every time. It’s the commodity that can pay the highest that has the workers,” he said.

It is the confluence of the labour shortage, the price farmers are having to pay to secure any workers, recent inflationary pressures and the inaccessibility of freight during Covid that has led Mr McAlister to begin the process of closing down his second-generation farming business.

Over the past three years, Mr McAlister has pushed 60ha of stone fruit trees out of his 200ha orchard.

“I used to plant trees every year, so every 10 years you’d have a new orchard. I haven’t planted in four years, once I realised labour was going to be a problem. I told the workers to cut the dripper lines two months ago, I couldn’t get them picked,” he said.

Mark Allison, Elders chairman.

A farmer who runs one of Australia’s largest fruit growing businesses – who did not want to be named – said he was paying a factory manager $120,000, up from the standard $80,000 two years ago, as well as a salary package that included visa sponsorship, a house, car and super. Yet he stayed just seven months after being offered $180,000 elsewhere for the same role. It was his second factory manager in seven months.

Elders managing director and chief executive Mark Allison said the scarcity of labour was dominating discussion across the business.

“We’ve had a series of business reviews. Every single discussion has been around the competition for labour. Whether they have an ag science degree or not, or other tertiary qualifications, it’s just supply and demand. Because there’s less people, the battle is stronger,” Mr Allison said.

He said wage inflation was inevitable, and suggested any means to bringing more people into the country as a way to ease demand.