CANBERRA (BLOOMBERG) - Australia is looking to recruit South-east Asian farm workers as the pandemic and a new free-trade deal with the UK exacerbates labour shortages in the nation's A$66 billion (S$67.37 billion)-a-year agriculture industry.

The government aims to offer three-year working visas by the end of the year to citizens from the 10 Asean countries, which include Indonesia, Malaysia, Thailand and the Philippines, Agriculture Minister David Littleproud told reporters in Canberra on Wednesday (June 16).

Australia already has a similar arrangement in place with Pacific Island nations.

With Australians reluctant to pick up what is often considered to be strenuous manual labour, reliance on foreigners has long been a crux to an industry that has seen a shrinking and ageing local workforce.

The government has attempted to attract backpackers - who must already complete at least three months of agricultural work for a typical two-year working-holiday stay - with the offer of a visa extension on the completion of a longer farm stint.

Still, their number has plunged from 160,000 pre-pandemic to less than 40,000 as the nation's borders were closed to almost all non-residents, leaving some goods not sown or left to rot unpicked.

Labour shortages were flagged by the government forecaster as a continuing "vulnerability" for the industry as the pandemic extends through 2021, with Australia unlikely to loosen all its strict border controls until well into next year.

Supply chain hiccups

With global food price inflation already tracking higher as farm supplies tighten around the world, any hiccup in the supply chain could hit household budgets hard.

Although prices have cooled slightly in recent weeks, the Bloomberg Agriculture Spot Index - which tracks key farm products - surged last month to reach the highest level since 2012.

Much of the impact on end prices, especially in the fruit and vegetable sector which depends more heavily on manual labour, has so far been mitigated by changes to farm management.

Still, labour shortages remain and are set to get worse under Australia's new free-trade agreement that Prime Minister Scott Morrison inked in London on Tuesday with counterpart Boris Johnson.

Under the deal, backpackers from the UK will no longer be required to work in the agriculture industry to fulfil visa requirements.

That's expected to reduce the number working on Australian farms by a further 10,000 a year, Mr Littleproud said.

Meanwhile, a lack of dedicated quarantine facilities has meant only 7,000 workers from the 10 Pacific nations are currently in Australia, even though that visa programme allows for 25,000 arrivals.

Mr Littleproud called on states to ramp up the construction of facilities, otherwise "farmers will make that commercial decision not to plant" during the nation's forthcoming spring.

'Smashed by Covid-19'

"We've been smashed by Covid-19," Mr Littleproud said.

The new Asean visa programme "sets the parameters, creates the environment now for the agriculture industry to have confidence that they're going to have a constant seasonal workforce into the future," he said.

Asked whether the arriving South-east Asian workers, many of whom may have limited English-language skills, could be exploited or underpaid, Mr Littleproud labelled such reports as "dangerous generalisations of demonisation of Australian farmers".

A 2016 survey of working-holiday makers found 66 per cent felt that employers took advantage of them through underpayments.

The Australian Broadcasting Corp reported that year that a group of Pacific Islanders from countries including Fiji and Tonga were being paid less than A$10 a week.

"That is not the general nature of Australian farming industry," Mr Littleproud said.

"The vast majority do the right thing."