By Tom Collins
LAKEFIELD — Eastern Ontario fruit, vegetable and berry growers are raising prices and cutting back on employees due to the province’s minimum wage increase.
The province jacked up the minimum wage from $11.40 an hour at the start of 2017 to $14 an hour starting Jan. 1, 2018. The minimum wage will increase again to $15 an hour on Jan. 1, 2019.
Erin McLean helps run McLean Berry Farms at Lakefield, north of Peterborough, with her family. They grow 17 different crops, including maple syrup, blueberries, pumpkins and sweet corn, and also have two pick-your-own strawberry locations. Because of the minimum wage increase, the family is considering converting one of the strawberry farms from pick-your-own to pre-picked to cut down on labour costs. They may also have to raise prices by 10 to 15 per cent on most food they sell.
McLean said there’s a delicate balance when it comes to raising prices. They can’t price themselves too high because consumers will simply switch to crops from Mexico and the U.S. found in the grocery stores. Plus, if other Ontario farmers keep their prices down, McLean’s will lose business to other local farms.
“It’s a hard spot to be in, but our costs have to be covered, and that’s just the reality of us continuing to farm,” she said. “At the end of the day, we have to charge what we have to charge to make ourselves financially sustainable.”
The farm usually hires up to 50 workers from March to October. Last year, it had 18 migrant workers, but will only have 15 this summer. About 50 per cent of the farm’s costs are labour. McLean also expects to see higher input costs starting this year as the minimum wage increase forces other businesses to raise their prices.
The increased minimum wage means that each full-time (40 hours per week) worker this year will cost an employer an additional $5,408 per year, not including additional employer contributions for Canada Pension Plan and employee insurance. On the other hand, an employer who lays off three full-time minimum-wage-earning employees for six months would save about $44,000 this year.
The Bank of Canada forecasts 60,000 fewer jobs in Canada by 2019 because of the minimum wage hike.
Foreign workers are also included in the new legislation. Farmers not only have to pay foreign workers the new minimum wage, but employers also need to pay for accommodations and flights (although the employers recover $447 to $457 per flight for workers from the Caribbean, and $543 to $548 for Mexican workers).
Paul Greer, of Green Ridge Farms at Wellington in Prince Edward County, is Eastern Ontario’s only full-time asparagus farmer. Even though asparagus is only harvested eight weeks of the year, off-shore labour is a necessity and a big expense. A worker sits low to the ground on a motorized cart, and using a knife, cuts the asparagus by hand as the cart moves slowly across a field. The workers also package the asparagus by hand.
Greer, who hires 15 Jamaicans each year, figures he would need to increase the price of asparagus from $3 a pound to $3.32 a pound to make up the difference in minimum wage. The asparagus yields about 3,000 lb an acre over 60 acres.
“We need to get our tonnage up to stay competitive and in order to make it viable,” said Greer, who sells the asparagus at the farm gate and to the food terminal in Toronto. “That 32 cents a pound is going to have a huge impact on our profit margin. The stuff we will send to the food terminal, we don’t set the price on that. We basically take whatever the market is that day. This is the frustrating thing.”
To save on wages, Greer plans to purchase an automated packaging line within the next couple of years. One of those machines can cost $25,000 to $100,000.
David Phillips of Avonmore Berry Farm at Avonmore normally hires 38 employees for the summer, 10 of them offshore workers. He already knows the farm will hire fewer employees this summer and raise prices, but he hasn’t yet figured how much of either.
“We have no choice,” he said. “We work at very slim margins.”
With the Quebec border only 45 minutes away from his farm, and a minimum wage there of $11.25, Phillips knows there will be some customers who will cross the border since Quebec crops will be cheaper, and other consumers who will shop at grocery stores where food imported from Mexico and the United States will always be cheaper.
“We’re going to have to sell our product on quality,” he said. “That’s the only edge we have.”
Many farmers, including McLean and Phillips, said they can live with the $15 minimum wage. It’s the speedy implementation that is causing distress. The increase would be more palatable if it were phased in over a five-year period, they said.
“It’s just so much, so fast,” said McLean. “We understand people need a living wage, but for it to happen so quickly with very little time for us to prepare and to mitigate some of the effects is challenging.”