Dairy industry workforce survey, 2015–16 Niki Dufty, Shiji Zhao, Walter Shafron and Haydn Valle Research by the Australian Bureau of Agricultural and Resource Economics and Sciences

Research report 18.8 July 2018

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© Commonwealth of Australia 2018

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Unless otherwise noted, copyright (and any other intellectual property rights, if any) in this publication is owned by the Commonwealth of Australia (referred to as the Commonwealth).

Creative Commons licence

All material in this publication is licensed under a Creative Commons Attribution 4.0 International Licence except content supplied by third parties, logos and the Commonwealth Coat of Arms.

Inquiries about the licence and any use of this document should be emailed to copyright@agriculture.gov.au.

Cataloguing data

This publication (and any material sourced from it) should be attributed as: Dufty*, N, Zhao, S, Shafron, W & Valle, H 2018, Dairy industry workforce survey 2015–16, ABARES research report, Canberra, July. CC BY 4.0.

*Niki Dufty née Millist

ISBN 978-1-74323-392-4

ISSN 1447-8358

ABARES project 43602

This publication is available at agriculture.gov.au/publications.

Department of Agriculture and Water Resources GPO Box 858 Canberra ACT 2601 Telephone 1800 900 090 Web agriculture.gov.au

The Australian Government acting through the Department of Agriculture and Water Resources, represented by the Australian Bureau of Agricultural and Resource Economics and Sciences, has exercised due care and skill in preparing and compiling the information and data in this publication. Notwithstanding, the Department of Agriculture and Water Resources, ABARES, its employees and advisers disclaim all liability, including liability for negligence and for any loss, damage, injury, expense or cost incurred by any person as a result of accessing, using or relying on any of the information or data in this publication to the maximum extent permitted by law.

Acknowledgements

The authors thank interview and survey participants for their input. Thanks also to Dale Ashton, Tom Jackson, David Galeano and Peter Martin for their help and guidance during the project and in preparing this report.

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Contents Summary ............................................................................................................................................................ iv

Introduction ....................................................................................................................................................... 1

1 Employment .............................................................................................................................................. 3

2 Supply of labour ....................................................................................................................................... 5

2.1 Sources of dairy farm workers ............................................................................................................. 6

2.2 Farm workforce by occupation ............................................................................................................ 7

3 Large farms employ more labour and use workers more productively ............................. 9

4 Vacancies and recruitment ............................................................................................................... 11

5 Expectations for the future ............................................................................................................... 13

Tables Table A1 Differences between ABARES and ABS labour surveys ............................................................... 15

Table A2 Skill classifications ...................................................................................................................................... 17

Figures Figure 1 Importance of labour for dairy farms, 2015–16 ................................................................................. 1

Figure 2 Average number of workers on farm, by industry, 2015–16 ........................................................ 3

Figure 3 Farm workers, by type of employment and industry, 2015–16 ................................................... 4

Figure 4 Expenditure on labour, by industry, 2015–16 ..................................................................................... 5

Figure 5 Dairy farms expenditure on labour, by farm size, 2015–16 .......................................................... 6

Figure 6 Sources of dairy farm workers, by employment type, 2015–16 .................................................. 6

Figure 7 Number of workers (not FTE) in each occupation, by employment type, 2015–16 ............ 8

Figure 8 Employment of workers on dairy farms, by farm size, 2015–16 ................................................. 9

Figure 9 Labour efficiency, by dairy farm size .................................................................................................... 10

Figure 10 Recruited workers employment type, by extent of difficulty recruiting, 2015–16 ........ 12

Figure 11 Expected change in business size and workforce in the next five years ............................. 13

Figure A1 Proportion of persons working in dairy, by occupation ............................................................ 16

Boxes Box 1 Data collection methodology ............................................................................................................................ 2

Box 2 Labour expenditure .............................................................................................................................................. 5

Box 3 Foreign workers ..................................................................................................................................................... 7

Box 4 Large farms outperform other farms in labour productivity ........................................................... 10

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Summary This report provides an in-depth look at labour use in the dairy industry. It complements ABARES previously released labour survey results for vegetable and irrigated horticulture and cotton farms (see Valle, Millist & Galeano 2017). The results show the dairy industry has distinct labour force requirements and faces different challenges.

• Dairy farms are estimated to have employed around 27,000 workers in 2015–16. The majority of these workers are family members or local residents employed on a full-time or casual basis. In contrast with the vegetable, irrigated horticulture and cotton industries, few seasonal workers are employed in the dairy industry.

• Dairy farms are less labour intensive than vegetable, irrigated horticulture and cotton farms, generally employing fewer workers and spending less on labour costs. However, labour is still a very significant cost on dairy farms.

