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Labour shortages could force-up UK food prices

UK food prices could increase over the coming year due to labour supply shortages writes Robert Salter.

British farmers, and many other parts of the agricultural and food supply chain in the UK, have been heavily dependent upon European workers over the past 10-15 years, but over one million EU nationals have left the UK in the last 12 months, and many may not return.

If labour shortages do become a significant issue for the 2021 farming season it is inevitable that farmers will need to increase the rates they pay their workforce to attract any labour which is available, and this will result in higher prices for UK consumers.

While those EU workers – who have historically worked in the UK taking advantage of the free movement of labour which was available during the UK’s membership of the EU – may be able to continue coming to the UK under the UK’s ‘settled status regime’ for EU migrants, or as part of the Frontier Worker Permit system, it is not clear how many EU citizens who have previously worked in the UK agricultural sector have applied for either of these options.

The Government has expanded a trial ‘seasonal workers programme’ designed specifically for the farming sector for 2021, but many questions remain about the suitability of this scheme.

For example, the scheme allows a maximum of 30,000 visas for 2021 to be issued, even though farmers’ organisations have previously suggested that they need up to 70,000 seasonal workers from the EU per annum.

It is questionable whether the nature of the seasonal workers programme scheme really helps smaller farmers in particular with their labour needs, as the scheme requires would-be workers to be sponsored by someone registered with the Home Office and, as with any Home Office work permit and visa scheme, it is quite possible that there will be significant delays in visas being approved.

The risk for farmers in this area is not helped by the deadline for individuals applying for settled status in the UK (or pre-settled status) in just a few days’ time on 30 June. After this date, any EU nationals who are already in the UK will need to obtain a work permit to continue working in the UK.

Settled status and frontier worker permits are only available to people who have historically come to the UK from the EU for work – they will not be available to any EU citizens who might have otherwise come to the UK for the first time in 2021 (e.g., recent school leavers).

Therefore the ‘pool’ of potential EU workers will reduce naturally on a year-by-year basis and the block on new EU labour coming to the UK threatens to create even more labour shortages in this sector which can only have a detrimental effect on prices.

Would you like to know more?

If you would like to discuss the above or how it may affect you, please get in touch with your usual Blick Rothenberg contact or Robert Salter, using the details are on this page.

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