Why backpackers are to blame for Australia’s cost of living crisis getting worse

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A drastic lack of overseas backpackers is at the root of the Australian cost of living and $12 head of lettuce crisis.

Fruit and vegetable prices rose by 18.6 percent in the 12 months to August.

This was even more dramatic than the 15 percent increase in gasoline prices, as headline inflation rose 6.8 percent — approaching the level last seen in 1990.

Although floods have destroyed crops this year, the reopening of the Australian border in February for foreign tourists has not resulted in the usual number of short-term overseas visitors, including many backpackers picking fruit to fund their working holidays.

A weaker Australian dollar also threatens to make imports more expensive, which the ANZ says could push inflation up.

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Overseas backpackers, or lack thereof, are responsible for Australia's cost of living and the $12 head of lettuce (pictured is a papaya picker in the Atherton Tablelands in far north Queensland)

Overseas backpackers, or lack thereof, are responsible for Australia’s cost of living and the $12 head of lettuce (pictured is a papaya picker in the Atherton Tablelands in far north Queensland)

The total of 348,440 people who arrived in Australia at short notice in August was just a third of the 1,078 million who arrived in December 2019, data from the Australian Bureau of Statistics shows.

Fresh food inflation is rising

FRUIT AND VEGETABLE PRICES: Up 18.6 percent in the year to August.

This was much higher than the headline monthly inflation rate of 6.8 percent – itself nearly the highest level since 1990.

Short-term visitor numbers in August 2022 are only a third of pre-pandemic December 2019 levels.

National Farmers Federation said this meant farmers did not sow crops because foreign backpackers were not available to pick fruit and harvest vegetables.

Vacationers made up 104,140 of those August arrivals, compared to 514,880 in December 2019, with working backpackers in that data.

Shane Oliver, chief economist at AMP Capital, said a shortage of foreign backpackers is contributing to higher fruit and vegetable prices.

“If you don’t pick the fruit, it’s wasted and that puts upward pressure on fruit prices and has a direct impact on inflation,” he told the Daily Mail Australia.

“Fruit growers are forced to pay higher salaries to get available labor or to source labor elsewhere, forcing them to pass on higher costs to consumers.”

Peter Ceccato, managing director of Super Seasons, said the shortage of available labor was so bad that the oranges in his orchard in the southern NSW town of Hillston were rotting on the ground.

This was despite offering work for $45 an hour, only to get zero applicants.

Overripe oranges are rotting on the ground and there aren’t enough workers, apart from only 20 Fiji immigrant workers, to pick them.

Now growers are closing their doors and some are even committing suicide.

“Suicide is an option, really,” Ceccato told ABC’s Four Corners program.

‘I do know people in our industry who have already committed that act. With the direct consequence of not being able to get work.’

A reopening of the Australian border to foreign tourists in February has not resulted in the usual number of short-term foreign visitors - including many backpackers picking fruit to fund their working holidays (pictured is a rotting orange in an orchard near Leeton in southern NSW)

A reopening of the Australian border to foreign tourists in February has not resulted in the usual number of short-term foreign visitors - including many backpackers picking fruit to fund their working holidays (pictured is a rotting orange in an orchard near Leeton in southern NSW)

A reopening of the Australian border to foreign tourists in February has not resulted in the usual number of short-term foreign visitors – including many backpackers picking fruit to fund their working holidays (pictured is a rotting orange in an orchard near Leeton in southern NSW)

Tony Mahar, CEO of the National Farmers Federation, said many farmers just aren’t sowing crops right now.

“The labor crisis is hurting farmers, it is hurting the economy and hitting consumers in the back pocket,” he told the Daily Mail Australia.

‘Farmers make the difficult choice not to plant some crops because they cannot guarantee that workers will come to harvest.

‘If no crops are planted, less food is grown and prices rise.

“They will continue until the problem is solved.”

The Food Supply Chain Alliance – which also includes the National Farmers Federation and AUSVEG – estimates it takes 172,000 workers from farm to dinner table.

Fruit and vegetable prices rose 18.6 percent in the year to August (pictured is an Australian supermarket selling individual heads of iceberg lettuce for $11.99)

Fruit and vegetable prices rose 18.6 percent in the year to August (pictured is an Australian supermarket selling individual heads of iceberg lettuce for $11.99)

Fruit and vegetable prices rose 18.6 percent in the year to August (pictured is an Australian supermarket selling individual heads of iceberg lettuce for $11.99)

They argue for more foreign workers.