• The dairy industry is shifting towards large farm sizes. Large dairy farms tend to employ more workers, both skilled and unskilled, than smaller farms despite having a greater level of automation. These farms also use labour more productively.

• In the dairy industry, job vacancy rates and recruitment activity are low and more likely to occur to meet the need for labourers on a full-time or casual basis. Few farms reported recruiting skilled workers in the previous year, possibly because of their reliance on family members to fill these more skilled positions.

• Among the farms that recruited workers in 2015–16, over 30 per cent experienced difficulties—the Department of Jobs and Small Business (2018) found a similar level of recruitment difficulty on average across all sectors of the economy. Those dairy farms experiencing difficulty were more likely to be looking to fill full-time positions. Farms cited issues associated with candidates’ poor attitude, motivation and personality as the main difficulty.

• Dairy farmers identified the top three workforce difficulties they expect to experience in the future as: inadequate business profit to employ more workers (53 cent of farms); negative perception of the jobs in the industry (31 per cent of farms) and an ageing workforce (26 per cent of farms).

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Introduction Despite a sustained decline in demand for labour in agricultural industries, labour remains an important input. Securing the future labour supply for agriculture is essential for the viability of these industries and competitiveness of Australia’s agricultural commodities.

To understand the labour market for agriculture, ABARES recently ran a survey of labour force employed in the dairy, vegetable, irrigated horticulture and cotton industries (Box 1). This report presents a snapshot of the labour force on dairy farms in 2015–16. Insights on future labour demand and possible pressure points in the dairy industry’s labour market are also presented. The attributes of the dairy industry’s labour force are compared with those in the vegetable, irrigated horticulture and cotton industries (reported by Valle, Millist & Galeano 2017) to highlight the dairy industry’s distinct labour demand characteristics.

Dairy farms range from single owner–operators to large farms employing many people. The ability to employ and retain good workers is important to ensure a dairy farm’s potential is not constrained. Measured by production costs, labour (including imputed family labour costs) is the second largest input after fodder (Figure 1). In recent years, the dairy industry has shown a trend towards fewer and larger farms, growing herd sizes and greater employment per farm (Dairy Australia 2017). Against this background, understanding the current situation and future employment needs of the industry is important. Through exploring who is working on the farm and the type of work they are engaged in, this report seeks to depict labour use on dairy farms and the issues dairy farmers face in meeting their labour needs.

Figure 1 Importance of labour for dairy farms, 2015–16

proportion of total costs

Note: Labour cost includes imputed family labour cost, hired labour and contracts paid—contracts paid may include some non-labour cost, but for dairy farms this component is expected to be small. Source: ABARES Australian Dairy Industry Survey (ADIS) 2016

%

5

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25

30

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Box 1 Data collection methodology

ABARES annual farm surveys collect detailed physical and financial information on the operations of farm businesses during the preceding financial year. The main collection method for the survey is face-to-face interviews with the owner–manager of the farm. The sample of farms in the survey is selected to represent the farm population of interest. See ABARES farm surveys definitions and methods for more details.

The data used in this report was largely collected through a supplementary labour survey included in the ABARES 2016 Australian Dairy Industry Survey. The survey covered around 300 dairy farms across Australia and collected physical and financial information for 2015–16. The supplementary survey focused on understanding the current workforce of dairy farms, recent recruitment experiences and expected future labour requirements.

This report also draws on data collected in ABARES 2015 and 2016 vegetable and irrigation surveys. These surveys also included the supplementary labour questions, in addition to collecting physical and financial information for 2014–15 and 2015–16, respectively. The vegetable survey covered around 300 farms across Australia. ABARES irrigation survey covers cotton, rice, dairy and irrigated horticulture farms in 10 regions of the Murray–Darling Basin. The irrigation survey covered over 450 farms. This report presents results for 2015–16 and data collected for cotton and irrigated horticulture. The term irrigated horticulture covers farms that grow tree and vine crops such as pome fruit, stone fruit, citrus, wine and table grapes and vegetables.

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1 Employment Based on the survey results, an estimated 27,000 workers were employed in 2015–16, on a full-time, part-time or casual basis, by the 6,616 Australian dairy farms with a value of agricultural operations over $40,000 per farm per year.

Our estimate of the number of workers in the dairy industry lies between estimates from the ABS Labour Force Survey for 2015–16 (ABS 2017a) and the Census of Population and Housing 2016 (ABS 2017b). The ABS Labour Force Survey shows that, in 2015–16, 30,000 Australians were employed in the dairy industry—although a high level of uncertainty surrounds the ABS estimates at this level of detail (ABS 2016). The ABS Census 2016 shows that around 20,300 people worked in the dairy industry on Census night. Differences between the results are likely to reflect differences in the collection methodology, scope and coverage of the surveys (see Appendix A for details).

