VICTORIAN vegetable growers are continuing to question their economic viability as more than a year’s worth of low or negative margins threaten the long-term sustainability of the industry.
The insights are contained in a new AUSVEG Vegetable Industry Sentiment Report, which affirms that 34 per cent of commercial vegetable growers are considering walking away from the sector in the next 12 months.
Rising input costs, poor farmgate returns, workforce shortages, industrial relations changes, lack of funds to invest in innovation, and an overwhelming compliance burden have again been identified as the key factors leading growers to reconsider their future.
AUSVEG conducts twice-yearly sentiment surveys, which have drawn responses from large, medium and small commercial vegetable growers from all Australian states and the Northern Territory to provide a current and cumulative picture of sentiment across the national industry.
Highlighting the intense pressure being felt by commercial vegetable growing businesses, 50 per cent of respondents to the most recent survey indicated they were financially worse off compared to mid-2023, and almost 30 per cent indicated they expected to be financially worse off in a further 12 months.
Challenging business conditions have led to almost 50 per cent seeing their future business outlook as either very poor, or poor, and a further 37 per cent ranking their outlook as average.
Workforce shortages and labour costs have continued to feature among growers’ biggest challenges, with 46 per cent indicating they were struggling to source enough staff in full-time, part-time and casual positions, and a range of skilled, semi-skilled and unskilled roles.
Labour costs have remained another major issue, averaging 38 per cent of a grower’s overall cost of production, and reaching as high as 71 per cent.
Successive surveys have also reflected changes in the workforce mix.
Following adjustments to workforce schemes relied upon by growers, engagement with the Pacific Australia Labour Mobility (PALM) scheme has reduced, and reliance on backpackers has increased.
More than 62 percent of grower respondents to the survey also indicated that the removal of the 88-day specified work requirement for working holiday visa extensions would have a severe or critical impact on their business.
The impact of some of these challenges on Australia’s food security have been somewhat masked by recent favourable weather conditions and fewer supply chain disruptions.
However, ongoing margin squeeze and difficult conditions, combined with any further set-back, could easily trigger a cascade effect that results in reduced production, higher consumer prices, and increased reliance on imported product.
AUSVEG CEO Michael Coote, said the report presented a concerning picture.
“While the economic challenges and uncertainty which have hit the wider Australian community have played a role in the difficulties facing commercial vegetable growers, many of the issues contributing to this crisis in vegetable farm viability are the result of legislative, regulatory and policy settings that have been imposed upon the industry,” said Mr Coote.
“Our industry is in an extremely tenuous position, with growers leaving, considering leaving, or just one more set-back away from leaving.
“With more than a third of respondents continuing to consider leaving the sector, it is clear that growers have, and will continue exiting until the situation improves." Without that meaningful improvement, there are serious implications for the viability of Australia’s vegetable industry, as well as our longer-term food security.
“Workforce is one example – with nearly half of growers this year experiencing workforce shortages, it is only due to their resilience and perseverance that they have managed to continue producing the vegetables, potatoes and onions that Australians depend on.
“A suite of carefully considered, fit-for-purpose solutions are needed from government, to ensure Australia’s vegetable industry remains viable, now and into the future. This includes recognising that growers need a range of workforce options given the significant geographic and production system diversity that exists in the industry.”
A focus on bolstering Australia’s waning vegetable consumption is among the solutions proposed by AUSVEG, to help reverse the industry’s fortunes.
Recent industry research has identified that Australians may be eating as little as 1.8 serves of vegetables per person per day when wastage is taken into account – less than the already low average of 2.4 serves reflected in official statistics.
That same research has identified that by lifting vegetable consumption by just one serve per person per day by 2030, there is potential to achieve a $3.3 billion net vegetable supply chain economic benefit, and $1.4 billion in healthcare system savings due to reduced dietary-linked disease burden over time.
Leader of The Nationals David Littleproud said if farmers leave the industry, supply will go down and prices will go up.
“Australia risks a third of growers quitting and no farmers means no food,” Mr Littleproud said.
“This is a worrying sign amid a cost-of-living crisis, with the outlook even worse than it was 12 months ago.
“Families have cut back on discretionary spending but they still need to buy food.
"Every single Australian would be impacted by a mass farmer exodus, as operating challenges threaten the viability of growers, risking an increase in prices at the check-out.”
Mr Littleproud said the report found changes to the Pacific Australia Labour Mobility (PALM) Scheme rendered it unworkable for many growers.
“Worryingly, the overwhelming majority of farmers surveyed believe employment problems will remain the same or worsen into the future," he said.
“This hurdle is on top of increasing input costs, poor retail pricing, lack of operating profit and compliance and regulation burdens."