Horticulture: December quarter 2020
Peter Collins and Charley Xia
Horticultural production to fall, prices to rise
Prices of horticultural produce are forecast to rise in 2020–21, driven by an expected fall in production as a result of a reduced supply of overseas labour. Prices of summer vegetables, stone fruit, pome fruit and table grapes are forecast to rise by between 15% and 25%. The supply of overseas labour has fallen because of COVID-19 related travel restrictions.
Forecasts for horticultural production and prices are more influenced by COVID-19 containment measures than any other agricultural commodity. This is due to the industry's greater reliance on overseas labour to manually harvest crops, and limited alternative sources of supply for some products.
Labour use high in horticulture
Labour intensity
Labour supply is more critical to horticulture than most other agricultural production because the harvesting of horticultural produce is generally very labour intensive. There is no viable alternative to manual harvesting of most fruit and vegetables (other than root vegetables such as carrots and potatoes). Prototype robot harvesters are not sufficiently developed. Tree nuts such as almonds, macadamias and walnuts are generally mechanically harvested.
Importance of overseas labour
Overseas workers normally comprise a significant share of harvest labour in horticultural enterprises. In 2018–19 the total number of casual and contract employees from overseas remained relatively stable, averaging 46,000 per month between July and January. This figure increased significantly in February 2019 to 63,300, as horticulture moved into its peak harvest months. The share of overseas labour in the national harvest workforce changed from an average of 58% between July and January to an average of 53% between February and April. This indicates that a significant number of locally sourced workers joined the harvest workforce in some regions during these peak months.
Labour market in 2020–21
Supply of overseas labour much lower
Overseas workers are mostly working holiday-makers and people from the Seasonal Worker Programme. Working holiday-makers can be employed in any industry, but those seeking extensions to their visa for a second or third year must work in prescribed occupations (such as farm work in regional areas) for a prescribed period. The Seasonal Worker Programme brings people from participating Pacific Island nations to work in agriculture.
The combined supply of overseas labour from these sources declined significantly after COVID-19 containment measures curtailed international travel. In the year to September 2020, the combined number of people in Australia holding working holiday-maker and seasonal worker visas fell by 48% to 71,000. By 25 October this had fallen to 66,000. Of these, around 60,000 were working holiday-makers.
Producer responses
Producers facing a shortfall in labour have the option of paying higher wages and offering better than standard conditions of employment. For example, some horticultural producers are offering prospective casual employees free accommodation.
Domestic labour response
The Australian Government has implemented multiple measures to encourage Australians to seek work in agriculture and help the agricultural industry access the labour it needs in the short term (see box). However, while horticultural producers, especially those willing to pay higher wages, are likely to find additional Australian workers, it is expected these will not be sufficient to make up for the shortfall in overseas workers in 2020–21. The pool of unemployed Australian labour grew significantly because of COVID-19 containment measures. According to ABS unemployment estimates for October, adult unemployment averaged 6.4% and youth unemployment 15.8% in the 8 regions identified as heavy users of overseas labour in horticulture. In Wide Bay, these rates were considerably higher, at 11.9% and 27.8%. However, high unemployment among domestic workers in the past has not resulted in a strong uptake of horticultural work. This suggests that unemployed domestic workers will not meet the present shortfall in overseas workers.
Government labour market initiatives
- The Australian Government is providing $17.4 million in relocation and accommodation assistance for those who relocate to regional areas to take up a job. It is also providing $16.3 million to encourage young Australians to take up farm work by temporarily changing Youth Allowance (student) and ABSTUDY independence eligibility criteria.
- Agricultural employers will also be able to access the government’s $4 billion JobMaker Hiring Credit for each new job they create over the next 12 months for which they hire an eligible young person, aged 16 to 35 years.
- Australian job seekers are being encouraged to take up seasonal work opportunities through reforms to Harvest Labour Services that will take effect from 1 July 2020. These changes expand the service to cover up to 5 new horticultural regions.
- The Australian Government has also made changes to help farmers access the skilled labour they need by adding 16 skilled agricultural occupations to the Regional Occupation List.