Dairy farm production is generally less labour intensive than for vegetable, irrigated horticulture and cotton farms. Dairy farms employ fewer workers (Figure 2) and spend less on labour costs (Figure 4). In 2015–16 around a third of dairy farms had two or fewer workers, including the owner–operator, and just over 10 per cent of dairy farms had seven workers or more. On average, dairy farms employed four workers (not full-time equivalent (FTE)). In comparison, vegetable farms employed 13 workers, irrigated horticulture farms 12 workers and cotton farms six workers.

Figure 2 Average number of workers on farm, by industry, 2015–16

proportion of farms

Note: The number of workers is a measure of head counts not full-time equivalent (FTE). Irrigated horticulture and cotton farms in the Murray–Darling Basin were surveyed (see Box 1). Source: ABARES Australian Agricultural and Grazing Industries Survey (AAGIS) 2016, ABARES ADIS 2016, ABARES Vegetable Survey 2016, ABARES Irrigation Survey 2016

%

5

10

15

20

25

30

35

0–2 3–4 5–6 7–10 11–20 21+

Number of farm workers

Dairy Vegetable Irrigatedhorticulture

Cotton

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Farmers may meet their skilled and unskilled labour needs using family members, local residents, Australians from outside the local area or foreign workers. Workers may have long-term engagement with the farms (hired on a full-time, part-time or casual basis) or work to meet seasonal short-term needs.

The dairy industry has a greater reliance on full-time workers than the vegetable, irrigated horticulture and cotton industries. In 2015–16 the majority (58 per cent) of workers in the dairy industry were employed on a full-time basis. This is similar to cotton, where just over half of the workers were employed on a full-time basis. In contrast, less than a quarter of positions in the vegetable and irrigated horticulture industry were on a full-time basis in 2015–16.

Very few dairy farms employed workers on a short-term seasonal basis, unlike vegetable and irrigated horticulture and, to a lesser extent, cotton farms (Figure 3). Less than 4 per cent of dairy farms employed workers on a seasonal basis compared with over 40 per cent of vegetable farms and over 50 per cent of irrigated horticulture farms. This is likely to reflect the less seasonal nature of the production cycle on dairy farms when compared with vegetable and irrigated horticulture farms. Three-quarters of dairy farms reported milking year round. A quarter of farms reported operating on a seasonal basis and these farms generally milk for 9–10 months of the year, limiting the demand for short-term seasonal workers on dairy farms compared with vegetable and horticultural farms.

Figure 3 Farm workers, by type of employment and industry, 2015–16

average per farm

Note: Number of workers is a measure of head counts not full-time equivalent (FTE). Irrigated horticulture and cotton farms in the Murray–Darling Basin were surveyed (Box 1). Source: ABARES Australian Agricultural and Grazing Industries Survey (AAGIS) 2016, ABARES Australian Dairy Industry Survey (ADIS) 2016, ABARES Vegetable Survey 2016, ABARES Irrigation Survey 2016

no. workers

1

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7

8

Dairy Vegetable Irrigatedhorticulture

Cotton

Full time Part time Casual Seasonal

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2 Supply of labour The dairy industry workforce consists of farm owners, sharefarmers or family members, and workers hired directly from the labour market or through contractors to perform specific tasks. Generally farms use a combination of all three types of labour. Farm expenditure on each type of labour is another measure for comparing labour use relative to that of other industries (Box 2).

Box 2 Labour expenditure

Expenditure on hired labour includes wages paid to permanent and casual labour hired directly by the farm.

Contracts paid is a fee for service to employees hired indirectly by the farm. It includes workers supplied by labour hire companies on contract and for other contract work. The fees paid for these contracts may include rent for capital items. For example, a harvest contractor may include the cost of providing the harvester, or a spray contractor may include the cost of providing the spray equipment.

Payments to owner–managers, sharefarmers and family members may bear little relationship to the actual work input. Family labour input is estimated and a value is imputed using the relevant Federal Pastoral Industry Award rates.

On average, dairy farms rely more heavily on family labour and use less contract and hired labour than farms in most other agricultural industries (Figure 4). In 2015–16 dairy farms with no hired labour or contract workers accounted for around a quarter of all dairy farms and were generally farms with small herd sizes. The reliance on family labour is especially true on dairy farms with small herd sizes (Figure 5). Larger dairy farms are still largely owner–operated, but rely more heavily on hired labour and contract workers.

