On 11 January 2022, the House of Lords is due to consider the following question for short debate:

Lord Redesdale (Liberal Democrat) to ask Her Majesty’s Government what plans they have to provide support to the British farming industry to combat (1) increased production costs resulting from the ongoing labour shortages, and (2) increased competition from the Australian and New Zealand markets.

What is causing labour shortages in the farming sector?

In recent months there have been reports of labour shortages in the UK farming and food production sectors, including shortages of:

  • seasonal workers to pick and process crops and flowers;
  • heavy goods vehicle (HGV) drivers;
  • poultry workers; and
  • qualified butchers and other abattoir workers.

In September 2021, the National Farmers’ Union (NFU) reported that there were over 500,000 job vacancies across the UK’s food and drinks sector. The NFU said that the reasons for the shortages were complex: the impact of the Covid-19 pandemic; Brexit; and the UK’s new points-based immigration system. It said the shortages had resulted in higher costs for farmers, as they had to offer more incentives to recruit and retain staff.

In October 2021, healthy pigs had to be culled at farms rather than being sent for slaughter, due to a shortage of abattoir workers and supplies of carbon dioxide used to stun the pigs. It was reportedly the first mass cull of pigs since the 2001 foot and mouth outbreak. By December 2021, the number of pigs culled had reached 30,000. Zoe Davies, chief executive of the National Pig Association, has said that “60 to 80% of abattoir workers were from Eastern Europe” and many that left during the Covid-19 pandemic “don’t want to come back”.

What has the Government done to address the labour shortages?

In October 2021, the Government announced a range of measures to support pig farmers. These included:

  • Funding for a private storage aid scheme, which enabled slaughtered pigs to be safely stored for three to six months so they could be processed at a later date.
  • Temporary suspension of the pork levy.
  • Temporary visas for 800 pork butchers, available until the end of 2021, to allow applicants to work in the UK for up to six months. At the time of writing, the Government has not said whether it will extend the scheme into 2022.

The Government also announced temporary visas for 5,500 poultry workers and 4,700 HGV drivers. The HGV visas expire on 28 February 2022. The poultry visas expired on 31 December 2021 and the Government has said it has no plans to extend the scheme.

Uptake of the visa opportunities by the end of 2021 had been limited. The Home Office minister, Kevin Foster, provided estimates to the House of Commons Environment, Food and Rural Affairs Committee in December 2021. He said the number of applicants for the poultry worker visas was “a couple of thousand”, though some poultry workers had also come via the skilled worker visa route. Mr Foster said there had been “a couple of hundred” applicants for the HGV driver visas, and pork butcher applicants had been “in the dozens”.

On 24 December 2021, the Government announced an extension of the seasonal worker visa route to the end of 2024, to allow foreign workers to pick edible crops and flowers for up to six months. There would be 30,000 visas available in 2022, with the number tapering down thereafter. The Government said it had “demanded a plan from the sector to cut the reliance on foreign labour”.

Trade deals with Australia and New Zealand

The farming sector has raised concerns about the impact of the UK’s future trade deals.

In December 2021, the Government published the final text of the UK’s free trade agreement with Australia. This is the first ‘from scratch’ trade deal agreed since the UK left the EU. The UK has also reached an agreement in principle on a free trade deal with New Zealand.

The UK-Australia deal removes almost all tariffs on trade between the two countries. However, the removal of tariffs on some agricultural products (including beef and sheepmeat) will be phased in over 15 years.

The UK Government has estimated that the Australia deal could increase trade by “£10.4bn in the long run”, equivalent to 0.08% of GDP over 15 years. However, the Government’s impact assessment showed that although the deal would benefit the UK economy overall, agri-food sectors would be worse off over the same period. Gross value added (GVA) in agriculture and semi-processed foods would decrease by approximately £94m and £225m, respectively, compared to 2019 levels.

Similarly to the Australia deal, the proposed trade deal with New Zealand would remove almost all tariffs on trade in goods, with staggered elimination of tariffs on some agricultural products. At the time of writing, the Government has not published a full impact assessment for the New Zealand deal. A preliminary economic assessment was published as part of the Government’s ‘strategic approach’ document in June 2020. The assessment used two modelling scenarios, the second of which made an assumption of deeper trade liberalisation. It found that the deal’s impact on UK GDP would be “close to zero under both scenarios” after 15 years. Overall UK output (GVA) was estimated to increase, but “agriculture and semi-processed food sectors are estimated to see a reduction in output (GVA) and employment” compared to the 2018 baseline.

The Office for Budget Responsibility (OBR) has estimated that the overall impact of Brexit would be a 15% decrease to both UK imports and exports. This reduction in trade would result in a 4% decrease in the UK’s long-run productivity. On trade deals with non-EU countries, the OBR forecast that they “will not have a material impact” on the UK economy.

What does the UK-Australia trade deal mean for farming?

The Government has said that the deal “supports UK farmers and creates new opportunities for our food and drink exporters”. The deal includes a dedicated chapter on animal welfare and the Government has said that all food imports from Australia will “continue to […] meet our high food safety standards”.

The deal includes various safeguards for the agri-food sector. The removal of tariffs on various agricultural products imported from Australia will be staggered over the first 10 years of the deal. Tariff rate quotas will apply during that period, meaning that a tariff is applied to all imports over a volume threshold. In years 11 to 15, the tariff quotas will continue to apply for beef and sheepmeat only.

The Government’s impact assessment of the Australia trade deal concluded that although it was positive overall, agri-foods would be one of the sectors negatively affected:

Part of the gains [of the deal] results from a reallocation of resources away from agriculture, forestry, and fishing (around -£94 million) and semi-processed foods (around -£225 million).

The assessment noted that Australia is a “large, competitive producer of agricultural products”. It stated:

Increased imports of these products could bring significant benefits for consumers across the whole UK via lower prices and increased choice. However, there is a risk that any adjustment costs which do arise are borne by import-competing producers and in localities where production is concentrated.

The Labour Party has criticised the deal’s safeguards for the farming sector. The party said Australia would be able to increase its beef exports to the UK “by more than sixty times their 2020 levels […] before any tariffs would kick in”.

The National Farmers’ Union has also criticised the trade agreement. Responding to the publication of the final text of the deal, the NFU’s president, Minette Batters, said:

There appears to be extremely little in this deal to benefit British farmers […] [O]n the face of it, this is a one-sided deal. When it comes to agriculture, the Australians have achieved all they have asked for and British farmers are left wondering what has been secured for them.

Ms Batters said the UK Government had “capitulated to Australian demands” on time-limiting safeguards to vulnerable sectors such as farming, with no protection available after 15 years.

A report on the deal by the Agriculture and Horticulture Development Board concluded that it was both an “opportunity and a sizable risk for our domestic agricultural market”.

The House of Commons debated the Australia trade deal on 5 January 2022. Several MPs raised concerns about its impact on farming communities. The Secretary of State for International Trade, Anne-Marie Trevelyan, referred to the various safeguards for agricultural produce, such as the tariff rate quotas. She said that the UK should be “unafraid of fair competition” and that it was “relatively unlikely that large volumes of beef and sheep” would be diverted to the UK from Australia’s main markets in Asia.

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Cover image by Illiya Vjestica on Unsplash