Wage bill increase must be reflected in farmgate returns
NFU Scotland is calling on the wider food supply chain to recognise the impact that new wage arrangements will have for Scottish farming.
The new National Living Wage’ (NLW) is to apply to workers aged 25 and older. It is due to begin at a rate of £7.20 per hour on Friday (1 April 2016) and rise in stages to £9.00 per hour by 2020.
For some farm businesses, particularly those involved in growing soft fruit and vegetables, wages can represent more than 40 percent of the operating costs. The introduction of the new living wage rate in a few days’ time could erode thin profit margins unless Scottish growers can recover the extra cost they face through the products they sell.
The Union has previously warned that it this doesn’t happen, then the danger is that less Scottish fruit and vegetables will be produced and more supermarket shelf space will be given to cheaper, imported produce.
NFU Scotland Chief Executive Scott Walker said: “NFUS fully supports the principle of a living wage for all workers in the agricultural industry and we are clear in our ambition that this industry is seen as one that offers good employment opportunities and exciting and rewarding careers.
“Farmers and growers know that to attract skilled and dedicated workers – whether permanent or seasonal – they need to pay a wage that is competitive. As a result, most full time workers in farming are already paid well in excess of the living wage.
“However, the dysfunctional supply chain, and the price pressure being heaped on all farm businesses at this time makes attracting and keeping staff a genuine challenge as the rewards for the risk involved in farming are simply not there.
“The supply chain needs to recognise that what they pay for farm produce is the biggest determinant of what a business can afford to pay its staff and any sensible sourcing commitment from retailers needs to address this issue.
“Farmers are not currently receiving a price for their produce that will accommodate the increased wage bill that the new national living wage will bring about – either this year or in the years to come. What we need is a change of attitude in the supply chain that recognises that the cost of food production is going to rise rather than continually screwing down the price.
“The Government and the public have rightly determined that we should now have a new national living wage and that comes at a cost. If the supply chain doesn’t reflect this extra cost in the price paid for farm produce and if the consumer will not pay the couple of extra pence required at the retail end, then parts of our farming industry will be exported overseas. The risk is produce will be imported from lower cost countries where there isn’t a national living wage.
“We may all feel better for the fact that there is now a new national living wage but we need to reflect this change in the decisions we take when choosing what products to buy and in what we are prepared to pay.”
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