Figure 4 Expenditure on labour, by industry, 2015–16 average per farm

a For some industries such as cotton, the cost of contracts paid for services may also include rent of capital items. Note: Irrigated horticulture and cotton farms surveyed in the Murray–Darling Basin (Box 1). Source: ABARES AAGIS 2016, ABARES ADIS 2016, ABARES Vegetable Survey 2016, ABARES Irrigation Survey 2016

$'000

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600

700

Cotton Vegetable Irrigated horticulture Dairy Broadacre

Family (imputed) Hired labour Contracts paida

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Figure 5 Dairy farms expenditure on labour, by farm size, 2015–16

average per farm

a For some industries such as cotton, the cost of contracts paid for services may also include rent of capital items. Note: Irrigated horticulture and cotton farms surveyed in the Murray–Darling Basin (Box 1). Source: ABARES AAGIS 2016, ABARES ADIS 2016, ABARES Vegetable Survey 2016, ABARES Irrigation Survey 2016

2.1 Sources of dairy farm workers Dairy farmers were asked to provide information about whether their workers were family members, a local resident from the same or next district to the farm, an Australian from outside the local area or New Zealand resident, a foreign worker on a visa, or other.

The source of workers varies with the type of employment. Full-time and part-time workers were predominantly family labour (just under three-quarters of full-time positions and nearly 90 per cent of part-time positions) (Figure 6). Local residents were the second-largest pool of full-time and part-time labour on dairy farms (a quarter of full-time workers and 10 per cent of part-time workers). Casual positions were also generally held by local residents (over three-quarters of casual workers). Few dairy farms surveyed employed workers from outside the local district or foreign workers (Box 3). The use of family and local workers may reflect the common practice of employing people for multiple short shifts per day for milking and the generally year-round nature of milking, which makes it more attractive to hire workers who live nearby.

Figure 6 Sources of dairy farm workers, by employment type, 2015–16

proportion of workers

Note: Too few seasonal workers were employed to provide a statistically significant breakdown of their background. Source: ABARES ADIS 2016

$'000

100

200

300

<200 200–350 350+Number of cows milked

Family (imputed) Hired labour Contracts paida

%

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40

60

80

100

Full time Part time Casual

Family Local Australian or NZ Visa holder Not specified

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Box 3 Foreign workers

Based on the survey results, relatively few foreign workers were employed on dairy farms in 2015–16. Estimates from the survey show that around 3 per cent of farms had an overseas worker. Less than 2 per cent of positions on dairy farms were filled by visa holders, this is estimated to equate to less than 400 workers in 2015–16.

The most commonly engaged visa category was backpackers on a Working Holiday Maker program (Working Holiday visa subclass 417 or Work and Holiday visa subclass 462). Two thirds of foreign workers on dairy farms were backpackers and, for those dairy farms that engaged backpackers, they accounted for a fifth of their workforce on average.

A handful of surveyed farms employed skilled visa holders on Temporary Skilled visa (subclass 457)—now issued as Temporary Shortage Skilled visas (subclass 482). The dairy industry labour agreement provides a pathway for dairy industry employers to recruit overseas workers in the occupation of senior dairy cattle farm worker (Department of Home Affairs 2018). The Department of Immigration and Border Protection (2017) granted 49 temporary skilled visas for dairy cattle farmers in 2015–16. Farmers who reported engaging temporary skilled visa holders in the ABARES labour survey were mostly operating large farms—almost all were in the top 10 per cent of largest farms by number of workers. This is likely to be because farms with more workers are more likely to engage skilled workers in addition to the owner–manager.

No dairy farms surveyed indicated they accessed workers through the Seasonal Worker Programme. Dairy farms were granted access to workers through this program in February 2016. No dairy farms are currently registered as approved employers under the program, but dairy farms could access these visa holders through a labour hire company.

The limited use of the Seasonal Worker Programme by dairy farms may reflect the relatively recent expansion of the program to include the dairy industry. In addition, the relatively high administration costs associated with becoming an approved employer (Zhao et al. 2018) and the relatively limited need for seasonal workers on dairy farms may also be contributing to the lack of demand. In particular, the Seasonal Worker Programme generally allows workers to be engaged for up to six months (and up to nine months for workers from Kiribati, Nauru or Tuvalu) (Department of Employment 2016a). However, the majority of dairy farms require workers year-round and for farms operating on a seasonal basis, milking runs for 9–10 months.

2.2 Farm workforce by occupation Farms surveyed in this study were asked to specify the occupation of workers (in line with the occupation classifications of ABS (2013)). The majority of positions on dairy farms (including family and hired labour) are labourers performing tasks such as milking and herding (54 per cent). Other major employment occupations include managers (37 per cent) and clerical staff (6 per cent).