Labour shortages to reduce horticultural production and increase prices
Given the observed labour market trends in 2020–21, ABARES modelled the impact on horticulture of an assumed 50% fall in the supply of overseas labour available to horticultural producers during the remainder of 2020–21 and a limited response from domestic labour. The assumed fall in the supply of overseas labour represents a significant decrease in the usual workforce for horticultural enterprises.
ABARES modelling approach
ABARES forecasts for the Australian horticultural sector for the remaining 6 months of 2020–21 are informed by an ABARES model based on Gunter, Jarret and Duffield's industry model. This model was used to assess, in 2 stages, the impacts of a significant reduction in the supply of labour in Australia on horticultural production and prices. The first stage estimates outcomes for average wage changes due to industry-wide competition for seasonal labour when the workforce has been significantly reduced. The second stage explores the effect of the modelled wage changes on production and prices for table grapes, wine grapes, pome fruit, citrus fruit, berry fruit, other fruit, nuts, vegetables and wine grapes.
In undertaking this analysis, ABARES focused on the impact on local and overseas labourers and farm output. Recent developments in domestic and international demand for individual commodities were included. This helped highlight the differences in the labour demand environment for each industry that would flow through to employers' capacity to pay higher wages.
ABARES assumed there is limited scope for producers to make significant labour-saving investments in capital over the remainder of 2020–21. Some small changes in managerial practices that help make greater use of existing labour were assumed.
The model assumes that:
- The use of overseas and local labourers is consistent with labour usage patterns observed during late summer and early Autumn.
- Local labourers and overseas labourers have the skills to undertake the same work –meaning that a local worker can replace an overseas worker.
- Local labourers are significantly less willing to work on farms than overseas labourers. They are therefore not as responsive to wage increases that are driven by labour shortages.
- A permanent reduction of 50% in the supply of overseas labourers for the remainder of 2020–21. This is smaller than the observed fall in holders of working holiday-maker and seasonal worker visas. The fall in supply of working holiday-makers to agriculture will be slightly less than for other industries because working holiday-makers applying for second and third year extensions to their visas must have worked in prescribed occupations (including farm work) in regional areas for a prescribed time.
- Different price responsiveness of consumers for each commodity. For example, the fall in consumption of vegetables is expected to be proportionately less than the rise in prices. In contrast, the fall in consumption of berries is expected to be proportionately greater than the rise in prices.
- Domestic demand remaining consistent for most commodities, with increasing international demand factored into calculations for the table grapes, citrus, stone fruit and tree nuts but decreasing international demand for wine grapes.
- Industries located further away from cities or regional centres having more difficulty securing supply responses from different sources of seasonal labour.
- Producers being aware of potential labour shortages, and actively searching for local labourers and managing their existing labour more productively.
Sector-wide outcomes
The gross value of horticultural production is forecast to increase by 5% to $12.6 billion in 2020–21, 15% above the 5-year average to 2019–20. The value of vegetable production is forecast to increase to a record high of $4.8 billion, 14% above the 5-year average to 2019–20. The value of fruit and tree nut production is forecast to increase to $5.3 billion, 18% above the 5-year average to 2019–20.
The forecast growth in the value of horticultural production is expected to result from the expected increase in prices and the nature of consumer demand for horticultural produce. Australian consumers generally do not significantly reduce purchases of fresh produce when prices rise. Relatively few import substitutes are available because of biosecurity protections, transport costs and seasonal availability. Additionally, most household purchases of fresh produce generally make up a small share of household budgets. This provides more scope to pay higher prices for these products.
Regional impacts will be uneven
The forecast increase in the prices of horticultural output will increase the revenues of producers who manage to secure enough labour to harvest a significant proportion of their crops. Whether or not producers are able to do this will depend on their geographical location, when their peak labour demand commences relative to producers in other regions, the share of overseas labour in their casual labour force and their capacity to pay higher wages.
Some insight into regional impacts can be gained by examining the relevant characteristics of overseas labour use in regions where producers employed more than 2,000 people in multiple months, from November to April 2018–19. These months represent the peak harvest months of February, March and April and a 3-month lead-in period when producers in some regions have a high demand for overseas labour.
