The Ulster Farmers’ Union has warned that supermarkets will need to pay more for vegetables if farmers are not to be squeezed out of existence when the new living wage based minimum wage comes into play in 2017.
Retailers have already slashed margins for local vegetable growers and UFU deputy president, Ivor Ferguson, says that with wages up to half the operating costs for these businesses any increase could only be sustained if it was reflected in higher prices.
“We are not against people being paid more, but the margins are not there for farmers to pay higher wages,” said Mr Ferguson, adding that per hour worked many vegetable farmers would not now be receiving a living wage for their efforts and investment in their business.”
“Supermarkets have said they will face pressure on their margins when they have to increase wages. Our worry is that they will try to recoup this by further squeezing suppliers. That would simply drive local vegetable producers out of business,” said Mr Ferguson.
He added that a particular concern was that farmers would get hit from two sides – lower prices from supermarkets to help them meet higher wage bills, and at the same time higher wages to pay on the farm.
“That would be an impossible squeeze for farmers – they would simply have to go out of business and instead of relying on local suppliers, customers would have to depend on less fresh, imported produce,” he said.
The UFU says the government’s decision to boost the minimum wage has to be better thought out. It says that while some employers might be in a position to pass on the extra cost to their customers this is not the case for vegetable growers or farmers in general.
“Growers are already operating at a loss because of price pressure from the supermarkets. They cannot mechanise operations to reduce labour costs, so that means either consumers and supermarkets accept the need to pay more to reflect higher wage bills, or farmers will have to go out of vegetable production,” he said.
Mr Ferguson stressed that this was not a case of crying wolf or of farmers trying to get out of paying their staff more.
“Farmers would love to be in a position to be more generous but they are not. There is time before this legislation comes into force to recognise the realities of higher costs. That needs to begin with supermarkets paying farmers a living price for their crops, before they can pay a living wage to hard working employees working in all weather conditions,” said Mr Ferguson.
Meanwhile, in the Republic of Ireland, Fianna Fáil agriculture spokesman Eamon Ó Cuív is also calling for farmers to receive sustainable prices. He believes that Ireland’s farm minister Simon Coveney ‘dropped the ball’ in this regard when he was to the fore in settling the last CAP reform deal.
He said inflation and increased compliance costs will serve to reduce the real value of the new CAP payments over the next five years. Ó Cuív believes that the issue of fair prices for farmers must now be tackled on an EU basis.