Cost Increases Erode Ontario's Fruit and Vegetable Growers Competitiveness

GUELPH, ONTARIO--(Marketwired - June 1, 2017) - As Queens Park gathers at the annual "Celebrate Ontario's Bounty" event to promote the good things that grow in Ontario, the Ontario Fruit and Vegetable Growers Association (OFVGA) reacted to the Provincial Government's announcement to raise the minimum wage rate to $15/hour, putting local food production at risk.

"This cost increase, for a sector that relies very heavily on manual labour, is going to further hamper Ontario's ability to compete with food grown in other jurisdictions," said Jan VanderHout, Chair of the OFVGA.

Horticulture is very labour intensive, with labour costs accounting for approximately 60% of annual variable expenses. Ontario cannot compete with other jurisdictions on labour and works hard to compete in other aspects of the sector.

Ontario's fruit and vegetable growers are a unique sector with high labour inputs and no ability to pass those increased costs onto customers - large retailers - who typically set the price for produce. The large retailers have the buying power to purchase produce from around the world at the lowest possible price. Any increase in costs for local food producers cannot be passed on - the sector is a "price taker."

"This new cost increase will directly impact our ability to compete," stated VanderHout. "We should be working with the province to find ways to improve our competitiveness, not impair it," said VanderHout.

Ontario's horticulture industry has an annual farm gate value of $1.5 billion but has been eroded year after year. Ontario's fruit and vegetable growers' margins average approximately 5%. The announcement to move to a $15/hour minimum wage represents more than a 31% increase in labour cost over today's current wage rates.

"This increase in cost will be unsustainable for many of the province's fruit and vegetable growers, which will result in the reduction of the availability of locally produced fruit and vegetables as farms shut down," said VanderHout.

The 2014 minimum wage framework of raising the minimum wage in accordance with the Consumer Price Index gave farmers what they needed - sustainability and predictability. This arbitrary wage increase will threaten provincial food sovereignty.

"We need to find a way to ensure that we have a competitive and sustainable agriculture sector going forward and ensure that we have locally grown food for all Ontarians."

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. Find out more at https://www.ofvga.org/.