The government is reportedly considering introducing work permits and a seasonal agricultural scheme after we leave the European Union.
The new plans might be useful for supporting the food sector after Brexit, and ensuring that enough workers come to fill jobs.
New acknowledgement of needs
The government has acknowledged that different food industry sectors would require a range of food jobs, according to George Eustice. The agriculture, food and fisheries minister spoke to the House of Lords EU Energy and Environment Sub-Committee about the need for workers during different seasons.
“In horticulture there is a need predominantly for seasonal agricultural workers. In other sectors, particularly meat processing and fish processing, you find there is quite a high dependency on permanent staff from eastern European countries,” he said.
He also spoke about the way different sectors may not need labour from outside of the UK – giving the example of chocolate factories. He also introduced the idea that having so much low-cost labour available had actually prevented manufacturers from developing mechanisation techniques, which might help to improve efficiency in some areas if the investment were to be made.
No change for prices
While discussing future food recruitment possibilities, Eustice also spoke about another factor: the fear that food prices will rise after we leave the EU. He ruled out this idea, saying he does not believe that it will come to pass.
The “most likely scenario”, in his words, was that “prices won’t really change much at all”. He added: “We are likely still to have a free trade agreement with the EU and, even if we didn’t, the analysis out there shows that the impact on food prices would be quite marginal, within a few percentage points, before you take into account the freedom you would have even under WTO rules.”
He believes that food prices are driven by energy and commodity prices around the world, and that there will be no link to Brexit when considering the cost of a weekly shop. Instead, the only change will come should energy or commodity prices change (though there was no discussion of whether this could possibly be affected by Brexit).
Eustice pointed at research by the Resolution Foundation, which showed that extreme circumstances might cause food prices to go up only by as much as 4%.
He also pointed out that materials and ingredients are not the largest factor in a company’s expenditure. In fact, according to his figures, a bakery business would only spend about 9% of their production cost on materials such as wheat. The rest goes on plant machinery, delivery vans, and so on. Of course, this brings us back around full circle to labour costs, which must also be factored in.
“The truth is on bread prices that a few pence on the price of diesel is likely to have far more impact than a few tariffs on wheat,” he said.
Food sector companies may well wish to engage in a hearty debate about his words, and what they really mean for the industry. It’s true that materials may constitute only a small part of the picture, but that does not mean that they are inconsequential. We have already demonstrably seen companies folding as the exchange rate between the pound and other currencies makes it impossible for them to make a profit whilst still importing their materials.
There is also, of course, the question of labour costs. If a shortage of workers occurs and wages are pushed up, there will certainly be a knock-on effect to the profitability of companies operating on previously cheap labour.