The Liberal government’s minimum wage hike will cost Ontario fruit and vegetable growers $297 million over the next two years.
The impact on the industry was calculated by professional consultants and presented to all levels of the provincial government, but Premier Kathleen Wynne, Members of Provincial Parliament (MPPs) and senior bureaucrats chose not to listen, says Ken Forth, chair of the Ontario Fruit and Vegetable Growers’ Association’s (OFVGA) labour section.
Over the last six to eight months the organization presented the government “with all the data they needed” to understand the crushing impact on the horticultural sector, explains Forth, but they ignored it. Now, like many industry sectors wrestling with the affect of the Jan. 1 hike, which increased the minimum wage to $14 per hour, the province’s fruit and vegetable growers are also struggling to absorb the added cost. The rate will rise again in 2019 to $15.
“We would like to pay our people as much as we can, unfortunately our prices are determined by the major chains and they tell us what we receive,” says Forth.
That price is based on what it costs major chains to import produce from the U.S. and countries like Mexico. In the case of Mexico, where workers are typically paid $6 a day, labour rates are 14 times lower. “We either match that price coming out of Mexico or we don’t get the business,” says Forth.
A broccoli grower near Hamilton, Ontario, Forth employs about 20 people on his farm and estimates that the wage hike will add $100,000 to his 2018 wage costs.
“That will be devastating…. Margins are real close in this industry and if we don’t see a bump in the price of our product we’ll have to make some other decisions at the end of the year.”
In this interview, Forth explains that growers have few options when growing a labour-intensive crop. He says many jobs on the farm “won’t get done” and there will likely be significant rationalization in the industry. He wonders about the future of locally grown fruits and vegetables in this province.
About 125 horticultural crops are grown in Ontario. Forth believes growers will be forced to reduce the number of crops they grow. “There will have to be rationalization of the business one way or another.”
In a year-end interview with RealAgriculture, Ontario agriculture minister Jeff Leal said his government understood the impact the wage hike would have on the sector. That’s why his government has ear-marked $60 million over the two years to help the sector adjust. Forth is thankful for Leal’s efforts, but he says the program is just not enough.
“Our study shows that over a two-year period, [the wage hike is] going to cost us $297 million…you do the math.”
Forth believes his organization has done its best. Now growers must focus on how to survive a Liberal government program that increases wage costs 24 percent this year and will add another eight percent in 2019.
Forth says the weather used to be the number one thing fruit and vegetable growers in the province worried about, but things are different now. “We’re not worried about the weather so much, but all farmers worry about the government because everything seems to be so irrationally done.”