Farm labour shortages drives productivity-lifting automation

A recent report from the National Agricultural Labour Advisory Committee admitted that Australian farmers’ extreme reliance on cheap migrant labour is having detrimental productivity impacts by preventing farms from adopting new methods and investing in automation:

In many ways, Australia is at a crossroads. Either its enterprises go all out to modernise by learning and adopting new methods, or they fall behind the others, occupying increasingly uncomfortable niches, relying on inadequately trained, low productivity workers, using the same old approaches that worked yesterday, and then finding themselves in a situation where business as usual has suddenly turned into business in decline…

The report was delivered against the backdrop of farmers complaining of labour shortages and wanting governments to facilitate the entry of low-paid foreign workers.

MB has argued repeatedly that giving farmers easy access to migrant workers is a mistake. Not only does it encourage exploitation and push down wages, but it also stifles Australia’s long-run productivity growth by discouraging farms from adopting labour-saving technologies and automation.

Put another way, without such easy access to cheap migrant labour, Australian farms would be forced to lift wages and conditions to attract local workers. These higher wages would, in turn, incentivise farms to invest in labour-saving technologies and automation, lifting  the economy’s productivity.

A new report from the ABC highlights my argument, with a shortage of migrant apple pickers in Tasmania forcing an apple grower to invest in conveyor belt technology, at a cost of $130,000 each, as well as lift employee pay:

Coronavirus-imposed travel restrictions and a shortage of overseas workers pushed apple growers to adopt the [conveyor belt] technology more quickly than anticipated.

When the pandemic hit and borders closed, Mr Smith did not have enough pickers. So he ordered two of the spider-like apple-picking platforms, with a price tag of $150,000 each.

“It’s not brand-new technology, it’s been around for a while”…

The machines have six conveyor belts and can pick at six different heights…

Use of the technology is expected to accelerate in the next 24 months because of COVID restrictions and labour shortages… Andrew Smith has since ordered two more machines…

There are also benefits for the quality of the fruit.

“Bruising basically disappears. Even the best apple picker will have some bruising in their fruit,” he said…

Orchard workers will now [also] be paid an hourly rate rather than based on volume…

“It’s more equitable, I guess. It becomes up to us to drive efficiency and manage this correctly, because now we’re potentially on an hourly rate, as opposed to contract labour which is what we’ve been doing for the past 40 years,” Mr Smith said…

The report also notes that technological investment on farms will accelerate over the next three years:

“The orchard will effectively start to get built around machines like this, so it is absolutely a game-changer,” Mr Smith said.

But he said these conveyor belts would not be the end of the line for the technological revolution at orchards.

“You’re going to see robots in the orchard here within 24 to 36 months in Tasmania, probably at this place or next door. It’s going to happen really, really quickly,” Mr Smith said.

The above article is bonafide proof that paying higher wages increases productivity by driving investment – exactly what MB has argued over many years.

There is a reason why advanced nations offer the highest pay, are most productive, and enjoy the highest living standards. All three issues are inter-related.

Allowing farms and other industries to import thousands of temporary migrants to work for slave wages was always deleterious for wages, productivity and living standards.

The key ingredient for Australian industry and the economy to flourish is productivity-enhancing automation, not endless cheap migrant labour.

Unconventional Economist

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