By Tom Collins
ST. THOMAS — Western 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.
Sarah Harrison of Mazak Asparagus Farms at St. Thomas says she will have to cut back on the number of employees from six to possibly two. Even though asparagus is only harvested eight weeks of the year, 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. Most asparagus farmers hire off-shore workers (who must also be paid the new minimum wage and be provided accommodation) but Harrison’s farm uses only local workers.
“If we continue to hire six people, we wouldn’t be able to pay the bills,” said Harrison. However, she says the 10-acre farm wouldn’t be able to survive with two workers doing the same work as six. “We have to come up with a whole new way of doing business. What exactly that is yet, we don’t know. There’s no way to mechanize picking asparagus because if there was, we would have done it years ago.”
The organic asparagus farm charges about $4 a pound on average, but says those prices will have to increase because of the minimum wage increase.
“We don’t do this so we can become millionaires,” she said. “Last year, my minimum wage employees at $11.40 an hour made more money than my husband and I did as owners of the business.”
Harrison pointed out an increase to $15 an hour will actually cost her farm more in CPP contributions, employment insurance and Workplace Safety and Insurance Board contributions, which will increase.
The increased minimum wage means that each full-time (40 hours per week) worker this year will cost an employer an additional $5,408, not including additional employer contributions. 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.
Kevin Howe, of Howe Family Farms at Aylmer, said the minimum wage increase will cost his farm an extra $205,000 this year and $290,000 next year. The farm grew 47 acres of strawberries last year, but he plans to bring that down to 30 to 35 acres in 2018. He normally hires 200 to 250 local workers during the peak strawberry harvest season, but knows he will have to cut that back this year. How much is still to be decided. Howe is hoping fewer acres will mean better management and therefore higher yields to make up for the loss of acres.
Even though he projected prices will go up 12 to 16 per cent, Howe said it’s not that easy to pass the cost on to consumers. The farm just can’t raise prices as there can’t be too much of a price gap between his berries and berries shipped from California or Mexico.
“The minimum wage only works if everybody is willing to pay for that price increase,” he said.
The farm also grows pumpkins and watermelons, and has about 35 to 40 workers — mostly foremen and field managers — that work longer than strawberry season. About 15 of them were making more than the minimum wage last year. Howe plans on giving them 20 per cent increases. Someone who was earning $14 an hour last year, for example, would earn $16.80 an hour this year.
“We have amazing employees that have put in lots of years, and that employee that’s making $14 an hour, I know that he deserves more,” he said.
Many farmers, including Harrison and Howe, say they can eventually live with a $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 say.
“We’re not saying people aren’t worth $14 an hour, we’re saying it needed to be brought in slower and give us some more time, not only prepare ourselves, but prepare our customers,” said Harrison.
The bank of Canada said that minimum wage hikes across Canada could cost about 60,000 jobs by 2019 as small business adjusts to handle the cost increase.
A study by the Ontario Fruit and Vegetable Growers’ Association last summer said the minimum wage increase could cost Ontario agriculture $406 million, with $225 million of that tied to the horticulture sector. The Ontario Federation of Agriculture said the increase in minimum wage will hurt Ontario farmers as farmers cannot recoup wage increases by rising prices of their crops.
In a December survey by the Canadian Federation of Independent Business (CFIB), 18 per cent of business owners said they are scaling back their employee benefits to accommodate the wage hike, 28 per cent said they are reducing the number of employees, 31 per cent said they are cutting hours and 50 per cent said they have reduced or eliminated plans to hire young or inexperienced workers. A survey from last July said 34 per cent of Ontario’s small- and medium-sized businesses would consider selling, closing or moving their business outside Ontario as a result of minimum wage increases.
“This whole social experiment is an act of a government that doesn’t appear to give a care in the world as to how their actions affect the small businesses on Main Street,” said CFIB president Dan Kelly in December in a Toronto Star column. “It is a pre-election goodie paid for by your local dry cleaner, coffee shop, and mechanic — not by your government. It’s about election optics, plain and simple. After all, it is easy to play Santa with someone else’s money.”