The producers best placed to secure the labour they require appear to be those in North Queensland and Coffs Harbour–Grafton in northern New South Wales. In these in 2 regions, use of overseas labour was high in November 2018 at 7,500 workers and did not fall below 5,500 from December 2018 to April 2019. These producers have a distinct advantage in 2020–21. They get early access to the limited supply of overseas labour and have the opportunity to offer better pay and conditions to keep overseas labour during their peak harvest period.
In a second set of regions, high use of overseas labour commenced early in 2018–19 but increased significantly in January or later. These producers get early access to the limited supply of overseas labour for some of their requirements but face a higher risk of not being able to hire the required numbers when their need increases significantly. Producers in 4 regions are in this category:
- producers in Shepparton–Hume employed an average of 3,600 overseas workers per month from November to January, but this increased to an average of 5,000 per month from February to April
- producers in North West Victoria employed an average of 2,800 overseas workers per month in November and December, but this more than doubled to an average of 6,900 per month from January to April
- producers in Wide Bay employed an average of 3,300 overseas workers a month from November to March, but this increased to 4,600 in April
- producers in South East South Australia employed an average of 2,500 overseas workers per month in November and December, but this increased to an average of 3,600 per month from January to April.
Producers in these 4 regions will be more adversely affected by a cut in the supply of overseas labour as the share of overseas labour in their casual labour force increases. For example, this share averaged around 77% in North West Victoria from November to April 2018–19. A 50% cut in the supply of overseas labour to producers in this region means a cut to the casual labour force of around 39%. In contrast, the share of overseas labour in the casual labour force in South East South Australia averaged around 45% from November to April 2018–19. A 50% cut in the supply of overseas labour to producers in this region means a much smaller cut to the casual labour force of around 23%. Between these extremes, the share of overseas labour in the casual labour force from November to April averaged 65% in Wide Bay and 55% in Shepparton–Hume.
Producers in Bunbury and South East Tasmania appear to be at greatest risk of not being able to secure the labour they require because of a combination of their temporal pattern of overseas labour use, the share of overseas labour in their casual labour force and their geographic location. In Bunbury, producers made greatest use of overseas labour in February, March and April 2018–19. Their use of overseas labour was reasonably high from November to January, at an average of 1,900 workers, but increased sharply to an average of 5,900 per month from February to April. Producers in South East Tasmania made minimal use of overseas labour in November and April 2018–19 and their greatest use of overseas labour was in January and February. It was reasonably high in December, at 1,500 workers, but increased to an average of 2,100 per month in January and February. This later start in peak demand for overseas labour means producers in these regions have a significantly higher risk than those in other regions of not being able to secure the overseas labour they need in a year of constrained labour supply. Additionally, the share of overseas labour in their casual labour force during peak demand was very high at an average of 86% in Bunbury and 94% in South East Tasmania. This means a 50% cut in the supply of overseas labour to producers in these regions would mean a cut to the casual labour force of around 43% in Bunbury and around 47% in South East Tasmania. Both regions are also geographically isolated from most other regions that attract overseas labour.
Patterns of overseas labour in horticulture in peak months
Patterns of overseas labour use in horticulture in peak months discussed in the previous section are drawn from an ABARES survey investigating labour use on Australian farms in 2018–19. A summary is presented in the following tables.
