Farms turn to productive automation to solve labour shortages

Last year’s 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. This culminated in the Coalition’s agricultural visa, which provides pathways for permanent residency for workers from 10 South-East Asian nations provided they pledge to become indentured with an employer for at least three years.

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.

The ABC supported my argument when it reported last year that a shortage of migrant apple pickers in Tasmania had forced an apple grower to invest in conveyor belt technology, at a cost of $130,000 each, as well as lifting employee pay.

Shortly afterwards, another report emerged of farms in South Australia turning to “automated harvesting solutions and robotic” to overcome labour shortages.

Now, The ABC reports that Victorian farmers are turning to automated shearing to combat worker shortages:

Kevin Butler, in Kilmore in northern Victoria, decided to take matters into his own hands to invest in semi-automated technology to shear his sheep.

“I would say it takes away 95 per cent of the energy [required],” Mr Butler said…

“I’ve got a $70,000 wool clip. I’m happy to go off and buy a tractor, so why not invest in something like this? It is expensive but it’s worth the investment”…

Mr Butler typically needs a team of shearers to complete the work, but with this technology he only needs himself and another; his roustabout and shearer Barry Milne.

Mr Milne agrees that it creates less work for shearers…

Victorian shearing instructor Tom Kelly said he has noticed more farmers using semi-automated technology for shearing, which he said was extremely useful in a time with declining shearer numbers.

The aboves article are 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 capital investment, not endless cheap migrant labour.

Unconventional Economist
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Comments

  1. I just saw an Aussie working at my local petrol station!

    Amazing that Scummo’s handlers allowed a pause in mass immigration for 2 years.

    • Display NameMEMBER

      I spent a bit of time in the US in Texas. Houston. Kids don’t get job at Maccas or petrol stations or any where low paid/entry level. These are all taken by adults and usually by Mexicans. This is where we are heading with the low skilled migration.

      • TailorTrashMEMBER

        My kids did their stint on the checkout at Woolies
        …..now those jobs go to middle aged Indians
        …..straya already there

  2. A few enlightened farmers will go for productivity, but many will comfortably wait for the revived deluge of unskilled migrants on temp visas, which has 100% iron-cast elite support, and can only be arrested by increasingly cunning COVID variants.

    See Albanese in today’s Financial Review, burbling that Labor will “tackle wage stagnation head-on”. He means “facilitate wage stagnation head-on”. And would you like “free TAFE courses” with that? Deja vu, from Beazley in 2005.

    • TailorTrashMEMBER

      Albo’s blowing hard …..his pledges and promises
      are piss in the wind as he won’t touch the big lever
      with the DANGER sign on it called immigration

    • PalimpsestMEMBER

      It’s typically the old 80:20 rule. Some producers will try new things, utilise CSIRO research, automate where sensible. Most will do things as they always have, until they either sell off the farm, die, or decide to adopt what their neighbours are doing. Some attend Agricultural days and learn, some don’t. Most choose the easy option.

      That’s how we ended up with a discussion about ‘skilled migration’ and the first people since lockdown we announced would get permanent residency is a group of basic farm labourers from the Pacific and Asia, that since complain they are being ripped off, so the Government response is to advertise about the risks of ‘escaping’. Ah yes – increasing Australia’s skillbase every day.

    • Strange EconomicsMEMBER

      And will the banks lend for business technology investments like shearing machines? Or lend for houses with guaranteed 10% a year increase (with a boost from renting to low wage workers).

        • EdZackery! I was recently knocked back for a Futures account because I didn’t want to put my house up…..! They twisted it by muttering they were saving me from losing it anyway as most traders lose…..

  3. reusachtigeMEMBER

    Giving a new machine a job is always much better than giving multiple poor imported leeches an income for their offshore breeding farms!

    • Yup… when looking at the alternative…

      without such easy access to cheap migrant labour, Australian farms would be forced to lift wages and conditions to attract local workers

      Just as when capitalism dismantled chattel slavery, when you can’t exploit workers, capitalism is the only solution.

  4. Not withstanding the development work ongoing at a couple of startups Australia has already missed the boat when it comes to farm robotics. The big boys are entering this space and now instead of developing new product at the bleeding edge of technology we’re deploying other peoples technology and paying handsomely for the privilege.
    So if you want to deploy a farm robot and expect some sort of support you go with the big names in farm equipment. Australia gets a few extra service technician jobs, the US and Japan get to develop a new and exciting area of robotics often supported by foreign governments interested in automation ….
    It’d be a funny joke if it wasn’t such a serious situation.

    • Strange EconomicsMEMBER

      Actually also New Zealand also has led a lot of the farm technology, dairy , shearing.

    • I get the feeling that most Aussies don’t understand the Startup game especially in a space like Agriculture.
      Lets start off the discussion with the assumption that all of today’s robotic agriculture startups are going to end up as parts of one of the major farming equipment suppliers (John Deer, Komatsu, Kubota etc) . Now If you can put on your corporate acquisition hat for a minute you can imagine that each of the big players has plans to buy successful startups in say three areas. ( Arial Drones, Visual recognition systems (identify ripe fruit) , robotic actuators (pick the fruit without damage) )
      So if there are 5 big Ag suppliers you have a total of 15 startup exit opportunities. That’s it 15 companies can exit the startup space through big headline making takeovers. That’s 15 globally, that’s it that’s all.
      For everyone else they will either find a way to breakeven and struggle on OR more likely they’ll get cheaply acquired (generally this issue is forced by Venture Capital Limited partner start-up investors). The Limited’s (as they are called) want to recoup some of their investment and realize they’ve missed the boat on the big sale, so they sell off their investment cheaply.
      This is how the start-up game works in the real world.
      Ok why the lesson?
      Well the Australian companies that exist in this space are already behind the 8 ball as far as being likely acquisition targets (as in they won’t be among the 15 exits from this space) , for a modern day VC this means they are un-investable because there’s simply no way that these companies will be 10 baggers.

  5. Does ‘productivity enhancing’ really happen in Australia? Would that be Reusa have two girls at one time?

  6. I remember when dad was a manager at the State Bank of Vic in Kilmore he’d bring a family pie back from the Kilmore bakery once a week and a box of party pies. Ripping pies, those.