The labour shortage in Hawke’s Bay’s primary sector has been well documented. It’s a conversation that has generated hundreds of column inches lately, and rightly so.
At the time of writing, industry leaders, while welcoming the government’s announcement that 2,000 RSE workers will be allowed into the country in early 2021, are mindful that the number is a mere drop in the bucket, with more than 10,000 workers needed for the forthcoming harvest.
The situation is further compounded by the fact that those 2,000 workers will be spread across New Zealand in the apple, kiwifruit, summerfruit and wine sectors, and how many Hawke’s Bay secures remains to be seen.
That’s why when you drive around the region you might see fruit well past its picking date still hanging on laden trees. On orchards and fields, many late-ripening crops have been pulled out or not tended to as business owners try to manage their production schedules faced with a lack of harvest labour. The same scenario is also playing out inside many processing facilities where machines lay idle through a workforce shortage.
Known for decades as New Zealand’s ‘fruit bowl’, Hawke’s Bay still possesses the climate, the availability of productive cropping land and enough water to claim the food capital title. We boast that ‘great things grow here’; the patchwork of fields testament to our production prowess and our commitment to all things agrarian.
On its website, Hawke’s Bay Tourism writes “We know a country where the food is bountiful and the wine is beautiful. This country is Hawke’s Bay, New Zealand’s Food and Wine Country.” It’s a lyrical description.
But is our reputation as the fruit (and vegetable) bowl of New Zealand under threat? Can we maintain our contribution to the country’s economy and more than billion-dollar export earnings without a dependable labour market?
Food production is the engine of Hawke’s Bay’s economy and while the region stands to lose precious GDP if this season’s fruit and vegetables aren’t processed, what are the longer-term impacts of a half-picked harvest?
The apple, pear and wine sectors are vital to Hawke’s Bay’s economy, contributing more than $1 billion directly to the region’s GDP. The apple and pear sector alone contributes almost $700 million of this, directly supporting around 2,580 permanent local workers and indirectly, through the supply chain, another 5,751 permanent local workers.
Throughout the year, the sectors support around 4,000 non-RSE seasonal jobs and around 13,733 seasonal roles. At its peak, apples and pears need 8,302 people for picking and packing. Including other industries, the seasonal peak for Hawke’s Bay occurs in March, when 10,550 workers are needed. As at December, we needed around 10,000 to prune and pick $1 billion worth of fruit across Hawke’s Bay alone.
“We have an immediate problem that needs solving,” says New Zealand Apples and Pears Inc CEO Alan Pollard. “The fruit needs to be picked at its optimum time and can’t be delayed. If there’s no way to get fruit off the trees or vegetables out of the ground, there are serious long-term implications.
“Our export customers buy from us because of the New Zealand Inc brand; our reputation around food security, integrity and quality. If New Zealand growers can’t supply global customers they’ll go elsewhere. And for a billion-dollar export industry, that’s serious,” says Pollard.
Cost pressure and capacity restraints along the export supply chain exacerbated by Covid, particularly for airfreight, has seen costs to markets vary from two to four times the normal per kilogram rate, all of which will be borne by growers.
A paper submitted by industry to government in November says, “The international marketplace, whilst currently strong, is looking increasingly unsettled as businesses fold, jobs are lost, and disposable household incomes fall. These are the costs and risks already evident to growers, packers and exporters.
“The risk that no one expects to take, especially in an economy reliant on primary industry-led economic recovery, is the inability to harvest the crop: to invest fully in production but only realise a part of the economic opportunity at the end. That risk is increasingly in danger of being realised as identified by the projected shortfalls in labour at harvest.”
The effect of not being able to harvest a proportion of the crop will be felt in reduced profits, and together with some losses, will have an exponential effect on the ability to secure capital to rejuvenate plantings, replace equipment, and retain permanent staff.
Business Hawke’s Bay CEO Carolyn Neville says the lack of seasonal workers is a real threat to the region’s economy.
“Hawke’s Bay must find a way to get the staffing it needs with a strong focus on ‘local first’ and then through the RSE scheme and introducing quarantine measures or through some other mechanism in order to maximise seasonal returns,” she says.
Labour pressure is also being felt here in the processing sector.
