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Darlings Fruit owner Stephen Darling, of Ettrick, said the apple harvest season runs from the end of February to mid May.
He had only about 60% of the 65 pickers and packhouse staff required for the season on his family’s about 90ha of orchard blocks in the valley.
Consequently, apples would rot on the ground this season, he said.
The labour shortfall was due to his business relying on foreign workers who arrived under the recognised seasonal employer (RSE) scheme from Pacific Island countries.
Pre-Covid, Immigration NZ had anticipated 14,400 RSE workers to be in the sector annually.
Before Christmas, Immigration Minister Kris Faafoi announced a border exception would be made for about 2000 RSE workers to arrive from January this year.
Mr Darling said the 2000 workers had be shared in horticulture and viticulture industries across regions and it was "ridiculous" they would not be available when winter pruning started in the valley.
The Government had to do more to protect the horticulture industry, he said.
"Allow the Pacific people to come back to work. If we do not get substantive change — and a strong signal — then I think we are looking at the collapse of horticulture."
The RSE scheme had allowed the industry to develop but "the growth curve is set to go into a death spiral."
CAJ van der Voort post harvest manager Jackie van der Voort said the business owned many orchards between Ettrick and Earnscleugh, which were mostly apples and some stonefruit.
The business usually employed about 280 RSE workers at this time of year.
Getting the fruit thinned this season with a lack of RSE workers was "challenging".
When more RSE workers were available, the business employed 136 staff to do the thinning.
This thinning season, 300 staff were employed, many from a Ministry of Social Development scheme.
"We still didn’t get the job done and the quality of the job wasn’t as good as it would normally be."
The wages for the past thinning season cost the business 2.7 times more than usual.
The ministry was great to work with but "generally we were landed with people who really didn’t want to be working".
The New Zealanders they did employ — who did want to work — did a great job but they could not get enough of them due to the low unemployment rate in the region.
Initiatives to try attracting more New Zealanders to work in the valley failed.
Good money could be made picking apples, she said. The average hourly rate for the apple harvest was $28.80 in Teviot Valley last season, she said.
The labour shortage in the packing shed had resulted in production falling, she said.
"We spent a huge amount of money to automate and streamline systems and I can’t get enough people in there to make it work — I’m running at 50% — it’s killing us."
The labour shortage was compounded by the number of backpackers in the country being slashed from 70,000 to 10,000 after the borders closed.
Backpackers traditionally accounted for 64% of the staff working in the horticulture and viticultural industry in Central Otago.
Melrose Orchard owner Pete Vernon, of Ettrick, said before the borders closed the same crew of RSE workers had returned to work on his 40ha apple orchard for more than a decade.
The crew quickly learnt the required skills
"They’re all fit, they’re all willing and all keen to work."
The RSE workers could make as much money by picking apples on his orchard in a day than they could by harvesting coconuts in their homeland in a week, he said.
Ettrick Gardens owner John Preedy said RSE workers were an important part of his 20ha pip fruit operation.
The orchardists said they were prepared to isolate RSE workers in their own facilities to combat the limited spaces available in managed isolation facilities.
A spokesman for the minister said there was "no ability" for the Government to increase the number of RSE workers in New Zealand.
"We’ve brought in as many as we could."
A reason for the cap was any RSE workers coming to New Zealand had to be able to return home after they finished their working arrangements.
"It’s one thing to bring them here, then they’ve gotta be able to go home."
Another reason for the cap was limited spaces being available in managed isolation facilities.
The Government had no plans to allow RSE workers to be isolated privately, as it would require access to limited resources, such as health professionals, he said.
He urged orchardists with staff shortages to talk to sector representatives, such Pipfruit NZ chief executive Alan Pollard, to discuss ways to access staff including the 2000 RSE workers available.
"They have to be shared around."
Mr Pollard, of Hawke’s Bay, said the situation was "dire" as there was a limited supply of RSE workers and a large demand.
"We’ve had to work out a process on how you can fairly and equitably allocate those across regions, industries and growers."
Pipfruit NZ hoped capacity at managed isolation facilities would be available to allow more RSE workers for winter pruning work.
Another pipfruit season without RSE workers was "untenable" so there had to be an alternative to the current managed isolation process, he said.
Pipfruit NZ programmes designed to get New Zealanders to work in the industry "had mixed success".
"The challenge with somewhere like Teviot Valley is there is very little unemployment down there."
The shortage was compounded by backpackers in New Zealand "sticking close to metropolitan centres".
"We are doing as much as we can — but unfortunately there is a limited labour supply and a limit to just how much we can do."