Is diversification the answer to labour shortages?
28 January 2019
The labour shortages currently faced by the agriculture sector are well documented. The situation will only get worse once free movement of EU nationals ends after Brexit.
To date the Government’s only concession is the pilot scheme for Seasonal Agricultural Workers. This will commence in 2019, allowing farmers in the ‘edible horticulture sector’ to employ non-EU workers for up to six months in any twelve, alleviating labour shortages at peak times. It is limited to 2,500 workers per year and so of extremely limited impact.
The Guardian reported back in May 2018 that, “Frustrated by the government’s foot-dragging, some of the big growers have already diversified.” The article referred to soft fruit growers scaling back UK operations and expanding in China, South Africa and Tasmania. That, of course, is not an option for farmers seeking to run a viable business here in the UK. So what else can be done?
Immigration White Paper
The White Paper published on 19 December 2018 confirms that the Government will consider the outcome of the seasonal agricultural workers pilot before deciding whether to roll it out more widely. It makes it clear that any wider scheme would be temporary and it is likely that higher salaries would be a condition of the scheme. This reflects the Government’s position that it ‘should not be an easy option’, and the agriculture sector must invest in technology and increase efforts to recruit local workers. Readers will know it is not that simple.
The White Paper also proposes more general measures for ‘transitory short-term work’. This would be at any skill level, but would be limited to workers of specified ‘low risk countries’, who would require a visa. Visa costs would increase over time and a full review would be completed by 2025. The initial suggestion is that visas would be for 12 months, followed by a 12 month cooling off period. However, this is subject to consultation and the agriculture sector may wish to push for different timescales to better suit farmers’ needs.
Another possibility for those relying on migrant workers is to lobby for changes to the existing Youth Mobility visa scheme. This allows under-31s from Australia, New Zealand, Canada, Monaco, Japan, South Korea, Hong Kong and Taiwan to work in the UK for up to two years in any role. The Immigration White paper suggested that, post-Brexit, this scheme might be expanded to EU countries.
Although not mentioned in the White Paper, the Government might be persuaded to implement a model similar to the Australian scheme. This is restricted to 12 months. An extension is only awarded if the young worker proves they have completed three months of ‘specified work’ (plant and animal cultivation, fishing and pearling, tree farming and felling, mining or construction) in regional Australia. This would not necessarily lead to experienced labour being available and enthusiasm levels are not guaranteed, but it may help to plug some gaps without increasing the number of migrants entering the UK.
Otherwise, faced with challenges in running their business in its current form, many farmers are choosing to diversify. On 13 December 2018 DEFRA released further details behind their 2017/2018 Farm Business Survey. They found that 66% of farm businesses in England had some diversified activity in 2017/18, up 2% from 2016/17.
But many potential areas for diversification also come with their own labour shortages. If you are contemplating a move into hospitality, be that offering tourist accommodation, running a tearoom, or hosting weddings, are you (or other family members) willing and able to take on work such as cleaning cottages or waiting on tables? Or will you employ others to do this? If so, it might be preferable to pursue less lucrative but also less labour intensive options such as running a campsite.
It is no surprise that the most popular diversification activities are those which rely on physical assets, rather than staff. DEFRA found that the most widespread form of diversification was letting out buildings for non-agricultural use, followed by generation of solar energy.
However, the most profitable form of diversification was processing farm produce. If you plan to add value through processing, will technology assist, or is it labour intensive? If you need more staff, will that work fit around other duties, perhaps creating fuller, more varied and attractive employment opportunities for local workers? Or would you encounter even more recruitment problems?
Anyone exploring diversification ideas must consider what staffing requirements will be generated, to ensure they are not just creating more problems.
You want to ensure maximum return for your efforts. When offering tourist accommodation, you could promote working holidays, where guests help out on the farm during their stay. If you are processing products, you could capitalise on the trend to gift experiences, by opening your doors to share traditional making techniques with visitors.
Farmers are renowned for being hard working, resilient and resourceful. There is no doubt that many will find diverse ways to ensure their business survives. But the most successful will be those who get not only the most out of their land, but those who maximise return on that increasingly scarce resource: human capital.
For further information please contact a member of our Immigration Team.
This article is from the winter 2019 issue of Agricultural Brief, our newsletter for farmers, landowners and others involved in agriculture. To download the latest issue, please visit the newsletter section of our website. Law covered as at January 2019.
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The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at January 2019.