Heinz Watties is a sizable operation and important to the region. Using more than 75,000 tonnes of vegetables and 8,000 tonnes of fruit grown in Hawke’s Bay and 75,000 tonnes of other products, pet food, jams, sauces, soups, the legendary baked beans and spaghetti are produced year round at its two Hastings factories. At the height of the harvesting season, 1,400 tonnes of raw seasonal produce are processed every day.
Bruce Mackay, Heinz Wattie’s agricultural manager, says the company is facing the same labour supply issues as other businesses in the region, mainly in its summerfruit and pipfruit operations.
“Thinning is well underway in both the summerfruit and pipfruit industries. The shortage of workers to thin and then harvest the crops will impact the supply chain and processing. The good news is that arable cropping is not facing as much pressure as a lot of the operation is mechanised,” says Mackay.
“Right across the country the primary sector is scrambling to find people,” adds Pollard. “The whole economy is struggling but in terms of unemployment, Hawke’s Bay is actually doing better post-Covid than expected and hasn’t hit projected jobless numbers.”
Latest figures from Infometrics’ 2019 Hawke’s Bay Food and Beverage Cultivation and Processing Sector Profile shows employment in the sector sitting at around 7,823 – accounting for just over 11% of the national figure. Forecasts in the report show there will be more than 3,000 job openings in the sector between 2020 and 2025, of those, more than 700 will be new roles.
“Our factory doesn’t employ RSEs like the orchards, but we do rely heavily on backpacker and other seasonal workers. Only small numbers in that labour pool are available, comprising the handful remaining in our region when borders were closed earlier this year.”
Bruce Mackay | Heinz Wattie’s agricultural manager
While the RSE worker shortage in Hawke’s Bay’s horticulture industry has dominated the headlines, other food industries and producers have also set off alarm bells, warning of serious implications to continuity of supply. And with scarcity comes price hikes.
Mackay says Heinz Watties has been strategising to mitigate the effect on the lack of seasonal labour available to harvest and process the orchard crops.
“Our factory doesn’t employ RSEs like the orchards, but we do rely heavily on backpacker and other seasonal workers. Only small numbers in that labour pool are available, comprising the handful remaining in our region when borders were closed earlier this year. An enquiry at any of the backpacker accommodation facilities in Hawke’s Bay seeking workers will likely come up empty these days. We need around 600 people in the factory at our peak and our recruitment agency is doing everything they can to recruit staff for the upcoming processing season.”
While Mackay agrees that Hawke’s Bay can rightly claim the food capital title, he says the importance of the processing industry is often under-appreciated in the region.
“Processing is an incredibly important part of the food chain. Growers appreciate that, and those with a mixed cropping enterprise acknowledge its importance. The processing industry provides cash flow and certainty plus allows the flexibility for growers to look for premium returns by diversifying their portfolio of crops. It also puts food on the supermarket shelves for the 10 months of the year that it’s not in season.”
Shift in labour
Pollard believes “absolutely” Hawke’s Bay can retain its food capital label and that it’s not a title necessarily linked to labour.
“The labour supply of the future will be very different to the current labour supply,” he says. “There will be shift from reliance of manual labour to more technical skills, which, with the right training, a broader range of people will be able to do. As technology improves it will definitely change our labour needs,” he says.
While technology might impact labour requirements over the next decade, there are other factors at play that threaten our primary sector paradise. Factors such as wages, the high cost of production and increasing land prices.
Mackay says Heinz Watties did a lot of “naval gazing” when the Ruataniwha dam was being proposed.
“With the cost of land in Central Hawke’s Bay being much less than the Heretaunga Plains, the economic return equation is obviously more realistic on fully irrigated land at $40,000 per hectare in CHB than it is on $100,000 per hectare land in the Heretaunga Plains.”
Having those choices provided options for primary producers and would have possibly seen a change in land use in both the Heretaunga and Ruataniwha Plains.
Mackay states simply “we don’t create change to make things worse, we do it to make things better”, and today ‘better’ takes account of all of society’s values, not just improved financial returns, which may have been the driver of generations past.
“We still see opportunities in the Heretaunga Plains, but the biggest constraint is resource management. If upcoming Regional Council plan changes are managed well, then that will be positive. There are some really good forward-looking opportunities for the primary sector in Hawke’s Bay.”
