Academic Advisory Panel - 5 February 2024 - Food production Advisory Note

This advisory note has been prepared by the Academic Advisory Panel (AAP) in response to a request from ARIOB officials, to provide feedback on impact of the real living wage and post-Brexit labour availability on food production and processing in Scotland. This note will be provided to help inform discussion on food production at the next ARIOB meeting on 8 March 2024. The note is a summary of discussion at the AAP meeting on the 5 February 2024. The panel, following presentation of work on Seasonal migrant workers in Scottish Agriculture commissioned by the Scottish Government, discussed impact of wage and labour availability on immediate supplies of food, supply chain resilience, long term prospects and viability of the industry, and mitigation measures that should be considered.

Context

The issue of the real living wage and post-Brexit labour availability on food production is complex and interlinked. Since Brexit, businesses have had to budget for new additional costs associated with visa requirements or the necessity to use labour providers. Additionally, there has been an increase in energy and fuel costs, and a minimal or no increase in prices paid by retailers to food producers, while inflation has negatively affected profit margins. To address concerns of fairness of contracts between producers and purchasers in the fresh produce sector Department for Environment, Food and Rural Affairs (DEFRA) has launched Fresh Produce Supply Chain Review in December 2023.

Key points from the AAP’s discussion

• Support for producers

The challenge of finding seasonal labour has become more pronounced globally, especially in the UK post Brexit. Moving production of fruits and vegetables to offshore markets could not only negatively impact the value of Scotland’s produce but also result in supply issues and contribute to offshoring ethical issues related to potential workers exploitation. To prevent production relocation, visas should be extended to accommodate the length of the growing season. Allowing businesses to move workers between farms to meet the production demand will improve both business efficiency and workers’ income prospects. Ensuring a fair return from retailers can alleviate the burden of additional inflation and recruitment costs and help sustain current levels of domestic production, providing people with access to grown locally nutritious produce.

• Support for workers

Support for seasonal workers could be enhanced to improve the attractiveness of the farm work sector and Scotland’s appeal as a desired employment destination. Enhancements may include improving accommodation standards, providing financial assistance and loans to cover costs of travel to the UK, and having capacity within the system to allow to switch employers mid-contract in exceptional circumstances. Awareness of the Worker Support Centre helpline, which assists individuals experiencing exploitation issues from employers or recruitment agencies, should be actively promoted. It is in the industry’s best interest to self-police working conditions and accommodation. Integrating pre-arrival and post-stay surveys into the process of bringing workers in would help address workers’ concerns effectively. However, resourcing of actions to enhance the attractiveness of the sector is constrained by very low profit margins and may not be feasible unless either farmgate prices or additional government funding is forthcoming.

• Technological solutions  

The main challenge with automation in the soft fruit sector is that the current technology is not advanced enough to replace seasonal workers. Machinery lacks the speed for quick fruit processing and may affect fruit quality making it unsuitable for direct human consumption. Additionally, the high equipment costs and the need for skilled operators may be prohibitive for smaller businesses and pose further recruitment challenges. While global seasonal workers shortages may drive future technological improvements, building resilience in the soft fruit sector may take time. Therefore, addressing seasonal workforce availability issues requires additional action, as a permanent shift away from seasonal workforce may not be feasible.

• Modelling as a tool for assessment of potential issues

Conducting a modelling exercise on the new additional costs related to workforce recruitment, the wage costs, and other relevant sensitivities would provide an understanding of key factors and their impact on the entire supply chain. Assessing the impact of labour availability may be more challenging due to insufficient data on the number of seasonal agricultural workers available. Care should be taken when undertaking modelling, as the complexity of the issues may result in inadequate outcome if interdependencies are not captured correctly.