This is not in line with the estimates reported in the 2016 ABS Population and Housing Census (ABS 2017b), where the majority of people employed in the dairy industry were managers (59 per cent) followed by labourers (26 per cent). Differences in definitions, collection method and the scope and coverage of the surveys are likely to be responsible for the divergence between these results and ours (see Appendix A).

Our survey shows that the occupation of workers on dairy farms varies substantially with employment type (Figure 7). Full-time workers in the dairy industry are predominantly employed as managers (53 per cent), followed by labourers (39 per cent). A high proportion of

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part-time workers are employed as labourers (47 per cent) and the rest are managers (26 per cent) and other skilled workers such as clerical staff (27 per cent). Casual workers on dairy farms were almost exclusively employed as labourers (98 per cent). Too few workers were employed on a seasonal basis to provide statistically reliable estimates of the occupations in which they were employed.

Figure 7 Number of workers (not FTE) in each occupation, by employment type, 2015–16

average per farm

Note: Number of workers is not on a full-time equivalent (FTE) basis. Source: ABARES ADIS 2016

no. workers

0.2

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0.8

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Managers Labourers Other skilled workers Other

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3 Large farms employ more labour and use workers more productively

Over the past 15 years the proportion of large dairy farms in the Australian dairy industry has increased steadily (Weragoda, Ashton & Finlay 2018). Medium and large farms are often more automated, allowing farmers to reduce their labour use per unit of milk produced (Ashton 2014). The trend towards larger farms has three implications on the demand for labour in the dairy industry.

First, larger farms tend to employ more workers and fill more positions from outside the family. Excluding contractors, large farms (those milking more than 350 cows in a 3-month period) on average employed 5.6 full-time equivalent (FTE) workers in 2015–16. Medium-sized farms (milking 200–350 cows) on average employed 3.2 FTE non-contractor works and small farms (milking less than 200 cows) 2.2 FTE. Unlike smaller farms, which tend to rely on family labour, large farms need to source labour externally (Figure 5).

Second, larger farms tend to employ more skilled workers. Larger farms reported employing more managers and other skilled workers (such as clerical workers) per farm (Figure 8). Medium and large farms are also more likely to employ trained mechanics and technical specialists than small farms. This is because higher degrees of mechanisation on larger farms increase the demand for workers with such skills and expertise.

Figure 8 Employment of workers on dairy farms, by farm size, 2015–16

average per farm

Note: Number of cows milked over a 3-month period is used as a measure of farm size. Number of workers is not reported on a full-time equivalent basis. Other skilled workers includes clerical workers, machinery operators, skilled technicians (such as skilled animal handlers) and professionals (such as scientists). Source: ABARES ADIS 2016

no. workers

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<200 200–350 350+

number of cows milked

Managers Labourers Other skilled workers

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Third, larger farms appear to offer more diverse and specialised roles, allowing workers to better utilise their skills. Although large farms generally employed more highly skilled workers, a greater proportion of their workforce was made up of labourers than on medium and small farms. This greater use of labourers may allow greater specialisation of more skilled workers. For example, small farms had less than one labourer to every manager, on average, and large farms had more than two labourers for every manager, on average. As a result, managers of small farms may spend more of their time on tasks that labourers on larger farms undertake.

In addition to greater automation (Ashton 2014), greater specialisation and utilisation of labour skills may have enabled larger farms to achieve higher labour productivity in milking rates and lower labour costs for production (Box 4).

Box 4 Large farms outperform other farms in labour productivity

Larger farms consistently outperform smaller farms in labour productivity. In 2015–16 large dairy farms produced an average 610,000 litres of milk per FTE, compared with 460,000 litres per FTE for medium-sized farms and 350,000 litres per FTE for small farms (Figure 9). A handful of farms surveyed achieved rates of over 1,000,000 litres of milk per FTE. This likely reflects a move to robotic milking and use of contractors—estimating an FTE for contractors was not possible because payments for equipment could not be excluded.

Higher labour productivity in milking rates on large farms also translates to lower costs of labour in production. Large farms incurred lower labour cost per unit of output—large farms spent a quarter less on labour to produce one litre of milk (8.6 cents per litre) than small farms (11.6 cents per litre) (Figure 9).

