National Living Wage will have 'significant impact' on farmers

The Fish Partnership, Buckinghamshire based accountants, are warning farmers that the introduction of the National Living Wage could have a significant impact on their businesses.

The new National Living Wage’ (NLW) came into force on 1 April 2016 and has seen pay for workers aged 25 and older increase to a rate of £7.20 an hour; an amount that will increase incrementally to £9.00 an hour by 2020

Seasonal farm businesses that require pickers during harvest time are extremely labour intensive and wages can represent more than 40 percent of a farm’s operating costs.

These businesses will see a significant increase in wage costs at a time when profitability is already in decline.

Farming unions have warned that if growers can’t recover the extra cost they face through the products they sell then many farms may fail and be forced to close.

Paul Laird, a specialist agricultural accountant and Director at The Fish Partnership, said: “Although the majority of people are aware that the National Living Wage has come into force this month; many may not have considered the true impact it will have on their business over the next few years.

“The incremental rises in wages for those over the age of 25 will really eat in to the slim profit margins of farms, especially those that rely heavily on low paid workers.

“If farmers are unsure of the effect the National Living Wage will have on their business then they should speak to a professional who can help them manage the additional cost.”