Labour shortages squeezing UK food supply, warns dairy group

Stay informed with free updates

Simply sign up to the UK employment myFT Digest — delivered directly to your inbox.

The UK’s biggest dairy provider has warned that labour shortages are undermining the country’s food security as wage inflation and the end of freedom of movement squeeze production and force farmers to reduce their herds. 

One in 12 of the 472 dairy farmers surveyed by Danish dairy co-operative Arla said they had cut output in response to recruitment pressures.

According to the study, released on Monday, 16 per cent of the farmers said they would consider leaving the sector altogether unless the situation improved. 

“Our farmers have told us for some time that they are facing real challenges with the state of the labour market,” said Bas Padberg, Arla’s UK managing director. “If we want our farmers to continue to put food on the table in millions of homes around the country they need help.”

Padberg said staff shortages were driving wage inflation in the sector as farm businesses competed for workers.

Farmers were paying workers almost a third more this year than at the end of 2019, before the Covid-19 pandemic and the termination of unrestricted movement between the UK and EU following Brexit, the research found.

Padberg said ending free movement was “part of the dynamic” but that the pandemic had also “changed the labour market”. “We haven’t seen the full effects of that,” he added, noting people were increasingly opting for careers that allow them to work remotely or flexibly. 

He added that the industry was struggling to convince young people to choose food manufacturing as a career choice, and to attract qualified candidates with the skills needed for increasingly automated manufacturing work.

On average it now took between three and six months to find an engineer for Arla’s factories, he said.

Arla called on the government to help promote careers in food and farming, support skills development and boost investment in automation to raise efficiency and close the labour shortfall.

The co-operative is currently working with the Department for Work and Pensions to promote the food sector in jobcentres and through career advisory services. Padberg said reform of professional advice given in schools was also needed.

Arla also called on ministers to expedite plans to rip up the apprenticeship levy and launch a new “growth and skills levy”, allowing companies to use a proportion of their contributions to the scheme to fund training through other routes.

The number of UK dairy farmers has fallen steadily over the past five years, but the drop between last autumn and spring this year was larger than average.

The number of dairy farmers in the industry fell 5.8 per cent between October 2023 and April 2024, from 7,500 to 7,130, according to the Agriculture and Horticulture Development Board, an advisory board to British farmers.

Milk production over a similar period, however, fell just 0.5 per cent, or 33mn litres, suggesting cows were being distributed to other dairy farms, raising the output of those farms, said Susie Stannard, AHDB analyst.

“The challenging weather conditions this year have been a factor for many, teamed with falling milk prices at the time but also increased regulatory demands, particularly environmental demands that require significant investments,” said Stannard.