Written evidence submitted by Agricultural Industries Confederation (LS0008)
Call for evidence - Environment, Food and Rural Affairs Committee
Labour shortages in the food and farming sector – response from the AIC
The AIC (Agricultural Industries Confederation) is the trade association which represents the UK Agri-supply industry which has a farmgate value of over £8 billion.
We represent a wide range of members who supply farmers with the key inputs and advice they require to produce crops and livestock products. AIC also Services manage a range of trade assurance schemes for specific sectors of the UK agri-supply sector. Our industry is therefore an integral part of the agri-food supply chain. The key sectors in which our members operate are shown below.
Response to call for evidence questions
The AIC is clear that labour shortages, particularly HGV drivers, are affecting many parts of the agricultural supply sector including the delivery of farming inputs to collection of produce. This is adding to challenges compounded by a range of legacy issues including Covid-19 and self-isolation, disrupted global supply chains, rising energy costs and EU:UK trade friction. These problems are unlikely to improve as we go into the winter.
For the agri-supply sector, the AIC is aware of members who have experienced labour availability issues across the following sectors:
- Crop Protection Products are facing delays from being delivered on farm. The main issue is availability of ADR drivers to deliver PPPs from bulk storage to distribution depots. This is adding to delays of products arriving on farm, which are needed as we head into the 2022 harvest year.
- UK feed companies have reported challenges in some situations of delivering animal feed to farms. For bulk deliveries of straights and co-products direct to farm, there is a higher reliance on owner/drivers or contractors to carry out these deliveries, whereas businesses running their own fleets are not so badly affected. AIC has been made aware that because of current HGV shortages, farmers have been contracted to deliver grains to mill in tractors and trailers.
Feed companies have been sending letters to their farming customers asking them to plan ahead when considering their feed requirements. As we head into autumn, feed demand for the ruminant sector increases and this is something that must be considered in Defra planning. Existing challenges in the pig and poultry sector mean that greater numbers of animals are on farm owing to slaughter throughput challenges. This has further exacerbated feed demands on farm. With the existing pressures in place, harsh winter weather could make this situation much worse. AIC is urging all stakeholders, including Government to not lose sight of the need for animal feed deliveries to ensure they can be maintained, so as not to impact on their health and welfare. During covid shutdown measures last winter, in which EU drivers were prevented from coming to the UK, Defra took very seriously potential impacts on animal welfare arising from shortages of critical imported feed materials. The very same concern must be shown heading into winter.
- Fertiliser and grain deliveries and collections are all being affected as a result of haulier shortages. AIC members have reported that this difficulty in moving raw materials has meant that collections and deliveries on farm has meant that farm businesses have not been able to receive inputs or send their grains from farms. Meanwhile, this knock-on impact to the supply chain has meant delays in arriving at mills or processing sites.
- In the seed sector, the lack of HGV drivers is also having an effect, however this sector also has a high reliance on seasonal staff to operate at mobile seed plants processing farm saved seed, from harvest through to October. Recent immigration policy changes have reduced the availability staff. Those that have undertaken seasonal roles are now put off by paperwork, quarantine and a narrowing of the income gap.
It is well established there are a number of factors behind labour shortages in the food supply chain, including agri-supply businesses. A key driver has been a reliance on migrant labour from the European Union. Many agri-supply businesses were entirely aware of the impending changes to migration policy, and have been undertaking measures to address this. However when one takes into account the recent pandemic, and its impact on the logistics and delivery sectors, global commodity inflation, historic low unemployment levels and EU Exit trade friction, these have all compounded the issue. Non-UK drivers have left the UK and are not available to work in the numbers they once did. Industry discussion estimates this at around 15,000 drivers.
With regards to HGV and haulage sectors, it cannot be overstated the impacts of testing capabilities and throughputs. For example, recent DVSA tests carried out per annum have been recorded in excess of 70,000 with between 40,000 and 44,000 passes. Last year (2020) 27,569 tests were carried out with 15,979 passes. Recent action by Government to address this is welcome, however the legacy it has created will take some time to overcome.
Finally, the age profile of HGV drivers is of concern. The average age of an HGV driver is 55 with less than 1% under the age of 25. This lack of young people coming into the sector has been highlighted by a number of AIC members, who have cited current apprenticeship programmes coming into the industry as too burdensome, and too much lag time from beginning to job placement. For many, the pay at this level is also a barrier to serious uptake.
It has been noted by a number of AIC members that the role of regulations related to off-payroll working has had a notable effect on the HGV sector. This requires all previously self-employed drivers to be contracted on PAYE where they are working solely for a specific business. This has been seen by many as being unpopular for drivers, with many deciding not to continue driving or are seeking work that remunerates them at a level to compensate for the tax and NI they pay through PAYE.
Simply put, the continuing impact of the movement of raw materials and finished goods could impact in the short supply of some foods and feeds to customers and consumers if sufficient drivers are not found to transport them.
AIC members have been clear that current growth in the construction industry on road, rail, building projects is drawing resource away from other sectors, notably agriculture. The effect could lead to rate inflation through drivers moving to other employers. This is also being seen in the supply chain as retailers are recruiting HGV drivers often at the expense of agri-supply drivers. This only pushes costs down the wider supply chain, and does not resolve a systemic issue.