Yummy Fruit Company’s Paul Paynter is remaining positive, but says while many think getting RSE workers back will solve Hawke’s Bay’s harvest problems, the region will still be missing the backpackers. “The food story out of Hawke’s Bay still looks amazing and with a few bold tweaks to government policy, there will be no stopping us.”
Pollard makes the point that the mantle of being New Zealand’s ‘fruit bowl’ is dependent on future innovation in the food industry.
“Innovative solutions around food security, sustainability and waste minimisation will also elevate Hawke’s Bay as a food capital. We have food innovators coming into the region. It’s not just about growing fruit and vegetables.”
In late February, the final decision on the fate of ‘Foodeast’ will be known. Formerly known as the region’s ‘Food Innovation Hub’, and located within the Tomoana Food Hub in Elwood Road, the project is estimated to cost $18 million. Funding of $12 million has been committed by the government from its Provincial Growth Fund, based on a feasibility study provided by the Sapere Research Group.
Foodeast will be one of five Food Innovation Network (FIN) hubs in NZ, made up of facilities supporting the food and beverage industry to develop and commercialise new products and scale up their businesses.
According to Hastings District Council project manager Lee Neville, the feasibility study for the centre forecasts that it will add $100 million to Hawke’s Bay’s GDP over the next 15 years and bring 500 new full-time jobs to the region.
HDC says the study was prepared after “consulting with 70 local stakeholders within the industry and indicated demand from firms for rental space in an innovation centre and access to skilled services”. Should the facility get the green light, “it will be available to companies directly linked to food and beverage industries and technology companies that support those industries”.
How Foodeast will actually contribute $100 million to GDP and play out in reality is unknown and information is scant. Companies who have signed an Expression of Interest in the project are unable to be named and the feasibility study wasn’t available to read, so we’ll have to wait until the project is given the go-ahead (or not) in February.
Neville says Hawke’s Bay has “all the ingredients” that a food business needs, whether it is a start up or is in growth mode.
“We have innovative companies, strong infrastructure, a good labour force pool, good logistics via Napier Port and a supportive business environment. The completion of Foodeast will make Hawke’s Bay an even more attractive and more competitive destination for food businesses,” she says.
Also sitting at the food innovation table is CoVE, a New Zealand Food and Fibre Centre of Vocational Excellence for the primary sector, soon to be housed at EIT in Taradale.
A key component of the government’s reform of vocational education, CoVE will “drive innovation and excellence” in the primary sector by strengthening links between industry, vocational training sector, researchers and communities to produce well-trained and work-ready graduates; and provide better upskilling and re-skilling opportunities.
Having CoVE in Hawke’s Bay is recognition of the region’s strengths and a major step forward for the industry.
“CoVE gives us a chance to influence the future,” says Pollard. “As the industry and technology advances and as we shift to more technical solutions, we will be having a very different workforce conversation.”
Innovation in the sector is already happening, with investment in 2D orchard structures and robotic systems becoming more evident. It’s something Pollard witnessed on a supersized scale during a recent trip to Japan.
“I visited a huge pack house – to put it in context it was twice the size of the Delegats building on the Hawke’s Bay expressway – and it was run entirely from a computer console. Large pack houses in Hawke’s Bay already have automated systems but the post-harvest technology is still developing.
“We simply can’t continue to rely on labour alone, wherever it is sourced, locally or internationally, to produce our crops. There has already been significant investment in simple things like picking platforms that allow a wider pool of people to be employed, including older people,” he says.
“Look at our soil, our climate and our growing conditions. We’re one of the best places to grow high export value food. We should aspire to be the country’s leading growing region regardless of labour.”
While Hawke’s Bay grapples with the labour shortage and increasing labour costs that are occurring in parallel, crop volumes have increased and will continue to do so.
There’s been significant investment in land, about 4% annual growth, which is the equivalent of around 400 to 500 more hectares every year. And land use is changing. As technology and systems improve and become more efficient, land is becoming more productive.
In the apple industry, many orchard owners are pulling out older varieties and planting new ones in their place – varieties that hold more export value and better returns for the grower.
What the Hawke’s Bay food industry’s labour needs are right now and what they will be in the next decade will certainly look different. Diversification, innovation and rapidly developing technology will all impact the food industry in the years to come, and labour may not be the deal breaker for the industry that it is today.