Wage hike spells disaster for growers

Monday, November 23, 2009

by SUSAN MANN

Ontario’s horticultural industry will face a catastrophe if the provincial government doesn’t offset next year’s planned minimum wage increase, concludes a report commissioned by the Ontario Fruit and Vegetable Growers’ Association.

The wage is set to go up by 75 cents an hour in March 2010 to $10.25 from the current rate of $9.50. It will be the third year of annual increases that started in 2008. That’s about a 28 per cent increase over a three year period and will cost growers an extra $73 million annually once the increases are fully implemented.

“The minimum wage increase artificially piles sharp labour cost increases on an industry that is already struggling,” it says in the report conducted by George Morris Centre research associates Al Mussell and Claudia Schmidt. The Centre, a Guelph-based independent agri-products think tank, published the report Nov. 19.

Increased labour costs decrease farmers’ profitability, particularly for those growing crops where there aren’t alternatives to manual labour, such as peaches. According to the report, a 28-per-cent increase in manual labour expenses decreases profitability by almost 50 per cent.

The researchers note grower eligibility for stabilization funding will also decrease significantly.

Association CEO Art Smith says farmers aren’t opposed to minimum wage increases: “What we’re opposed to is having it on the backs of the farmers who don’t have a mechanism to recover those costs.”

To offset the wage increase, Mussell and Schmidt recommend the government implement two types of compensation programs – one to offset losses in net income and the other to compensate for lost risk management program eligibility. BF