Study illustrates impact of minimum wage on horticulture sector
A study on the impacts of the planned minimum wage increase in Ontario has been completed by Agri-Food Economic Systems for Ontario Fruit and Vegetable Growers’ Association (OFVGA) and our members. The results of the study, titled “Understanding the Significance and Impact of the 2018-19 Minimum Wage Increases for Ontario Fruit and Vegetable Growers” shows that the costs of such a dramatic increase in minimum wage could cost Ontario agriculture $406 million, with an estimated $225 million in costs just to horticulture.
The $225 million increase to fruit and vegetable farm expenses is an important cost for the province to consider. When you compare the average salary expense increase with the average operating earnings of farms in Ontario, the discrepancy is massive. The study shows that normal salary expenses have sat at 65 per cent of operating earnings, making it the highest on-farm expense. Extremes have seen it rise as high as 79 per cent in 2010. However, the increase of minimum wage will push salary expenses to an average of 90 per cent of operating earnings in 2018, decimating profit margins for growers. In 2019, with the full roll out of the program, an average of 100 per cent of operating earnings or more will be used to fill the gap created by such a drastic change in minimum wage.
The May 31, 2017 announcement by the Office of the Premier would see a 31.6 per cent increase in minimum wage from $11.40/hour to $14/hour by January 2018 and $15/hour by January 2019.
OFVGA members are encouraged to get in touch with their local Members of Provincial Parliament (MPP) to discuss how an increase in minimum wage will affect labour, businesses, and access to local Ontario produce for consumers across the province. OFVGA has also drafted a template letter that growers can use to address these issues with local government, highlighting that fruit and vegetable growers are price takers in this market and losses to their margins cannot be recuperated in sales.
The Ontario Fruit and Vegetable Growers’ Association (OFVGA) advocates for the sustainability of fruit, vegetable and greenhouse farmers as a nationally recognized not-for-profit association. The edible horticulture sector supports 30,000 farm-based jobs in Ontario, as well as a further 8,700 jobs specific to horticulture and specialty crops. More than 125 different fruit and vegetable crops are grown in Ontario.
For more information, please contact:
OFVGA Executive Director