On April 26th, 2019, Northeast Agribusiness and Feed Alliance (NEAFA) President John Clark addressed the NYS Senate Labor and Agriculture Committees on the topic of the farm labor, Senate bill 2837. Clark took the opportunity to inform the gathered senators about NEAFA, its mission and its constituents, which include central New York members Bailey’s Feed in Boonville, Brown’s Feed in Frankfort, Louis J. Gale and Son in Waterville, Gold Star Feed and Grain of Sangerfield, and Lutz Feed Company in Oneonta. “We all have deep roots in the farming community, and we know that without a viable, profitable production sector, none of our agri- businesses would exist,” said Clark. “Therefore, NEAFA is here today to stand with the farming community, in strong opposition to S.2837, and implore you to find a path forward that effectively addresses the economic realities of New York’s farming sector. No state policy that attempts to address the issues identified in Senate bill 2837 will be successful unless the policy effectively respects and addresses the economic impacts to New York farmers. Absent a win-win solution, Senate bill 2837 will alter the face of agriculture as we know it in New York State.”
Dairy farmers represent the largest sector of New York’s agricultural industry. Nevertheless, this industry produces a commodity, raw milk, and therefore dairy farmers are price takers for their commodity. The price for raw milk is formula driven and farmers do not know what they will receive for their milk until several weeks after it has been shipped to the milk processing plant. The economics of commodity milk production are extremely tough due to a worldwide surplus of production. Currently dairy farmers are struggling to remain profitable due to an extended period of low milk prices and dairy economists do not forecast a significant improvement in milk prices to dairy farmers anytime soon.
“The agribusiness community stands with the production sector in strong opposition to collective bargaining and mandatory overtime as prescribed in S.2837,” said Clark. “We know how economically devastating this legislation will be if passed into law.” According to the Northeast Dairy Farm Summary and Cornell PRO-DAIRY, feed purchases represent the largest expense on New York dairy farms. In the agricultural industry, feed manufacturers particularly, extend significant amounts of credit to dairy farmers to help them manage their expenses. The current dairy farm economic stress has imposed significant levels of outstanding debt onto feed mills, creating a stressful relationship between farmers and their feed supplier. This economic reality reflects the seriousness of current conditions that will only be made worse should overtime over 40 hours per week, 8 hours per day be mandated.
Clark also highlighted the Farm Credit East report assessing the economic impact from this proposed legislation. According to their analysis, this legislation will decrease net farm income on NY dairy farms by 40 percent. If the 40 hour per week, 8 hour per day overtime were mandated on dairy farms over the five-year period between 2013 and 2017, the increase in labor costs would have exceeded the average net income for those years. The impact of the increased labor costs could be enough in some cases to move some farms from positive net earnings into a loss situation.
New York’s farmers are competing with other states, such as Pennsylvania and Vermont, that do not mandate overtime payments and collective bargaining. New York is already an economically challenging place to milk cows due to high business costs driven by property taxes, environmental regulations, high minimum wages among other factors. “Time and a half will be the factor that renders New York to the category of ‘no longer economically viable’ for milk producers,” said Clark. “And the ripple impact will be felt throughout the communities of upstate New York. Rather than establishing policy to better farm worker opportunities, this bill could strike at the heart of New York’s agricultural industry and eliminate jobs or reduce income for each job that is offered.”
The impact of a mandating overtime pay in New York may shift agriculture in several ways. Labor intensive agriculture operations could shift to agricultural enterprises that are less labor intensive, such as dairy production shifting to grain or hay production. Farms may transition to multiple shifts of workers to avoid the overtime mandate, thus forcing farm workers to reduce their weekly income. Technology could substitute for workers and an overtime mandate will incentivize farmers to invest in robots over humans. In all these examples, farm workers lose job opportunities.
The ripple effect onto the rest of the agriculture economy is obvious. Businesses like feed mills, seed and fertilizer suppliers will experience a reduction of business, thus imposing job reductions and less economic activity in local communities. The threat of an overall decline of the upstate economy, due to mandatory overtime, is real and obvious to those in the industry.
“Senate bill 2837 will clearly make a significant difference on the future of New York’s agriculture industry,” said Clark. “As it currently stands, it will dramatically alter the course and future of our industry. I strongly encourage you to heed the warnings of the agriculture community. They are not hollow threats.”
The Northeast Agribusiness and Feed Alliance is a 300 member organization committed to supporting a thriving northeastern agricultural community through advocacy, education, and collaboration. Members of the Alliance include feed, seed, fertilizer companies, financial service providers, transportation companies, veterinarians, nutritional services providers, and professional advisors.