Farmers in the UK have until now been able to benefit from a just in time business model, benefitting from the order and delivery of goods at relatively short notice. For the year ahead, the combination of driver shortages, as well as the many existing other challenges in agri-supply sectors (detailed in Question 4), mean that this approach to ordering inputs will be placed under considerable strain. This could have far reaching impacts across the UK’s agricultural sector. Defra and Whitehall more broadly must take this seriously and contingency plan for these medium to longer term effects.
Fertiliser. In September, some UK and European fertiliser manufacturers suspended production due to an unprecedented rise in gas prices. Wholesale prices for gas had increased 250% since January 2021 - with a 70% rise since August. Prolonged shortages will have an impact on agriculture and food production. This is because the manufacturing of fertiliser also produces CO2 as by product, meaning that the sector is of critical importance to the farming, food processing and healthcare sectors. Alongside providing fertiliser for farmers, CO2 is required for use in abattoirs and packaged foods, and nitric acid is used in industrial and cleaning chemicals. The priority must now be on industry and Government working together to deliver sustainable and resilient supply chains, and ensuring UK growers are not prevented from accessing necessary fertilisers we need for our food security.
Crop Protection Products. There have been challenges in supplying crop protection products such as glyphosate to UK farms. This is because of issues with availability of active substances from China, and production plants in the USA, which has had a knock-on effect on manufacturing and availability for the UK and other markets.
Fuel. More recently, the shortage of fuel as a result of panic buying from broader society has meant that AIC member businesses operating across agri-supply sectors have experienced difficulties in finding fuel to be able to either make deliveries or collections on farm. Bulk HGVs are required to take cereals and oilseeds off farms to deliver to mills, and this has been pushed later into the year owing to a late harvest. There have been a number of cases of arable marketing firms unable to source enough fuel in order to be able to make collections from, or deliveries to, farms. Should this situation not resolve itself soon, AIC would urge Government to be prepared to prioritise key workers such as food supply chain vehicles in order to access fuel. This extends across the whole supply chain, from farm inputs to the retail deliveries.
As the Committee may be aware, AIC member businesses have faced considerable difficulties in both importing and exporting goods to and from the European Union since the 1st of January. A major problem of the Trade and Co-operation Agreement (TCA) is that there is a lack of consistency in the way in which rules are being applied on exports of many products to EU countries, including animal feed, seed and some grains.
It was anticipated that inspections would take place on feed materials from 1st October, however feedback received to the AIC from both importing members and individual Member State veterinary authorities, it was clear that Government authorities and EU member states were not ready to implement the requirements. The AIC position on imports has been clear – if the UK cannot guarantee a smooth transition to import checks from 1st October 2021, given current supply chain and labour pressures, then a delay was the only feasible option. It is of course preferable that eventual import checks will take place, in order to achieve some kind of balance to trade with the EU. However we should be clear that given the current pressures in the agri-supply chain relating to inputs and labour shortages, we must keep this timetable under review as the circumstances change
It should be noted that Government has taken some welcome steps to help alleviate burdens on EU-UK trade friction, workforce shortages and supply concerns. The first area of welcome co-operation was during staff absences owing to required self-isolation on the test and trace app, and the status of critical workers having to self-isolate, even if they have been double vaccinated and showed no clinical signs of Covid. Initially, only certain employees in certain sectors could be exempt from self-isolation. Following extensive AIC discussions between Defra, DFT and AIC, eligibility was widened to include employees in agri-supply businesses. This allowed workers to be exempt on a case-by-case basis, something that many AIC members benefitted from, especially in critical animal feed sectors.
Government should also be commended for the openness and recognition of the challenges faced by AIC members in importing and exporting products such as animal feed, seed, grains and fertilisers to and from the EU. In some cases this has included direct engagement between exporting or importing businesses, AIC and Government authorities over individual issues, as well as more systemic problems arising from the TCA more broadly. There are however still a considerable number of challenges across all AIC sectors, and further work is required in order to prevent trade friction compounding supply chain problems in 2022.
The AIC believes that further steps are required from Government in supporting the agri-supply and wider agricultural sector. This is because it is very unlikely that current difficulties will improve as we head into Winter and in the early part of 2022.
The key actions AIC needs from Government are:
1. To create a 12- month Covid-19 Recovery visa in order to alleviate the labour shortages. This will enable the agricultural supply chain to work with UK Government and the devolved administrations in parallel on a package of measures that support training and skills development, the adoption of new technologies and career promotion.
2. To work across Whitehall departments to fully appraise the medium to long term impacts of shortages of key inputs on farms. These include current shortages and costs of inputs such as fertilisers and crop protection products, which have had a considerable knock-on effect to both primary agriculture, but also in the wider food chain via CO2 production, and other by-products used in the wider economy. Government must understand that short term, quick fixes are insufficient in addressing such shortages and costs. An entire strategic approach is needed across Whitehall on what shortages will now mean for different agricultural sectors, and more importantly what it means for the nation’s food security. This is something that AIC and industry is ready to assist Government with.
3. To negotiate a mutual veterinary agreement with the EU. This would ease problems trading food and feed between Great Britain (GB) and the EU and GB to NI, and from EU to GB when import controls take effect.
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 Moving dangerous goods by road is governed by international regulations and is strictly policed. Most European countries are signed up to ADR. ADR ensures that any dangerous goods transported by road can cross international borders freely if the goods, vehicles and drivers comply with its rules.
 Establishing the labour availability issues of the UK Food and Drink Sector
 Establishing the labour availability issues of the UK Food and Drink Sector