Farms turn to productive automation to solve labour shortages

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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.

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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.

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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.

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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.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.