The NFU has asked DEFRA to consider postponing the implementation of the National Living Wage, announced by Chancellor George Osborne in the government’s Summer Budget.
In a letter to minister for farming George Eustice, NFU deputy president Minette Batters has called for the government to delay the compulsory pay rise to £7.20 for all workers over the age of 25, set to come into force in April 2016, over concerns it could raise production costs considerably, particularly for those within the horticulture sector.
”This has been completely shot from the hip in terms of a cost to our business,” said horticulture board chairman Guy Poskitt.
”We’ve got a government that want to grow UK fresh produce and suddently they’ve imposed a huge inflationary cost to our business, whilst at the same time we’re up against it regarding currency. It’s a real thorn in the side, and a real opportunity for European countries to export more food to the UK.”
Poskitt added that, in fresh fruit crops, labour can account for up to 50% of production costs. The rise in wages could therefore “undoubtedly have a huge knock in effect in terms of the cost of production”, as many workers are currently paid below the new threshold.
“We don’t decry the Living Wage, we think it’s probably right and proper that people do get more money becasue the current rate of pay is hard to sustain,” he added.
“But we’re asking for postponement because a lot of our members have undertaken contracts with retailers and food propcessors a year or up to two years in advance, and in that budget put only1 or 2% for wages as an increasing cost.”
The pay rise of up to 10% for workers could lead to farmers opting for greater automation, with jobs lost as a result, Poskitt added.
The concerns of the NFU are set to be raised at today’s Fruit Focus industry event in Kent.
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