Figure 9 Labour efficiency, by dairy farm size

Note: FTE estimates exclude contractors. Number of cows refers to the number of dairy cows milked for at least three months. Source: ABARES AADIS 2016

The trend towards larger dairy farms may change the training requirements of the industry. Traditionally, dairy farming skills were passed between generations of family and through formal training (such as TAFE). More large farms in the industry will likely lead to greater specialisation of roles and increased reliance on labour from outside the family unit. As a result, alternative learning pathways and potentially more reliance on formal training or investment in on-the-job training may be necessary to maintain the skill base in the dairy industry’s future workforce.

number of workers per farm

labour costper litre of milk

milk produced per worker

cows milked per worker

Small farms (<200 cows)

2.2 FTE

11.6¢/l

350,000 l/FTE

60 cows/FTE

Medium farms (200–350 cows)

3.2 FTE

9.3¢/l

460,000 l/FTE

80 cows/FTE

Large farms (350+ cows)

5.6 FTE

8.6 ¢/l

610,000 l/FTE

88 cows/FTE

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4 Vacancies and recruitment Farm business expansion or employee turnover may result in a job vacancy (temporary labour shortage) on a farm. Vacancies can result in direct costs, through interrupting the farm production process, or indirect costs such as for recruitment advertising and training. Shortages in the labour market can make it difficult to fill vacancies and increase these costs for farmers.

Few dairy farms reported having a job vacancy at the time of the survey (4.3 per cent of farms) and, across all occupations, the vacancy rate was just over 1.2 per cent of positions. Comparable data was only collected the year before (2014–15) for the other industries. For 2014–15 the job vacancy rate was the same as on cotton farms (1.2 per cent of positions) and lower than on irrigated horticulture (1.8 per cent of positions) or vegetable (1.5 per cent of positions) farms. The low vacancy rate on dairy farms is likely to reflect the greater reliance on family labour reducing the likelihood of staff turnover. Of those dairy farms with a vacancy, 92 per cent were in positions for labourers. Recruitment for managers and other skilled workers was not common on dairy farms because the farm owner tends to be the farm manager—as a result, this position is less likely to become vacant.

Relatively few dairy farms recruited workers in 2015–16 (9 per cent of farms), reflecting the dominance of family labour on dairy farms. Of the positions recruited throughout the year, the overwhelming majority were for labourers. One-third of recruited positions were full-time positions and two-thirds were casual positions.

Farms reported multiple reasons for recruiting. Among the dairy farms that recruited workers in 2015–16, more than half (55 per cent) refer to staff turnover as the main reason. Other common reasons included business changes (39 per cent of farms) or as a normal part of business practice (28 per cent of farms). The proportion of dairy farms recruiting as part of normal business practice was significantly smaller compared with vegetable (83 per cent), irrigated horticulture farms (93 percent) and cotton farms (77 per cent) and is likely to reflect the relatively limited use of seasonal workers on dairy farms.

Of those dairy farms that attempted to recruit in 2015–16, 32 per cent indicated that they had some or a lot of difficulty in recruiting. This is similar to the all industry average result from the Department of Jobs and Small Business (2018) Survey of Employers’ Recruitment Experiences in 2017, which showed that 33 per cent of employers reported having difficulty recruiting in their most recent recruitment round. ABARES survey results show dairy farms reporting difficulty were more likely to be recruiting for full-time positions than farms that reported no difficulty, which were more likely to be recruiting to fill casual positions (Figure 10).

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Figure 10 Recruited workers employment type, by extent of difficulty recruiting, 2015–16

proportion of workers recruited

Source: ABARES ADIS 2016

For those dairy farms that reported some or a lot of difficulty in hiring workers, the main reasons cited for this were candidates’ poor attitude, motivation and personality (79 per cent of farms), lack of the necessary skills, experience or qualifications (74 per cent of farms) and insufficient interest in this type of work (71 per cent of farms). This suggests that a skills shortage is not the sole reason making recruitment difficult, although it may be a factor.

Farmers who undertook recruitment reported on the effectiveness of recruitment methods. Most dairy farms nominated personal contacts (word of mouth and local contacts) as their most effective means of recruitment (66 per cent of farms), closely followed by print advertising (through newspaper or internet) (38 per cent of farms) and advertising in other public locations (19 per cent of farms). Just over 10 per cent reported using third parties for recruitment (for example, rural employment agencies and labour hire companies). This is in contrast with other industries—34 per cent of vegetable farms, 38 per cent irrigated horticulture and 25 per cent cotton farms used third parties for recruitment. The difference may reflect the need in these industries to acquire a large number of seasonal workers, making outsourcing recruitment more attractive.

% of recruits

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100

No recruitment difficulty (68% or farms)

Full time Casual Part time

Some or a lot of difficulty(32% of farms)

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5 Expectations for the future Dairy farmers identified the top three workforce difficulties they were expecting to experience over the next five years: insufficient business profit to employ more workers (53 per cent of farms); negative perceptions of jobs on dairy farms (31 per cent of farms); and an ageing workforce (26 per cent of farms).

