Some are decreasing their acreage and workforce to offset the additional costs
By Diego Flammini
Three days into 2018 and Ontario’s horticulture industry is adapting its 2018 growing plans to accommodate a higher minimum wage.
On Jan. 1, Ontario’s minimum wage increased from $11.60 per hour to $14 per hour.
And in a labour-intensive industry, that $2.40 per hour raise is causing some fruit and vegetable producers in the province to scale back their operations.
“We’re expecting there to be about a 25 per cent decrease in overall acreage,” Kevin Howe, a member of the Ontario Berry Growers Association, told Farms.com today.
Howe grows about 400 acres of pumpkins, watermelons, strawberries and sweet corn in Aylmer, Ont. He employs about 400 people each year to help with harvest.
But Howe estimates he could cut production by 30 per cent and reduce the number of employees to offset the additional wage costs and potential profit loss.
“We have to be cost-competitive with all of the imports,” he said. “Last summer, consumers could buy a quart of imported strawberries for $1.87, so some growers even had to dump their products. We’re unable to tax or limit any imports so we’re on the open market as price takers.”
Other members of Ontario’s horticultural industry are also concerned about the increased minimum wage, especially as it’s set to jump to $15 per hour in 2019.
“Profit margins for growers are already in single digits and 60 per cent of their total input costs is labour,” Alison Robertson, executive director of the Ontario Fruit and Vegetable Growers’ Association, told Farms.com today. “As of Jan. 1, input costs went up and they’ll more than likely go up again next year.”
The cost to consumers would be low for producers to remain competitive with imported goods, she says.
“We ran a competitiveness study last fall and found that growers need an increase of a few cents per pound of apples and an increase of less than 20 cents per melon,” she said. “Would a consumer notice that kind of increase? Maybe not. But would they pay it knowing the food was produced locally and safely? I would say so.”
Some growers, Robertson said, are considering different crops or transitioning to a cash crop operation.
“You can’t become a grain farm tomorrow,” she said. “Especially when you have an apple orchard or a peach orchard. It’s going to be a bit of a struggle going forward.”