February Reality Check

I just spent two full days taking two groups around Albany. The first day they were from the Berry Industry. On the second day, they were primarily apple growers, but they had other tree fruit interests. Each group had budget items to discuss. At every one of my 30 visits we closed with a Q and A about the possibility of new legislative action on the Farm Omnibus issues. Of all the possible issues, the possibility of overtime at any level but most of all 40 hours looms high.

I am not here to cast any negatives on any sector of our industry. The reality is this as I see it. Dairy is locked in a struggle to cover overhead while they continue to out produce demand. They have no legal right to hire foreign workers like the H2A. Overnight, fruit is seeing that its traditional top four varieties are now listed in the back of their consumer’s demand. The rapid decline of demand for Macs, Cortland, Empire and Red Delicious are leaving producers with over 50% of their acreage in a less desirable demand position. Dairy and fruit are the top two categories in New York. I need not list the issues that are present in the remaining crops. Are they important? Cornell studies say apples account for 1.2 billion dollars annually. Regardless of misconceptions by too many New Yorkers, agriculture is a major economic driver we cannot afford to lose.

One quick takeaway that I think is important to mention here. In both Albany and DC we see a huge

Paul Baker,
Executive Director
NYSHS

changing of senior leadership. Albany and DC are having to adjust to a large percentage of new legislators. They are loud and they intend to quickly make their mark. Educating these new legislators is a very new challenge. They arrive, in most instances, with strong convictions. Often times their sources of information are based on perceptions from social media verses facts. So we must defuse these already strong perceptions before we can to move ahead in any discussions.

Here are two examples of what we are facing. In the Senate Veteran Committee there are only two members with any military experience. In the Assembly Agriculture Committee similarly there are only two members with any real agriculture experience. We are seeing committees making policy for us all that have no real world understanding of their respective topics. I have echoed this to you all before. If you decide to not speak, many will fill your absence that have no understanding of your world.

Regardless of what you might think you have heard or hoped for this issue will appear shortly after they complete the arduous budget debates in early April. Perception becomes reality. If you have ever been to either the legislative chambers in Albany or DC you must first pass inspection for security reasons. Trust me when I tell you the ‘weapons of misconceptions’ that are sneaking threw are very dangerous. We must make every effort to continue to be in discussions prior to these legislative floor hearings. I believe, for the most, part people wish the best for each other. Too often however we all may rush to judgment before we truly comprehend the entire topic. We have time between now and the end of this legislative session. I urge you to get involved. It is nearly impossible to get rid of bad legislation. It is often time best served to head it off before it becomes reality.

What is at Stake in the next Year in Albany?

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

Paul Baker,
Executive Director
NYSHS

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.