Ont. minimum wage hike forces greenhouses to think cannabis, automation
Greenhouse growers face 32% increase in costs, says Ontario Greenhouse Vegetable Growers
Greenhouse operators in Ontario say it's a "scary" time to be in the business of growing crops.
Some are considering the shift to cannabis production, implementing more automation or closing altogether.
They blame Ontario's recent minimum wage hike combined with the provincial cap-and-trade program, designed to reduce greenhouse gas emissions while charging those same operations.
"I don't know if there are a lot of businesses that can take that kind of tidal wave hitting them and not be substantially affected," said Joseph Sbrocchi, general manager of the Ontario Greenhouse Vegetable Growers.
Between the minimum wage increase to $14 in January, up from $11.60, and the province's cap-and-trade program, Sbrocchi estimates that's a 32 per cent increase for Ontario greenhouses to absorb in a 12-month period.
"A lot of people are going to be looking at their books and I dare to say they're going to be shocked," said Sbrocchi.
Industry has become 'unstable'
For Gerry Mastronardi, it's now become an "unstable" industry that's "scary" as a greenhouse grower.
His Leamington greenhouse — TG & G Mastronardi — has grown tomatoes since 1987 and employs 64 people with almost all of them at the minimum wage mark.
"This is all going to go back onto the consumer," said Mastronardi. "What was the urgency? It wasn't phased in."
Right now, the only way he can balance the books is by raising prices.
I don't know where we're going to get the extra revenue to pay for all these extra expenses.- Gerry Mastronardi, owner of TG & G Mastronardi
That will be very little, if any, for greenhouse producers since price is driven by the open market. And Mastronardi is competing on a global scale with greenhouses in the U.S. and Mexico that aren't facing these same pressures.
Future is uncertain
"I don't know where we're going to get the extra revenue to pay for all these extra expenses," said Mastronardi. "This year will definitely be the year that will determine a lot of things."
He's decided to put a pause on any future expansion projects, especially since Ontario's minimum wage is rising again to $15/hr in 2019.
The Mastronardi operation has already implemented some automation in recent months, which may now be accelerated because of the minimum wage increase.
"We have done what we can do to date and we're going to sit on the fence right now," said Mastronardi. "We have no intentions of spending any further money until I see what happens with another year under our belt with this minimum wage."
From tomatoes to cannabis?
We have no intentions of spending any further money ...- Gerry Mastronardi, owner of TG & G Mastronardi
To help offset some of those costs, Mastronardi is looking at converting some of his tomato crop into cannabis, which could be more lucrative. He admits there's a lot of red tape involved with growing pot, plus the potential of a saturated market once it becomes legal.
"All of a sudden you have all this extra production, is it going to drive the market down? Are you going to be faced in the same situation," Mastronardi asks himself.
Farmer wants wage subsidies
A farmer in Sarnia wants to take things a step further. Mark Lumley is asking the government for wage subsidies for people in the agriculture industry to offset the minimum wage increase.
"If we could get some assistance in keeping those wages down for our perspective, then we could be able to hire more people instead of being steered toward automation all the time," said Lumley, who is also the past chairman of the Ontario Sugar Beet Growers' Association.
Lumley agrees with Mastronardi about being unable to simply raise crop prices, because growers compete on a global scale.
He referenced the ability for restaurants to simply pass that cost onto the consumer because "locally, everybody is kind of under the same conditions."