Labor shortages squeeze farmers, Arla Foods UK data shows

More than half (56%) of Arla Foods UK’s dairy suppliers say it’s harder to recruit workers now than 5 years ago – and a growing number are reducing output and herd sizes due to labor shortages.

These are some of the headline findings published by the UK’s largest dairy co-operative as it carried out its annual producer survey, this year polling 472 dairy producers from among its 2,000 farmer-owners.

Compared to 2023, 1 in 12 farmers report that they are cutting production (compared to 1 in 18 a year ago) and 1 in 10 have had to cut their herd due to recruitment woes.

The majority (86%) of those surveyed also said very few or no applicants have had the right qualifications for the advertised vacancies while 16% say they would consider leaving dairy altogether, up from 12% last year.

Farmers are now also paying staff more than five years ago, with the average wage more than a quarter (27%) higher than it was at the end of 2019, before the COVID-19 pandemic and the end of the free movement of people due to the UK’s exit from the European Union.

The drop in output and the shrinking herd sizes could signal price increases and threaten food security, Arla has warned.

Bas Padberg, managing director at Arla Foods, comments, “Our farmers have told us for some time that they are facing real challenges with the state of the labour market. This new data bears out their concerns and the potential impact on food prices and food security.

“If we want our farmers to continue to put food on the table in millions of homes around the country, they need help.”

Arla’s solutions: from diverse workforce to technology

The co-op has called for a government intervention in order to alleviate labor shortages and reduce producers’ farm management pressures.

For example, Arla wants to see more women and younger people in to the industry, and attract more workers with expertise and experience in automation – a ‘growing issue’ in the sector according to the co-op.

Support is also needed to attract and promote food manufacturing as a career choice among a more diverse population, according to the company, and the government should also fast-track changes to the apprenticeship levy to make upskilling and training easier for businesses.

“We’re calling on the government and industry to work together to bring people into our exciting sector, and then to give them the skills and equipment they need to be fully productive.,” Padberg said.

“What ministers have said already about driving growth and supporting training is positive; we now need to go further and faster.”

Arla’s vice-president of production, Fran Ball, added: “The challenges in recruiting suitably skilled people into the food supply chain is becoming increasingly harder. With advancements in technology and automation, we should be getting more efficient, but we still need the right people with the right skills if we want to have a workforce that is fit for the future.”

Farmer confidence at an all-time low

In May 2024, the National Farmers' Union (NFU) Farmer Confidence Survey showed that short and mid-term confidence had plummeted to its lowest since records began, in 2010.

All farming sectors expected decreased production over the next year according to the data, with mixed farms, arable farms and dairy farmers the most impacted by factors such as wet weather.
At the same time, almost two thirds (65%) of farmers said their profits were declining or that they could exit their respective industry.

The NFU - which represents Welsh and British producers - called on the government to adopt measures that would help safeguard producers' future and the nations' food security, with NFU president Tom Bradshaw stating that 'confidence has collapsed after months of devastating flooding, unsustainably high production costs and low market returns'.

According to an AHDB analysis, UK funding for agriculture has remained the same in the last five years, but farm costs have increased by 44% on average, with pig (54%) and dairy (44%) being hardest-hit by input cost rises.

To account for the effect of inflation, the farming budget would need to increase by 44% to £3.4bn, the AHDB predicts. This is without considering any other spending required to support the farming sector.