Employment of overseas labour in horticulture, November 2018
| Region | State | Overseas labour (no.) | Share of casual labour (%) | Major horticultural commodity groups manually harvested |
|---|---|---|---|---|
| Wide Bay (includes Bundaberg, Gympie and Eidsvold) |
Qld | 3,430 | 64 | Citrus, strawberries, vegetables and other fruit |
| North Queensland (Cairns and Atherton Tablelands) |
Qld | 3,780 | 70 | Other fruit, citrus and vegetables |
| Coffs Harbour–Grafton | NSW | 3,690 | 67 | Berries, vegetables, other fruit, stone fruit and citrus |
| Shepparton–Hume (includes Shepparton, Wangaratta and Wodonga) |
Vic. | 3,060 | 56 | Stone fruit, vegetables pome fruit, and strawberries |
| North West Victoria (includes Sunraysia) |
Vic. | 2,630 | 75 | Table grapes, citrus, stone fruit, vegetables and other fruit |
| South East South Australia (includes the Riverland) |
SA | 2,380 | 51 | Vegetables, citrus, stone fruit, pome fruit and other fruit |
Source: ABARES
Employment of overseas labour in horticulture, December 2018
| Region | State | Overseas labour (no.) | Share of casual labour (%) | Major horticultural commodity groups manually harvested |
|---|---|---|---|---|
| Wide Bay (includes Bundaberg, Gympie and Eidsvold) |
Qld | 3,100 | 66 | Citrus, strawberries, vegetables and other fruit |
| North Queensland (Cairns and Atherton Tablelands) |
Qld | 3,330 | 69 | Other fruit, citrus and vegetables |
| Coffs Harbour–Grafton | NSW | 2,760 | 66 | Berries, vegetables, other fruit, stone fruit and citrus |
| Shepparton–Hume (includes Shepparton, Wangaratta and Wodonga) |
Vic. | 3,310 | 54 | Stone fruit, vegetables pome fruit, and strawberries |
| North West Victoria (includes Sunraysia) |
Vic. | 2,910 | 75 | Table grapes, citrus, stone fruit, vegetables and other fruit |
| South East South Australia (includes the Riverland) | SA | 2,640 | 53 | Vegetables, citrus, stone fruit, pome fruit and other fruit |
Source: ABARES
Employment of overseas labour in horticulture, January 2019
| Region | State | Overseas labour (no.) | Share of casual labour (%) | Major horticultural commodity groups manually harvested |
|---|---|---|---|---|
| Wide Bay (includes Bundaberg, Gympie and Eidsvold) |
Qld | 3,240 | 65 | Citrus, strawberries, vegetables and other fruit |
| North Queensland (Cairns and Atherton Tablelands) |
Qld | 3,300 | 69 | Other fruit, citrus and vegetables |
| Coffs Harbour–Grafton | NSW | 2,760 | 66 | Berries, vegetables, other fruit, stone fruit and citrus |
| Shepparton–Hume (includes Shepparton, Wangaratta and Wodonga) |
Vic. | 4,570 | 55 | Stone fruit, vegetables pome fruit, and strawberries |
| North West Victoria (includes Sunraysia) |
Vic. | 4,320 | 76 | Table grapes, citrus, stone fruit, vegetables and other fruit |
| South East South Australia (includes the Riverland) | SA | 3,050 | 45 | Vegetables, citrus, stone fruit, pome fruit and other fruit |
| South East Tasmania | Tas. | 2,040 | 94 | Stone fruit, pome fruit, strawberries and other fruit. |
Source: ABARES
Employment of overseas labour in horticulture, February 2019
| Region | State | Overseas labour (no.) | Share of casual labour (%) | Major horticultural commodity groups manually harvested |
|---|---|---|---|---|
| Wide Bay (includes Bundaberg, Gympie and Eidsvold) |
Qld | 3,380 | 63 | Citrus, strawberries, vegetables and other fruit |
| North Queensland (Cairns and Atherton Tablelands) |
Qld | 3,660 | 70 | Other fruit, citrus and vegetables |
| Coffs Harbour–Grafton | NSW | 2,150 | 65 | Berries, vegetables, other fruit, stone fruit and citrus |
| Shepparton–Hume (includes Shepparton, Wangaratta and Wodonga) |
Vic. | 5,630 | 55 | Stone fruit, vegetables pome fruit, and strawberries |
| North West Victoria (includes Sunraysia) |
Vic. | 7,800 | 78 | Table grapes, citrus, stone fruit, vegetables and other fruit |
