February 2019 - 50

AG LABOR REVIEW
Isn't that the truth? Versatile industry adapts
MICHAEL MARSH
President & CEO
National Council of Agricultural
Employers
Michael@ncaeonline.org
John Kennedy once said, " The
farmer is the only man in our economy
who buys everything at retail, sells
everything at wholesale, and pays the
freight both ways. "
Isn't that the truth?
And that's clearly why when farmers
and ranchers have increased costs of
doing business that can't be recouped,
it places their legacy family operations
at risk. It's unfortunate this reality is
something the anti-farmer crowd can't
wrap their heads around and don't
seem curious enough about it to try.
Take, for instance, what transpires
on the farm or ranch and in its balance
sheet and income statement when the
business receives a mandated increase
in wages that must be paid to employees
under a government program. Let's
think about what happens.
American farms and ranches
compete for market share and price
globally. Consequently, prices for
commodities produced in the U.S.
are correlated to prices paid for the
identical commodities produced
outside our borders. The price paid for
crops planted, raised, watered, tended
to and harvested in the U.S. must
compete on a price basis with the same
crop produced in another part of the
world. And it doesn't matter what the
crop might be.
Wheat produced in the U.S. and
sold into the South Korean market
must compete with wheat produced
in Australia. Strawberries produced
in Mexico and sold in the U.S.
compete directly with strawberries
produced here. Milk produced and
made into cheese in America and sold
in Morocco is in competition with
cheese made in Holland. And so it
goes for all crops.
Consequently, when an additional
cost is imposed on an American
agricultural operation such as a
mandated worker wage increase, the
impact to business profitability is
profound. Contrary to anti-farmer
activists, costs cannot be shifted
upstream. If a U.S. farmer tries
increasing the price to his buyer to
keep his operation whole, they lose
their market to either a domestic
competitor with a more favorable
cost profile or worse, to a foreign
competitor. That negative net income
effect erodes the family farm or ranch
balance sheet and rebuilding lost
equity is hard to do.
President Kennedy had it right.
Keeping American farmers and
ranchers farming and ranching is the
reason the Executive Committee of
the National Council of Agricultural
Employers (NCAE) asked the
secretaries of Agriculture and Labor
to not utilize a USDA wage survey
that would jump 2019 wages for
agricultural workers by an average of
over 6 percent for 2019. Employers
in some states would experience an
increase of more than 22 percent.
That's not a typo.
These huge increases would also
come at a time when U.S. farm and
ranch families are being crushed by
unfair retaliatory tariffs and when,
according to the Bureau of Labor and
Statistics, all wages across the U. S.
increased by 2.8 percent.
Keeping family farms and ranches in
business is also the reason that NCAE
has been asking members of Congress,
Republicans and Democrats, to
support Senator Thom Tillis, R-N.C.,
as he tries to advance a proposal to
implement a short-term hold for wage
rates for the 2019 growing season.
This would provide a window for the
departments of Labor and Agriculture
to develop an improved system
offering an accurate and marketbased
assessment of adverse effect and
create the most effective mechanism
to address it. 2019 could be another
tough year for U.S. agriculture. Spiking
costs on farmers and ranchers is a
losing proposition only making a
tough year tougher. FGN
50 | FruitGrowersNews.com
http://www.FruitGrowersNews.com
February 2019

Table of Contents for the Digital Edition of February 2019