Survey participants considered upgrading skills and knowledge an important factor influencing their labour demand over the next five years—57 per cent of farms indicated the need to acquire new skills or knowledge for managers and 43 per cent of farms for labourers. The two most commonly cited reasons for needing to acquire new skills was introduction of new technologies or equipment and new legislative or regulatory requirements.

Expectations about future production levels also have a strong influence on the future labour needs of dairy farms (Figure 11). Over the next five years:

• farms anticipating no substantial changes to their business (53 per cent of farms) expected a small (2 per cent) decline in their future workforce

• farms looking to expand their businesses (10 per cent of farms) expected a 6 per cent increase in the number of farm workers

• farms expecting to exit the industry or contract their business (11 per cent of farms) anticipated a 57 per cent decline in the number of farm workers

• farms that intended to make other changes to their business (such as the enterprise mix) (26 per cent of farms) anticipated a 34 per cent decline in the number of farm workers.

Figure 11 Expected change in business size and workforce in the next five years

Source: ABARES ADIS 2016

Based on farmers’ responses, the numbers of workers on dairy farms is expected to decline by 14 per cent overall in the five years to 2020. The Department of Employment (2016b) projected

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–2% 6% –57% –34%average expected labour forcegrowth

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a 2.8 per cent increase in the number of people employed in dairy cattle farming over the same period. The difference may be caused by the difference in the methodologies used in the estimation. The projection of the Department of Employment was based on historical data. In comparison, the ABARES estimate was derived from survey data collected at a time when farmers received low milk prices and may have had a more pessimistic outlook about the industry’s future, thereby reducing the perceived demand for workers. Our estimate also does not capture that farms expecting to exit the industry could be taken over by other dairy farms who still require workers, which would reduce the expected reduction in workers. Further work is needed to overcome these issues. Ultimately, employment in the dairy industry is likely to reflect the overall trend in production, which will in turn depend on future milk prices, climate conditions and the cost and availability of labour and other inputs used by dairy farms (such as fertiliser, fodder and irrigation water).

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Appendix A: Comparison of occupations with the ABS Census The ABARES farm survey, the ABS Labour Force Survey and the ABS Population and Housing Census (ABS Census) differ in collection methodology, scope and coverage (Table A1). These differences are likely to have resulted in different estimates of the size of the dairy industry workforce. This is despite these surveys all relying on the same definition of occupations (Table A2).

Table A1 Differences between ABARES and ABS labour surveys

Survey ABARES survey ABS Labour Force Survey ABS Census

Survey entity type Survey of businesses Survey of households Survey of households

Summary method A representative sample of farm businesses (registered dairy farms with an estimate value of operations greater than $40,000) were asked about their workforce over the year in a face-to-face survey.

A sample of the population are asked in depth questions about their employment status in the preceding week on monthly basis in a face-to-face survey.

Everyone in Australia on Census Night is asked questions on a range of topics, with four questions on labour force status in the preceding week in a self-enumerated questionnaire.

Estimate of total dairy work force 2015–16

27,000 (RSE 5.6%) 30,000 20,300

Note: See ABS 2016, 2017c for more commentary on the differences between the ABS labour force survey and the ABS census. RSE is the relative standard error and indicates the extent to which the estimate is likely to deviate from the true population. Source: ABARES ADIS 2016; ABS 2017a, b

The sample method between the ABS Labour Force Survey and the ABARES farm survey differ. The ABARES survey captures a sample of farms that excludes small farms. In contrast, the ABS Labour Force Survey collects data from households and does not place a limit on the size of the business in which respondents are employed. Differences in timing of data collection could also result in differences between the two estimates.

The ABS Labour Force Survey notes a greater degree of uncertainty around the published estimates at detailed industry levels. For fine-scale analysis of employment at a regional or industry level, the 5-yearly ABS Census provides greater confidence (ABS 2016, 2017c).

The ABS Census data reported fewer people working in the dairy industry than the ABARES farm survey. This may be because:

• The Census is conducted on a single night and occurs at a time that is not generally a peak production period for those dairy farms with split milking (around a quarter of farms). This could reduce the number of people reporting dairy as their industry of employment in the preceding week, compared with the ABARES survey that captures the entire financial year.

• The Census captures the main job held—if respondents worked more hours in other jobs, dairy farming would not be reported as their industry of employment.

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• The Census online form, compared with the paper-based form, asked more specific questions to improve the quality of fine-level data on the industry of employment and job description (ABS 2017c). For farm households that did not fill in the survey online, it may not have been possible to identify the industry of employment or occupation at the detail of dairy cattle farmer manger.

