By Michelle Sutherland
The impacts of the soon-to-be-implemented $5.00 minimum wage increase will spread across the agriculture sector, but will be felt the most in the factory setting, as well as in the banana industry where prices for products have already been set, Ministry of Agriculture’s Chief Executive Office Servulo Baeza said this week.
“The concerns came from the factories, for instance, who pays minimum wage to unskilled workers,” Baeza explained. “It is more like the factory side as opposed to the actual farm workers. For the banana industry, they indicated that they are already operating at a very slim margin and the price for which they sell the bananas export-wise is already fixed because they work on contract; therefore, they cannot raise the price for the bananas.”
Baeza explained that “they have to look at other ways in terms of how they can try to reduce costs.” He added that it was the banana sector, for instance, that was also advocating for more time to adjust. “However, as you would know, the minimum wage has been on the table for quite a long time, and it not only affects one industry but cuts across all,” said Baeza.
While some of the concerns were difficult to listen to, Baeza shared that despite looking at all aspects, at the end of the day, a commitment was made by the government, and so it had to be honored.
For now, the Ministry, according to Baeza, will be monitoring the impacts that the wage increase will have on the agriculture sector and are committed to working along with them to alleviate any additional pressures that something like this will create.
For instance, they will be liaising with stakeholders to see how best they can work together to keep the cost of production down even as various factors, such as increased prices in fuel and energy, continue to impact that aspect.
“All this will all lead to an increase in the price of production, so we could possibly see a trickle-down effect of inflation. How much that will be, I am not sure because different people will play with their numbers differently. More money in pockets will lead to an increase in demand, and that will result in an increase in prices,” said Baeza.
When we asked him whether he foresees an increase in the price of vegetables, Baeza said that he does not see any because the majority of the vegetables in the country are being produced by cooperatives that represent themselves and work for themselves. However, other factors, such as the increase in prices for fertilizers as well as the price of fuel, along with the demand for vegetables during the holidays, have had a more significant impact on prices.