Mindset of Agriculture Today While we Await the Outcome of Senate 2837
I thought it might help to hear what is on the minds of Agriculture in New York today. As the Director of 3 farm boards, I receive, on a daily basis, calls from farms asking me to project the outcome of this legislation. Nature does not allow these farms to set everything on the back burner and await the final outcome. They must make real world decisions today that may or may not really be in their best interest depending on this piece of legislation. Here are a few of those decisions/questions;
Should I put my farm up for sale today before this Bill becomes a reality? There is little question that land values will take a dip if this Bill passes. I know of large farms that have in fact sold or have placed their farms up for sale before land values fall.
What about investing in new land, equipment, storages, employee housing both new and improved are just a few of the questions that are on hold.
Should I return my seed/trees for a credit or plant it? I am unsure if I will be able to afford the labor cost later this year.
I actually have dairy farms that are slaughtering new calves because they cannot afford to feed them under current economics. Just meeting current bills is an impossible task. If this Bill passes as currently drafted they see no path forward.
Estate planning? How do we plan for tomorrow not knowing if we can survive the future costs here in New York? Young farmers are looking to other careers.
How do I craft contracts for 2019 if I cannot project my labor costs?
Time to lock in on seasonal recruitment of my labor for 2019. Can I sign a work order if I do not know the terms for myself or my employees? H2A agreements need to be crafted and advertised. If I limit my men to 40 hours will I be able to attract my experienced labor to my farm?
Most every farm at this date is locked into the 2019 crop. They are very uncertain as to the rules of employment and what this will mean for their operations. Nature will not wait. Crops need to be set in a timely basis to meet harvest before the frost of winter arrives. Overhead dictates farms must move forward. The costs of not doing so would be equally damaging.
I understand that we need to ensure that every employee is protected under the rules of fair labor. I see this discussion having huge long term effects on the state economy. We are in the midst of annual minimum wage increases here in New York. Due to the chronic lack of New Yorkers who will work on farms we must recruit from outside our state borders and often from outside our national borders. In order to manage our farms the reality is we must attract workers to our State. Farms, out of necessity, are using the federal program H2a.
Farms this year will have no choice but to accept the final language of this legislation for crop year 2019. The real impact will come as soon as crop year 2020. Once the true cost of labor is known, farms will drastically shift into new farming practices. If they see that they cannot pass on the new labor costs they will lose their markets. Traditional crops will have to be reassessed as to their feasibility. In short, agriculture will have no choice but to take on a whole new look. Only time will tell if this look is good for both farms and their employees.
No one has a lock on tomorrow. We each can offer our most sincere educated estimate about the future. We must try to stay within our known borders and then project what could possibly happen. With total 100% certainty the political climate in Albany in 2019 will be changed. We know for certain that all three chambers now rest comfortably within one party. This makes passage of party programs significantly easier to obtain. Based upon the history of the last decade, it is safe to assume new legislation will be offered up that will significantly impact our industry. The question yet to be decided will be whether we can withstand these revolutionary changes?
The most obvious issue that will be facing NYS agriculture will it be mandated, like all other segments of labor, to pay employees on a 40-hour work week and pay time and a half? Collective bargaining is also of concern. For today let us simply look at time and a half on a commercial fruit farm. To do this we will make a few assumptions. We will assume that for this farm to maintain a credible work force that they are in the H2A program. Last year the adverse effect wage rate was $12.83. We do not know the new one but it most likely will be in the range of $13 plus. For today I will use last year’s rate. For my calculations I am going to say harvest was 10 weeks. I am going
to say the farm employed 50 workers. The average work week in harvest was 60 hours. In 2018 then that farm had a weekly hourly outlay just for harvest wages of $38,490. (60 hours X $12.83= $769.80 per employee. Now X 50 employees = $38,490 per week). This, of course, does not consider State unemployment and workers comp related costs. If we now do the same exercise at time and a half for this same farm, we see his direct costs rise to $2 shy of $900 per man per week. So, his new payroll will be up (40 hours X $12.83= $513.20 plus 20 hours at $19.25= $385). So, the new weekly pay check will be then $898.20. Same crew and not one extra bushel harvested. This farm will then have a weekly payroll of harvest employees alone of $44,910 plus other employment charges (50 employees X $898.20= $44.910).
For our simple example, Fruit Farm X has an increase of $6,420 per week ($44,910 – $38,490 = $6420). Now over 10 weeks we see an increase to harvest employees alone of $64,200. Same production.
The NYS minimum wage in 2019 is $11.10. This is $3.85 above the federal minimum wage. If you are in H2A you are paying $5.58 above the federal minimum wage. Farm wages are not by any means the lowest in the land. They greatly exceed the average small business sectors up and down main street. We need to make this point. Each farm employee creates multiple off farm jobs in NYS. Clearly NYS fruit farms cannot remain competitive if they must absorb these new estimated charges. A compromise must be reached, or we will see NYS forever altered. I remind everyone of the stark reality that once a farm operation closes its doors it never returns. Are we ready to see this radicle change in our State? Now is the time for everyone to get concerned. Currently, we have not seen the legislation we did our math homework on in this State. Today is not too late to begin a very serious debate.
I am asking each of you to rethink all the issues. As farmers, we are not immune to annual changes in weather, technology and markets. It comes as no surprise to anyone that labor availability is tied to higher wages. Agriculture in NYS is tied to a very high usage of labor. We are not an Iowa corn-based economy. As the new year arrives each of you need to educate yourself on all levels. Take advantage of educational programs such as the Becker Forum coming in January 2019. Reach out to your respective NYS legislators and have a discussion with them as to what is at stake. Support the efforts of your respective organizations that are presenting logical debates to many of these proposals. If you fail to speak, I assure you this void will be filled by voices that have no real skin in the game. Action will occur. I encourage you to be a part of it.