• ABARES uses weighted data from each farm to calculate population estimates. The weight is based on the number of farms in a region and their size (based on livestock numbers and planting area). While our findings suggest that employment and farm size are generally correlated, the weighting may affect the estimate of total number of workers.

Differences between the ABS Census and ABARES survey are also observed in the occupations of workers in the dairy industry (Figure A1). These differences may be because the employee and employer have interpreted employment occupations differently. For example, in the ABS Census, a person who has a managerial responsibility to perform specific tasks may, legitimately, consider themselves a manager. In the ABARES survey, farm business owners may only recognise the owner–operator as working in a manager role and hence have reported their workers with high duties or skill levels as labourers, rather than manager. Another explanation is that farmers’ perception of the roles they are employing workers in differs to the roles workers see themselves as performing as self-reported in the Census.

Figure A1 Proportion of persons working in dairy, by occupation

Note: ABS census 2016 using table builder data based on Industry of Employment (INDP) at the 3 digit level Dairy farming and Occupation (OCCP) at the 1 digit level. Source: ABARES ADIS 2016, ABS 2017b

%

10

20

30

40

50

60

70

Managers Professional Technicians Clerical Machinery Labourers Other

ABARES ABS

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Table A2 Skill classifications

Occupation Examples Indicative skill level

Managers Farmer or farm manager, chief executive or general managers, specialist manager—such as in advertising, sales, business admin and ICT.

Bachelor degree or above or at least 5 years relevant experience.

Professionals Agronomist, veterinarians, human resource (HR) specialist, plant scientist, lawyer, marketing, engineer, environmental scientist, accountants.

Bachelor degree or above in specific field.

Technicians and trades workers

Skilled animal or horticultural worker, construction trade (such as plumber or carpenter), mechanic, chef.

Bachelor degree or Cert II and 2 years on-the-job training or 3 years on-the-job training.

Clerical and administrative workers

Bookkeeper, project administrator, secretary, office support.

Machinery operators and drivers

Harvester operator, forklift operator, processing machine operator.

Cert II or Cert III or formal experience-related training

Labourers Farm workers (such as dairy farm worker routine herding and milking), general farmhand, wool handler, stable hand, vegetable or fruit picker, packers, meat processing worker.

May not require formal training.

Source: Adapted from ABS 2013

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References ABS 2013, ANZSCO -- Australian and New Zealand Standard Classification of Occupations, 2013, version 1.2, cat no. 1220.0, Australian Bureau of Statistics, Canberra.

——2016, Differences between the LFS and the Census factsheet, Australian Bureau of Statistics, Canberra.

——2017a, Labour force Australia, Detailed, Quarterly, August 2017, Employed persons by Industry group of main job (ANZSIC), Sex, State and Territory, cat no. 6291.0.55.003, data cube EQ06, Australian Bureau of Statistics, Canberra.

——2017b, Census of Population and Housing Table Builder, Australia, 2016, Australian Bureau of Statistics, Canberra.

——2017c Census of Population and Housing: Understanding the Census and Census Data, Australia, 2016, Australian Bureau of Statistics, Canberra.

Ashton, D 2014, Australian Dairy: financial performance of dairy farms, 2011–12 to 2013–14, ABARES research report 14.17, December.

Dairy Australia 2017, A People Approach, accessed May 2018.

Department of Employment 2016a, The agriculture sector and the Seasonal Worker Programme, February.

——2016b, Employment Outlook to November 2020 (Word) (488.6KB).

Department of Home Affairs 2018, Dairy industry labour agreement.

Department of Immigration and Border Protection 2017, Subclass 457 visas granted pivot table, 2017-18 to 30 September 2017 - comparison with previous years, ANSCO nominated occupation 121313, database accessed from: https://data.gov.au/dataset/visa-temporary-work-skilled

Department of Jobs and Small Business 2018, Survey of Employers’ Recruitment Experiences in 2017 – unpublished data, provided 30 June 2018.

Valle, H, Millist, N & Galeano, D 2017, Labour force survey, ABARES report to the Department of Agriculture and Water Resources, Canberra, May.

Weragoda, A, Ashton, D & Finlay J 2018, Australian dairy: financial performance of dairy farms, 2015-16 to 2017-18, ABARES, Canberra May

Zhao, S, Binks, B, Kruger, H, Xia, C & Stenekes, N 2018, What difference does labour choice make to farm productivity and profitability in the Australian horticulture industry? A comparison between seasonal workers and working holiday makers. ABARES research report prepared for the World Bank, Canberra, February.