Should farmers have to pay into Ontario’s pension plan?

By Tim Alamenciak - Published on October 5, 2015
farm tractor
Can farmers afford to pay employees a pension? First in a week-long series on food and labour.

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When Don McCabe sells a soybean from his farm, he tabulates the cost. Seed. Water. Gas for the tractor. Gas for the harvester. Wage for the employee. Benefits for the employee.

Every bean has its costs, McCabe says.

The Ontario Retirement Pension Plan, announced this year, is set to be another one .

McCabe, who is currently president of the Ontario Federation of Agriculture, says it’s not appropriate for farmers to be required to pay into the pension plan because many rely on migrant labourers, who may not retire in the province. Many small farmers are also self-employed, and use their farms as a pension fund.

“The issue hits our horticulture sector the largest because they're the ones who hire the most labour at the farm gate,” says McCabe. “When you add another cost to the farm gate, it has to be absorbed again in another way.”

The newly-announced pension promises a plan for every worker by 2020. Companies and employees can be exempt if they can prove there is another qualifying pension fund, but otherwise every employer must participate. The rollout will begin with large companies—which the government defines as more than 500 employees—in 2017. The pension plan will be funded by a contribution of 1.9 per cent of income by the employee and matched by the employer. Wages for workers brought to Canada under the Seasonal Agriculture Worker Program vary depending on the type of farm, but range from $11.25 to $15 per hour in Ontario.

The OFA has argued that a pension paid to some 20,000 workers brought here under the Seasonal Agriculture Workers Program will be spent outside the province. They also argue that many farmers invest in their farms as a form of pension, using the sale to fund their retirement, and that this falls outside the scope of pension plans as defined by the government. They argue that the money a self-employed farmer spends on their own pension might sometimes be better spent investing in the farm. McCabe says the OFA is still in talks with government, but according to an official spokesperson for the minister of finance, steps have already been taken to help small businesses cope, including the multi-year rollout, and temporary workers will be required to participate in the plan, though there are still ongoing evaluations.

“The government continues to examine unique workplace arrangements, including temporary foreign workers and seasonal agricultural workers,” says Clancy Zeifman, spokesperson for associate minister of finance Mitzie Hunter. “Temporary, seasonal, part-time and contract workers, including farmers, will generally be required to participate in the ORPP if they do not participate in a comparable workplace pension plan.”

The province says the pension plan will benefit the economy and has committed to releasing an economic analysis by the end of the year. The plan still has a number of logistical hurdles, the most significant of which is that the Conservative government has refused to co-operate, meaning the administrative burden falls solely on the province.

Sylvain Charlebois, professor at the University of Guelph’s Food Institute, says the agriculture sector is no different from other sectors that are included in the plan, and an exemption could prompt other trade groups to request the same.

“Thinking that agriculture is always different from an employer-employee perspective may not be the way to go, because people are people and risks are risks,” says Charlebois.

Increasing the cost of human labour could spur innovation, he says.

“If you increase the cost per employee, you may actually entice farmers to think about technology in a different way, like drones, technology in the field, investing in technology—and that's never a bad thing. You could actually make agriculture much more effective,” says Charlebois.

McCabe says the change will result in the hiring of fewer migrant workers—an argument that Chris Ramsaroop, spokesperson for Justicia 4 Migrant Workers, disputes.

“Similar arguments were made around the minimum-wage increase. They said there would be major job losses, less workers—that hasn't happened,” says Ramsaroop.

He says that though many farm workers stay in Ontario eight months of the year, some have been coming to Canada for 30 years under the seasonal worker program, often to the same farms. A natural evolution, says Ramsaroop, is to extend them the same benefits as other workers. “We see a consistent theme from the employer organizations—they want to depress wages, they want to cap the labour force and they want to create an agricultural industry that reflects the 18th or 19th century and not a modern agricultural system that reflects the 21st century,” says Ramsaroop.

Who grows, sells and cooks your meals, and how can their jobs be made better? Each day this week, TVO.org will explore an issue on the intersection of food and labour in Ontario.

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