Labour shortages could push food prices even higher, MPs warn

Chronic labour shortages in the food and farming sector could see food prices continue to rise, MPs said today.

The Environment, Food and Rural Affairs Committee report – devised by six Tory and four Labour MPs along with an SNP colleague – said as of August last year the sector had ‘potentially in excess of 500,000 job vacancies’.

The report found evidence of pressure and shortages before the outbreak of war in Ukraine had caused the sector to experience ‘even greater pressure’ and said this was ‘due principally to Brexit and the Covid-19 pandemic’.

And it said the Government ‘must learn the lessons’ from how it introduced temporary short-term visa schemes in autumn 2021, because the ‘late announcement limited the sector’s ability to take advantage of the visas’.

The report called on Ministers to review aspects of the Skilled Worker Visa scheme that ‘act as barriers, including the English language requirement and the complexity and costs involved in a visa application’.

And it said there must be an expansion of the Seasonal Workers Pilot scheme and increase in the number of visas available by 10,000 this year – as well as making the scheme permanent and announcing visa numbers in future. 

This morning, the chair of the the committee said he was ‘hopeful’ the Home Office was listening to concerns. Speaking on BBC Radio 4’s Today programme, Neil Parish said: ‘I am hopeful that the Home Office is listening but they must listen and do something about it rather than just leave it and it’ll sort itself out, because it won’t.’ 

The release of the report comes after a torrid year for the industry that left nearly a quarter of the UK daffodil crop unpicked, fruit produce rotting in the fields and 35,000 pigs culled because of a lack of workers.  

‘The evidence we have taken leaves us in no doubt about the seriousness of the issues facing the food and farming sector caused by labour shortages,’ wrote the study’s authors.

‘These include food security, animal welfare and the mental health of those working in the sector.

‘In contrast, the Government has not demonstrated a strong understanding of these issues, and even on occasion sought to pass the blame onto the sector on the basis of incorrect information about its own immigration system.

‘The Government must radically shift its attitude and work together with the sector to devise solutions that speedily help address the problems it faces, in the short, medium and long-term to help the UK’s food industry and enable it to thrive.

‘Failure to do so risks shrinking the sector and leading to higher food inflation at the price of the UK’s competitiveness, thereby making the country more reliant on food imports as we export our food production capacity – as well as the jobs it supports – abroad.’

Around 35,000 pigs which were destined to become sausages, bacon and chops have been culled because of a chronic lack of skilled butchers and abattoir workers.

Kate Morgan, a Yorkshire-based pig farmer, told BBC Radio 4’s Today programme this morning: ‘It’s really quite desperate. We’ve had a really, really difficult nine months that’s been brought on by labour shortages and has affected farmers on the ground. And it continues to be a struggle to be honest.

‘We’ve had a really big backlog of pigs on farm that were contracted to the processers and they just didn’t take those contracted pigs. And so we had to deal with them. Obviously our pigs are growing every day, and every day we have new piglets born.

‘They weren’t leaving the farm, and so we were just getting more and more on the farm, and we were having to create pens for them. They were growing and going out of spec. It was costing us a lot of money, a lot of stress emotionally and financially.’

She added: ‘I don’t think the Government still fully understand agriculture. They don’t do anything until it’s too late. We’ve got a massive issue with food security about to hit us, and still they are not acknowledging it and they’re not facing it. This has been happening for nine months, the labour shortage, and yet now a report comes out. They just do not act fast enough.’

The agriculture sector, like much of the British economy, is facing sky-high energy prices following lockdowns and labour shortages in the wake of Brexit. 

Now, Moscow’s invasion of Ukraine has fuelled rocketing prices for fertiliser because Russia is a major producer – with farms having to be more reliant on animal slurry to grow crops and cut costs.

Fertiliser prices in the UK have soared almost fourfold over the past year, according to sector data.

The nutrient-rich material was already in short supply after surging gas prices forced leading UK manufacturer, CF Fertilisers, to pause production in September last year.

Six months later, the Ukraine war sent fertiliser prices hurtling even higher.

Wheat also hit recent record peaks because Russia is a key producer alongside Ukraine but has now been hit by tough sanctions.

Meanwhile, worsening labour shortages sparked by Brexit and exacerbated by Covid, are particularly acute in the agricultural sector.

The industry had 500,000 job vacancies in September 2021, according to NFU data.

Visa issues and Covid restrictions have caused many farm workers to return abroad, notably including many European lorry drivers.

On Monday, it emerged that considerably more food businesses are being forced to pass on their rising costs to customers as they reported being worse hit by inflation than many other companies.

The Office for National Statistics said that 58 per cent of food and beverage businesses have reported passing on price rises to customers in March.

In the economy as a whole 37 per cent of all businesses reported the same.

It comes as the data shows food and drink companies are being especially squeezed by inflation across the economy. 

Just 3 per cent of food and drink companies said they had not been impacted by price rises, which was nearly seven times lower than all businesses (20 per cent).

Companies across the country are struggling to find new staff, with 60 per cent saying that have seen a low number of applications for jobs in March.

It has meant that 29 per cent of food and drinks companies have started paying their existing staff more, and around the same proportion are paying higher wages for new recruits.

These businesses are also more likely to be suffering from extra costs caused by Brexit and the end of the transition period. 

In March 60 per cent of food and drink companies said they were being impacted by energy price rises, compared to 38 per cent across all sectors.