UK: Change on the horizon for labour-intensive production systems?

The potential reduction in migrant labour post-Brexit may catalyse structural change in the agricultural and horticultural sectors.

That is the conclusion of AHDB’s latest edition of Horizon, which looks at the impact of a UK exit from the EU on the agricultural labour force, notably, the industry’s current reliance on labour from overseas.

It analyses the reasons why the UK agricultural industry has increasingly drawn on EU migrant labour and what effect any future restrictions on the free movement of people may have.

Paid labour represents a significant proportion of the industry’s total cost of production at about 14 per cent of total financial inputs or £2.5 billion in 2015.

But agriculture, forestry and fishing is the lowest performing UK sector in terms of job output per hour and major European counterparts outstrip the UK on productivity growth in agriculture. In light of this, the report argues that risks to availability of overseas labour could be mitigated by an increase in productivity through innovation and skills development.

David Swales, AHDB Head of Strategic Insight, who co-authored the report, said: “If there are restrictions in the availability of labour, the costs of employing staff are likely to rise, meaning investment in more capital-intensive production systems such as automation may become a more attractive option for growers and producers."

There would be a risk in the short term, however, that businesses could be exposed by labour shortages and become less competitive in the global marketplace. In addition, some agricultural and horticultural sectors do not lend themselves to automation.

“Much greater substitution of capital for labour may be a consequence of a reduced supply of labour. But in the current climate of uncertainty, businesses may need significant signals from Government to help stimulate them to invest the capital required to offset any loss of affordable labour,” added Mr Swales.

“We could see both the current structure of the industry and the nature of UK agricultural production change significantly as a result.”

Read Horizon, The impact of a UK exit from the EU on the agricultural labour force.

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