“This is one of the few cost of living that the government can influence, and they should seriously look for solutions,” said Mr Mahar.

“We have to pull out all the stops. That means getting more Australians into work by lowering barriers such as pension rules and getting more foreign workers on the plane.’

This severe labor shortage occurs with unemployment in August at an almost 48-year low of 3.5 percent.

The cost of living is looming as a weaker Australian dollar threatens to make imports more expensive.

The currency has fallen to 63 cents for the first time since April 2020, after trading at 75 cents in April.

David Plank, the ANZ’s head of Australian economics, said a 17 percent drop in the Australian dollar over the past six months could lead to consumers paying more for imported goods.

“The recent decline of the Australian dollar to below 63 cents, the lowest level since the early days of the pandemic, does not look good for the inflation outlook,” he said.

Peter Ceccato, managing director of Super Seasons, said a shortage of available labor was so bad that the oranges were rotting on the ground (pictured) in his orchard in the southern NSW town of Hillston.

Peter Ceccato, managing director of Super Seasons, said a shortage of available labor was so bad that the oranges were rotting on the ground (pictured) in his orchard in the southern NSW town of Hillston.

Peter Ceccato, managing director of Super Seasons, said a shortage of available labor was so bad that the oranges were rotting on the ground (pictured) in his orchard in the southern NSW town of Hillston.

‘If imports become more expensive, the costs of consumables rise, which directly affects household budgets.’

The Reserve Bank estimates that every 10 percent drop in the Australian dollar is equivalent to a 1 percent increase in consumer prices over three years.

“So it appears that the weakness of the Australian dollar will be a source of upward pressure on prices in the coming years,” said Mr Plank.

The Australian dollar has traditionally weakened when investors fear a slowdown in global growth as currency traders buy the US dollar, the world’s reserve currency, instead.

Commodity prices, such as coal, are still near record highs, meaning currency traders are reacting to the difference between Australian and US interest rates.

The total of 348,440 people who arrived in Australia at short notice in August was just a third of the 1,078 million who arrived in December 2019, data from the Australian Bureau of Statistics shows.

The total of 348,440 people who arrived in Australia at short notice in August was just a third of the 1,078 million who arrived in December 2019, data from the Australian Bureau of Statistics shows.

The total of 348,440 people who arrived in Australia at short notice in August was just a third of the 1,078 million who arrived in December 2019, data from the Australian Bureau of Statistics shows.

The Reserve Bank of Australia has raised cash interest rates for six months in a row since May, to a nine-year high of 2.6 percent.

But the US Federal Reserve has been even more aggressive, with its target equivalent interest rate now at a 14-year high of 3 to 3.25 percent.

US inflation rose 8.2 percent in the year to September, not far from its four-decade high.

In Australia, the Reserve Bank expects headline inflation to hit a new 32-year high of 7.75 percent by the end of the year – a level more than double the target of 2 to 3 percent.

dr. Oliver said that while the number of short-term arrivals was well below 2019 levels, international student numbers, classified as long-term arrivals, were back above pre-Covid levels and there were signs that more working holiday visas were being processed.

The cost of living crisis is emerging as a weaker Australian dollar (notes pictured) threatens to make imports more expensive.  The currency has fallen to 63 cents for the first time since April 2020, after trading at 75 cents in April.

The cost of living crisis is emerging as a weaker Australian dollar (notes pictured) threatens to make imports more expensive.  The currency has fallen to 63 cents for the first time since April 2020, after trading at 75 cents in April.

The cost of living crisis is emerging as a weaker Australian dollar (notes pictured) threatens to make imports more expensive. The currency has fallen to 63 cents for the first time since April 2020, after trading at 75 cents in April.

A weaker Australian dollar makes travel cheaper for foreign visitors – something appealing to foreign backpackers.

But for now, a shortage of backpackers means Australians are doing the work in the towns holidaymakers used to do, leaving fewer locals to pick fruit.

“Some of those backpackers would have done some of the suburban jobs, some of the Australians would have gone to pick fruit – now that the Australians are filling the suburban jobs, none of them are left to go out and pick fruit “Dr. said Oliver.

‘Meanwhile, the backpackers aren’t quite back yet.’

Home Secretary Clare O’Neil said she added 500 new officials to her department to help work visa applicants work faster, with a huge backlog to clear.

“So we immediately increased the workforce back to where they were in a normal business environment, pre-Covid, but actually increased them significantly in an effort to get those processing times down,” she told Four Corners.

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