| South East South Australia (includes the Riverland) |
SA | 4,850 | 40 | Vegetables, citrus, stone fruit, pome fruit and other fruit |
| South East Tasmania | Tas. | 2,070 | 94 | Stone fruit, pome fruit, strawberries and other fruit. |
| Bunbury | WA | 5,990 | 86 | Vegetables, pome fruit, stone fruit, other fruit and citrus. |
Source: ABARES
Employment of overseas labour in horticulture, March 2019
| Region | State | Overseas labour (no.) | Share of casual labour (%) | Major horticultural commodity groups manually harvested |
|---|---|---|---|---|
| Wide Bay (includes Bundaberg, Gympie and Eidsvold) |
Qld | 3,400 | 63 | Citrus, strawberries, vegetables and other fruit |
| North Queensland (Cairns and Atherton Tablelands) |
Qld | 3,680 | 70 | Other fruit, citrus and vegetables |
| Coffs Harbour–Grafton | NSW | 1,770 | 66 | Berries, vegetables, other fruit, stone fruit and citrus |
| Shepparton–Hume (includes Shepparton, Wangaratta and Wodonga) |
Vic. | 4,990 | 55 | Stone fruit, vegetables pome fruit, and strawberries |
| North West Victoria (includes Sunraysia) |
Vic. | 7,920 | 79 | Table grapes, citrus, stone fruit, vegetables and other fruit |
| South East South Australia (includes the Riverland) |
SA | 3,350 | 41 | Vegetables, citrus, stone fruit, pome fruit and other fruit |
| Bunbury | WA | 5,970 | 85 | Vegetables, pome fruit, stone fruit, other fruit and citrus. |
Source: ABARES
Employment of overseas labour in horticulture, April 2019
| Region | State | Overseas labour (no.) | Share of casual labour (%) | Major horticultural commodity groups manually harvested |
|---|---|---|---|---|
| Wide Bay (includes Bundaberg, Gympie and Eidsvold) |
Qld | 4,600 | 66 | Citrus, strawberries, vegetables and other fruit |
| North Queensland (Cairns and Atherton Tablelands) |
Qld | 3,770 | 69 | Other fruit, citrus and vegetables |
| Coffs Harbour–Grafton | NSW | 1,770 | 66 | Berries, vegetables, other fruit, stone fruit and citrus |
| Shepparton–Hume (includes Shepparton, Wangaratta and Wodonga) |
Vic. | 4,360 | 56 | Stone fruit, vegetables pome fruit, and strawberries |
| North West Victoria (includes Sunraysia) |
Vic. | 7,370 | 79 | Table grapes, citrus, stone fruit, vegetables and other fruit |
| South East South Australia (includes the Riverland) | SA | 2,990 | 41 | Vegetables, citrus, stone fruit, pome fruit and other fruit |
| Bunbury | WA | 5,600 | 86 | Vegetables, pome fruit, stone fruit, other fruit and citrus. |
Source: ABARES
Employment of overseas labour in horticulture, April 2019
| Region | State | Overseas labour (no.) | Share of casual labour (%) | Major horticultural commodity groups manually harvested |
|---|---|---|---|---|
| Wide Bay (includes Bundaberg, Gympie and Eidsvold) |
Qld | 4,600 | 66 | Citrus, strawberries, vegetables and other fruit |
| North Queensland (Cairns and Atherton Tablelands) |
Qld | 3,770 | 69 | Other fruit, citrus and vegetables |
| Coffs Harbour–Grafton | NSW | 1,770 | 66 | Berries, vegetables, other fruit, stone fruit and citrus |
| Shepparton–Hume (includes Shepparton, Wangaratta and Wodonga) |
Vic. | 4,360 | 56 | Stone fruit, vegetables pome fruit, and strawberries |
| North West Victoria (includes Sunraysia) |
Vic. | 7,370 | 79 | Table grapes, citrus, stone fruit, vegetables and other fruit |
| South East South Australia (includes the Riverland) | SA | 2,990 | 41 | Vegetables, citrus, stone fruit, pome fruit and other fruit |
| Bunbury | WA | 5,600 | 86 | Vegetables, pome fruit, stone fruit, other fruit and citrus. |
Source: ABARES
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Agricultural commodities – December 2020 PDF  |
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| Agricultural commodities: December quarter 2020 - Statistics - data tables XLS |
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