I was in Nova Scotia in late January to take part in Horticultural Nova Scotia’s annual conference and the Nova Scotia Fruit Growers’ Association’s 150th annual meeting. It was while I was there that the Ontario government announced the latest increase in minimum wage from $10.25 per hour, set in 2010, to $11 per hour.
The increase probably came as no surprise to most farming organizations in the province, many of which made submissions to the Minimum Wage Advisory Panel last fall. But that doesn’t make the decision any less alarming to growers and other farm producers who rely on employees to help prepare, plant, manage and harvest crops.
According to Ken Forth, president of Foreign Agricultural Resource Management Services (FARMS), who happened to be present for part of Hort Nova Scotia’s conference, fruit and vegetable growers in Ontario were “terrified” by the rise in minimum wage, which hadn’t yet been announced at that time. He added the increase meant Ontario producers would be at a disadvantage in the North American market considering wages in the U.S. and Mexico are lower.
Farmers are price takers, he said, not price setters.
With the announcement on Jan. 30, several farming organizations announced their concerns surrounding the increase.
“[The] OFA has long protested that an increase in the minimum wage will hurt Ontario Farmers – especially fruit and vegetable farmers who rely heavily on seasonal labour,” the Ontario Federation of Agriculture stated in a press release. “Farmers are unable to recoup wage increases by adding the additional cost of production to the price we receive from our farm products.”
The Grape Growers of Ontario (GGO), who also appeared in front of the province’s advisory panel for minimum wage, advised against a “significant lump-sum increase that we have seen in the past.” Instead, they suggested minimum wage increases be connected to the Consumer Price Index (CPI) “to establish a regular, predictable and sustainable” rate pattern.
It was a view shared by the OFA.
“[The] OFA supports tying minimum wage increases to the [CPI], believing this approach will lead to more predictable adjustments for which all businesses can plan.”
This support was echoed by the Christian Farmers Federation of Ontario (CFFO).
“We believe there needs to be a fair and just way to move forward on this policy,” stated Nathan Stevens, general manager and director of policy development for the CFFO, in the organization’s weekly commentary. “When you run the numbers from 2010, which is the last time the minimum wage increased, using CPI as a means to establish the minimum wage, $11 is not unreasonable.”
The CFFO hopes the loss of value in the Canadian dollar will help cushion the blow for export producers, considering the timing of the increase.
The GGO was also concerned with the timing of the increase, preferring any jump in minimum wage occur “outside of [the] traditional seasonal labour period of April to November to avoid increases during the season.”
Ontario’s 75-cent minimum wage increase is set to begin on June 1, 2014. Under the proposed legislation, any future increases would be announced by April 1 and come into effect on Oct. 1.
In the fall of 2009, just prior to Ontario’s previous increase in the minimum wage, the George Morris Centre released a 40-page report entitled Minimum Wage Increases in Ontario: Understanding the significance in horticulture. Authored by Al Mussell, a senior research assistant, and Claudia Schmidt, a research associate, the report presented an analysis of the apparent cost and risk management impacts of an increase to the minimum wage. According to the reported results, the cost to growers of increasing the minimum wage to $10.25 was estimated at $73 million and was expected to result in decreased profitability for producers.
“In particular, when an enterprise with few alternatives to substitute for labour is examined (peaches), a 28 per cent increase in manual labour expense decreases profitability by almost 50 per cent,” the report stated. “Since little opportunity currently exists to adjust to this labour cost change in industries like peaches, these constitute real cash losses for farmers.”
The report’s Executive Summary ended with a dire prediction.
“The minimum wage increase … artificially piles sharp labour cost increases on an industry that is already struggling. Moreover, it puts public policy at odds with itself, and confuses the public interest that government has articulated for horticulture. This warrants corrective action to restore profitability to Ontario horticulture as it relates to minimum wage increases. The apparent result of inaction will be a catastrophe for much of Ontario horticulture.”
Admittedly, the dire consequences of the 2009 report did not come to fruition. Hopefully this newest minimum wage increase will not be the catalyst for that predicted catastrophe.
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