Farms & Farm Machinery #401

Opinion
The competition
for labour will
see harvest costs
increase
Labour losses
Cost of labour is linked to the global header market
Headers are getting bigger, more complex and more
expensive and so is the global demand for them.
The value of the international combine harvester
market today is estimated to be around A$20 billion
dollars and is predicted to nearly double by 2030.
Every month, somewhere in the world, you will
find a harvesting machine working its way through
the annual harvest of 2,790 million tonnes of grain
(2020), which equates to 10,000 shiploads at 27,900
tonnes each.
From Australia to Argentina, Sudan to Saudi
Arabia, China to Chile you will see the annual grain
harvest taking place – putting 1.1 billion tonnes
of corn, 775 million tonnes of wheat, 505 million
tonnes of rice, 159 million tonnes of barley, 62
million tonnes of sorghum, 25 million tonnes of
oats and 14 million tonnes of rye into the globe’s
granaries.
Global production comprises some of the
world’s smallest producers, such as Qatar, which
harvests just 5,000 tonnes off and reclaimed
from the Gulf Sea in what must be the world’s most
expensive grains – producing crops they proudly
call Golden Organic.
On the other side of the equation, the world’s
biggest wheat and rice producer is China, which
harvested and ate its way through 136 million
tonnes of wheat and 211 million tonnes of rice last
year and still needed to import more to feed its
rapidly growing middle class.
Not to mention the world’s highest yielding wheat
crop in New Zealand, which clocked in at 16.79
tonnes per hectare, or the world’s fastest-expanding
area of arable cropping land in the central part of
Brazil, which has grown from 26 million hectares
in 2000 to over 50 million hectares today – nearly
double Australia’s entire dryland cropping area.
Across the globe the demand for combines,
big and small, is growing faster than the world’s
grain production as farmers seek bigger and more
efficient machines to get the crop off.
The combine harvester market includes more
than just the big European and American names
we can all recall (Agco, Claas, Deere, CNH) but
also a swag of other lesser known and completely
unknown brands including Rostov, Rostselmash,
36 Farms & Farm Machinery
Trevor Whittington,
CEO WAFarmers
Kubota, Mahindra, Dasmesh, Kartar, Preet, Sdf S.P.A.
Iseki and TAFE. This doesn’t even include about
30 Chinese manufacturers responsible for the two
million units, mostly between 60–120 horsepower
(45–89kW) and costing $30,000–$60,000, which
are working in China today.
While the Asian machines might be small,
compared to US, EU and Russian machines,
the one thing they all have in common is every
manufacturer is racing to make bigger machines.
Why? Because, everywhere in the world,
agriculture is facing a labour problem.
Farmers from Argentina to Russia, China to
Sudan are reporting either a skills shortage, a
labour shortage or a cost of labour problem.
In India, farmers are complaining about the
increasing cost of labour as skilled workers head
to the city in droves, chasing better paying jobs,
forcing farmers to contract in harvesters to replace
manual workers or upgrade to larger self-propelled
machines.
This has resulted in over 6,000 additional
machines being added to Indian farmers’ inventory
last year in the race to get their 300 million tonnes
of grains off arms and onto dinner plates.
Chinese manufacturers of harvesters are developing
larger machines as available labour decreases
Even Russia, with its highly skilled workforce, has
a problem as a result of its declining population.
The nation’s mega farms, with hundreds of
harvesters each, are in the process of rolling out
automated headers that mirror the actions of a
master unit as a way of stripping out labour costs.
And, of course, here in Australia farmers are
spending up big, replacing machines with newer
models because they can’t be guaranteed fast
access to mechanics or parts in case of a breakdown,
or they are buying bigger models to replace
two smaller machines as a result of a lack of access
to skilled operators.
What does this mean for Australian agriculture?
Our farmers are experiencing probably the
world’s biggest labour challenge, with a shortage
of holiday visa workers, an ongoing local skills
shortage and rising occupational health and safety
risks combining to force farmers to seek to replace
labour with new capital equipment.
The competition for labour will see harvest costs
increase as farmers bid to attract workers from a
limited pool of bodies and, more importantly, talent.
As a result, the days of $25-an-hour workers are
long gone as farmers work out the cost benefit ratio
and risk of putting either a totally unskilled worker
or an expensive skilled worker onto a chaser bin
or header and hoping they don’t hit the one power
pole in the paddock.
Expensive machines demand expensive skilled
labour and without backpackers and with a mining
boom underway, farmers can expect to see a rapid
increase in hourly rates.
In time we will look back in wonder at how we
got away for so long with paying harvest workers
a fraction of the value of what they bring to getting
the harvest off. Either we compete with the rest
of Australia for labour and pay more, we open the
gates wider to expand the imported worker pool
to tap the skilled Eastern Europeans and South
Americans, or we follow the Russians and invest
in automated machines.