Minimum Wage Increase a Cause for Future Pain?

Article by: Hari Yellina

Farmers from a variety of industries have warned that as a result of the Fair Work Commission’s decision to raise the national minimum wage, the price of fresh fruit, vegetables, and meat will rise even more. From July 1, the nation’s lowest-paid workers will earn $21.38 per hour, a rise of nearly $40 per week for a full-time worker. As Australians battle with inflation, unions and social welfare groups applaud the decision, but some primary producers warn that they may be compelled to pass the cost on to customers. Apple grower Ian Cathels of New South Wales said growers were also battling with inflation and rising energy prices. The ruling of the Fair Work Commission, he said, was “another nail in the coffin.”

“The current pricing of fruit and vegetables in supermarkets is merely a reflection of supply and demand [but] it does not reflect the fact that our input costs have skyrocketed.” “We’ve seen significant price hikes in terms of our diesel, which is up 22%, fertiliser, which is up 170 percent, and packaging, which has doubled in price.” “And now we see that labour, which is by far our most expensive input for farmers, has risen.” Anthony, a pig farmer in Bordertown, South Australia, has stated that he will most likely close his operation. “I have pigs, and we’re working for nothing, and our costs are increasing up and up and up, day after day.”

“People who complain about lettuce prices should get used to it since we growers can’t keep working for free. “With this factored in, everything else we feed the pigs is going to become more expensive. “I’m thinking I’ll be removing the pin by Christmas… It’s not going to be worth it,” he stated. Emma Germano, president of the Victorian Farmers Federation, said that growers would have no choice but to pass on the rise. “People are asking, “How come iceberg [lettuce] is $12 a head?” at the same time. If this type of blunt instrument is employed to put up wages, it will end up at $13 per head.”

Professor Simon Maddocks, the chair of Primary Producers South Australia, believes the minimum wage hike is necessary. “I think everyone understands that with rising cost of living constraints, there was obviously going to be some demand for good wage movement,” he added. “Some form of decision to address wage levels in the country was inevitably going to be made.” Farmers, on the other hand, are correct to be concerned about how they will pay minimum wage agriculture workers, he said. “From the standpoint of a primary producer, rising fuel costs, labour constraints, and increased input costs will merely add to the pressure on production costs,” Mr Maddocks said.

“The pragmatic reality is that these input costs can’t only be absorbed at the primary production end of the firm; they’ll have to be transferred down the chain.” “I believe it is unavoidable.” He predicted that the decision will put even more pressure on businesses already struggling with rising manufacturing costs as a result of disrupted global supply chains. “But it will have to be rolled down the line to customers at some time,” Mr Maddocks said. During peak season, Bundaberg macadamia and avocado grower Joe Lyons employs roughly 14 people, six of whom are full-time and the rest are casuals. He said he’d wait to see how the judgement affected award rates because many of his employees were already paid more than minimum wage.

“We need to wait for the award wage to come out [then] we’ll look at our levels,” Mr Lyons said.”As the grower, we’ll just basically absorb these costs as best we can [but] not all growers are going to be able to do this. “You also have to remember we’ve lost piece rates, and we also have superannuation that’s going up 4.4 per cent as of July 1 as well.”