Media Article: Dairy Exporter - Apr 2022

First published in Dairy Exporter, April 2022 -
Struggle to fill the job gaps.

While technology can fill many of the gaps, New Zealand dairy farmers are likely to have an on-going need for migrant labour. By Phil Edmonds.

The wave of challenges facing the dairy sector, farmer advocates have recently stuck closely to pressuring the Government into creating exemptions for migrant dairy workers to address the well-charted problem of industry staff shortages.

As with any sector, there is a need for a back-up workforce that may well be transitory or part-time. This is particularly important for dairy farming

Not all farmers are feeling the same pain on this, but it is likely to be affecting all to some extent, even if through difficulties in accessing off-farm contractors. In light of this unresolved workforce deficit, are there realistic opportunities for farmers to reduce their labour needs by adopting new technology?

The dairy industry workforce is undoubtedly stretched and has been for a number of years. The 2021 Federated Farmers Farm Confidence Survey pinpointed the sector’s struggle to fill workforce gaps as a huge issue, with nearly half of respondents stating it was harder to recruit skilled and motivated staff.

The most recent version of the survey published in March this year reported no change in the proportion of respondents who specifically identified the difficulty in recruiting staff as a major challenge.

The degree of concern in the farming community that there are not enough people willing to take on available jobs is backed up by DairyNZ research that has indicated the industry is short of more than 4000 workers.

The general shortfall is not new, and its underlying causes are well documented. But they have been exacerbated by the Covid-era’s border closures and resulting inability for migrant workers to enter New Zealand to address skill shortages. The ever-declining NZ unemployment rate has also continued to decrease the pool of potential workers, who have a much wider range of job opportunities than in the past.

In the current context, DairyNZ expressed ‘bitter disappointment’ that in March the Government decided to allow only 300 international dairy farm workers into NZ to help address the immediate shortage, despite being asked for 1500. This comes after the Government created a temporary class exemption in November 2021 for 200 dairy workers to enter the country.

These (albeit modest) exemption spots had been hard fought for, and there has been some surprise that after the first 200 were enabled, farmers were slow in coming forward to accept the offer (particularly given the rhetoric from DairyNZ and farmers via the confidence surveys).

The Government indicated the latest exemption would be the last before July when the new visa regime takes hold.

After July, employers wanting to bring migrant workers into New Zealand will have to be accredited and meet minimum standard requirements and commitments, which will include a labour market test to ensure New Zealanders get the first chance in the job market ahead of migrant workers, and employers will have to pay the median wage (currently $27 per hour).

Could the initial slow uptake of entitlement to migrant dairy workers signal the problem is not as chronic as has been argued?

Possibly, although there are also some reasonable explanations for the hesitancy. The 2020-21 season was well underway by November and most farmers who had been short of labour are likely to have already stitched together a means to get through it. In addition, those migrant workers that were sanctioned to come into NZ to work on dairy farms would still have needed to go through managed isolation for two weeks, at the employers’ expense, and have their availability delayed. Beyond that, there may be wider factors that have made farmers think twice about recruiting offshore dairy workers.

Part of the shortfall identified by DairyNZ is unlikely to be just about advertised jobs not being filled. As with any sector, there is a need for a back-up workforce that may well be transitory or part-time. This is particularly important for dairy farming as it enables employers to offer the kind of conditions necessary to attract good workers. Where there is a lack of people on hand to do casual milkings, for example, there is not the same opportunity to offer a favourable work roster and more days off. It is possible that other sectors are ‘pinching’ dairy farming’s back-up.

In terms of wages, there should be less concern than in the past about escalating expectations of pay rates and conditions (and now median wage mandates) as a reason to be cautious about taking on new staff.

The revenue gains dairy farmers are making with record high milk prices will have eased those qualms. However, given what farmers know about milk price volatility, they will also be thinking about higher wage costs in seasons ahead when prices inevitably fall. International milk prices are not determined by a function of farmers’ ability to service their fixed onfarm costs. Wages don’t fall in line with prices. There may be a proportion of farmers who are vocal about staffing deficits but in the same breath not as eager to add higher costs to their business.

Understanding why the initial quota of migrant workers was not filled on day one (despite the reportedly dire need) requires a more nuanced consideration of what the vacant jobs are within the industry, and where they are located rather than simply accepting the industry is short of a bald 4000 workers.

DairyNZ says its data indicates “the greatest need is for farm assistant positions, which is the most common role onfarm. There are also a number of herd manager positions available. Highly skilled roles of assistant managers and farm managers are also vacant on some farms”.

Looking at the pinch point though, DairyNZ says “as calving approaches, farmers will be looking to fill fixed-term calf rearing positions”. This suggests the most sought-after workers are those who would be ‘temporary’ farm assistants. They are also workers that might previously have been paid closer to the minimum, rather than the median wage. The elevated (effectively regulated) wages that will need to be paid to migrant workers filling farm assistant roles (before July at 1.5 times the median wage, and at the median wage from July onwards) could be considered an imposition by some.

In terms of where those jobs are, and what type of farm operations are most in need of workers, DairyNZ says “farms in all regions have been affected by staffing shortages, regardless of whether they are close to towns or cities.

“While all farm sizes are affected by staff shortages, larger farms with more staff are more likely to have vacancies. Larger farms tend to be located in Canterbury, Otago and Southland, and farmers in these regions have reported being more likely to have vacancies.”

There will of course be exceptions, but the above suggests that for established farmers with average sized operations based in the traditional North Island dairying regions, worker shortages might not actually be top of their minds.

It also suggests that if technology is to play a role in de-escalating the industry’s need for supplementary international workers, it would need to be focused on eliminating specific tasks, some of which are seasonally specific – essentially feeding calves, spraying weeds, putting up fences and putting cups on cows.

Suppliers of robotic milking machines would argue they’ve got the latter covered, and that their technology has been developed specifically to help farmers working with labour uncertainties and shortages. The promotion of DeLaval’s VMS milking system includes a pitch to farmers who want to have a normal family life and their employees to have normal working hours.

But uptake of robotic milking in NZ has possibly not reached a level that reflects an unsustainable dependency on hard-to-attract farm assistants. Among other things, including business investment priorities, this is likely due to farmer perception that it requires a whole-farm system change that they’re not prepared for.

Technology is, however, readily available that is helping farm teams become more efficient, and within that, farm businesses to adjust to what has become a fluid labour market as staff (at the assistant level) transition from season to season.

Scott Townshend, chief executive of onfarm data company Trev, says that while a tool like Trev doesn’t directly reduce the farm head count, data tools can be used by anyone regardless of their tech literacy, which helps mitigate the challenges of rotating staff.

“Our farmers are using Trev to provide business continuity by storing all necessary information in a structured way so when there are personnel changes, they can understand how your farm operates, and manage your data before the next person steps in to pick up where they left off.”

The prospect of reducing the number of assistant roles on NZ dairy farms still looks like a long-term, rather than a short-term goal.

Without farm system changes, migrant workers are still going to be required to fill seasonal gaps for some time, particularly in the South Island.

Technology will increasingly ease the disruption that transitional staffing creates, but at this stage there’s no immediate danger that gumboot makers are going to go out of business.