Market Morsel: Do you go to a land down under? NO

Market Morsel

We like to cover all the primary inputs, chemicals, fuel, fertilizer and freight. We haven’t really covered one, but it’s an important one. Labour.

One of the reasons we haven’t covered it was that I couldn’t think of anything data-driven that I could write about. I had a look over the weekend at some of the backpacker data after some discussions with friends back home.

Backpackers are clearly a huge source of labour for Australian farms. We all know how they work, come to Australia, float around the beach and nightclubs, and then work in a rural area for some cash and to get a second-year visa. They can then spend another year in Australia and avoid the eventual return to the reality of a dreary, wet and cold homeland (Scotland, Ireland etc.).

Covid has severely constrained movements of people; Australians haven’t been able to get to WA, never mind arrive from the rest of the world.

Travel restrictions have caused a sharp drop in the number of applications for backpacker visas. The first chart below shows the granted backpacker visas, based on which year the visa has been applied for. This is important later on.

The average number of visas was around 205,000 per year during the last decade. In the 2020 financial year, it was 31200, and up until December 2021, it was 17500. A huge fall, but not surprising considering no one could get through our border.

The next thing that I think is important is the lack of second-year visas applications. In a typical year, just under 20% of applicants would be on a second-year visa. There were hardly barely enough first-year visas last year to fill a Bondi nightclub (1749).

The second-year visa holders are not going to be there. In addition to attracting new backpackers, the gap in second-year backpackers will have to be filled.

The reliance will be on new applicants and third-year vias. Only 8% of the average number of backpacker visas have been granted roughly halfway through the year. The shortage is not going away anytime soon.

I foresee some continuing issues in backpacker labour:

• Second-year visa holders are those who have already got some experience in regional areas. They are likely to have a higher value than those ‘straight off the plane’.
• Third-year visa holders might be reluctant to stay for another year, if they haven’t been able to see family/friends in a significant amount of time.
• The impression by many is that Australia is a risk due to the long lockdowns we experience. No backpacker wants to be stuck in a hostel with no cash for months.
• Many who would go backpacking out of uni are just going straight into a job.
• Travelling is still extremely difficult and expensive. I can vouch for that from recent overseas trips.