Minimum wage to increase in March

Wednesday, February 11, 2009

© AgMedia Inc.

by SUSAN MANN

Elgin County farmer Mark Wales is trying to figure out how he’ll pay for added labour costs on his garlic and vegetable farm this year.

On March 31, the province’s minimum wage rate is slated to increase to $9.50 an hour from the current rate of $8.75 an hour. It’s the second of three consecutive annual minimum wage increases. The final one, planned for March 31, 2010, will raise the wage to $10.25 an hour.

One option Wales is considering on his mostly pick-your-own farm is to “trim what my staff do.” He’s also having second thoughts about a possible expansion into strawberries as he tries to figure out how he’ll pay for the added labour costs.

Typically on fruit and vegetable farms labour accounts for 50 to 60 per cent of the cost of production, says Wales, vice-chair of the Labour Issues Coordinating Committee. The committee represents the farming industry on labour matters.

Most farmers generally pay $1 to $2 above the minimum wage because it’s the only way they can attract and retain good workers. With the rising minimum wage farmers will still have to maintain that price difference because “it’s not fair to your good employees,” Wales says.

The Ontario Fruit and Vegetable Growers’ Association (OFVGA) is asking Premier Dalton McGuinty to put this year’s increase on hold until the economy improves.

The Labour Issues Coordinating Committee will make the same suggestion when it meets with the province’s labour minister. Wales says that meeting will be soon.

OFVGA chair Brenda Lammens says the three years of wage increases that started on March 31, 2008 amounts to a 28-per-cent increase and blindsided horticultural farmers when it was first announced.

Once the three years of increases are implemented horticultural farmers will spend an extra $70 million to $120 million a year in wages.

Lammens says the most frustrating part of the minimum wage increases is it’s a social program, included in legislation introduced by Premier McGuinty to help fight poverty. Farmers, like other Ontario citizens, agree poverty has to be eradicated but this social program is “being paid for off of the backs of farmers,” she says. “There’s no way we can recoup these costs out of the marketplace.”

A coffee shop or a retail business can raise prices to offset higher minimum wage costs but “it doesn’t work that way in the fresh market,” she says. Horticultural farmers can’t simply charge more because buyers will just go to another source for produce.

In addition to asking for this year’s wage increase to be delayed, OFVGA is working to develop a risk management program for horticulture to be funded by both the federal and provincial governments. With the Ontario government determined to increase wages, Lammens says the association asked officials to help the industry develop a program “that will take the pressure off of us.” The program is being designed to trigger a payment in cases when a farmer’s costs exceed their income.

Labour is just one of the recent increases in production costs growers are facing, Lammens says. Fuel and fertilizer costs are also rising. “Our margins have become so narrow.” BF