Keeping the California Dairy Industry Afloat

The Necessity of Keeping the California Dairy Industry Competitive

 

By Brian German, Associate Broadcaster

 

 

Anthony Raimondo, an attorney with 15 years of experience working with farmers and farm labor contractors, is concerned the California government is placing the state’s agricultural industry at an economic disadvantage compared to other states. Raimondo used the California dairy industry as a prime example in which arbitrary in-state legislation is giving other states an advantage.
dairy cows

 

“The state government tells the dairy farmer how much they get to charge for milk,” explained Raimondo. “They have now raised minimum wage and overtime, with AB-1066 becoming law, but they do not tie any of that [added cost] to the milk price. Farmers will lose money,” he said.

 

“The California dairy industry is still fighting to be a part of the USDA’s Federal Milk Marketing Order (FMMO),” Raimondo continued. “But until that happens, the added costs are causing many California dairymen to weigh their options.”

 

Increasing government regulation is making it difficult for California dairies to compete with other states, Wisconsin in particular. Raimondo elaborated, “For many years, Wisconsin’s milk production was on the decline and California’s milk production was on the rise; that trend has now reversed. Wisconsin is now on the rise again and California is on the decline because our dairies can’t make it with the level of regulation and the level of cost,” he said.

 

“Some dairies have reduced hours to keep costs low,” said Raimondo. “Other dairies are closing either because they are going out of business or because they are moving to places like Idaho and Texas where the milk price is better and the cost profile is more favorable.”

 

The move to a FMMO would help even the playing field for California dairies. Raimondo warned there is a lot at stake if nothing is done to lower milk production costs in the number one Ag state. “We are going to lose a segment of agriculture that is 100% family farms. Family farming is one of those things that is precious to our state, and it can’t be brought back once it’s gone,” Raimondo said.

Ag Leaders Discuss AB 1066 Consequences

Ag Leaders on AB 1066 Consequences

By Patrick Cavanaugh, Farm News Director and Brian German, Associate Broadcaster

California ag leaders hoped that Governor Brown would see how the AB 1066 overtime bill would actually hurt farmworkers and veto it. Now that the Governor has signed it, the following ag leaders weigh in on AB 1066 consequences: Norm Groot, executive director of the Monterey County Farm Bureau; Bryan Van Groningen, field manager for Van Groningen & Sons Farms; and Anthony Raimondo, a Fresno-based attorney who has been representing farmers and farm labor contractors for over 15 years, among them.

Norm Groot

Norm Groot anticipated, “The end result of AB 1066 is a big move to mechanized harvesting, which probably means a change in some of the crops that we’re growing here simply because currently we can’t harvest lettuce or strawberries or some of the other vegetable crops by mechanized means. Lawmakers are forcing the hand of the growers to move into crops that are less labor intensive and thus, save the [labor] cost,” said Groot.

Groot noted the inaccurate AB 1066 assumption—that an increase in overtime hours and pay will result from its passage. “We will probably see their hours cut back to the eight hours a day and forty hours per week,” he explained, as stipulated in the law. “Growers will adjust their planning schedules to the amount of laborers that they think they have available for harvest. It’s not an automatic given that we’re going to see all these paychecks increase, simply because we’re putting overtime at more than eight hours a day or after forty hours a week,” Groot said.

Groot added that farmworkers are not in favor of losing 33% of their income at this point. “I think overall, the unions have been supportive of this particular change, but the unions do not represent the majority of the laborers or field workers at this point,” he said.

“I think if you were to ask the average field worker whether he wants to work ten hours a day and sixty hours a week, he would probably say yes. Field workers want that income. They know they work in a seasonal business; they have to earn their income when they can,” he explained.

Bryan Van Groningen

Bryan Van Groningen
Bryan Van Groningen

“Our farmworkers, our employees, love to put in the extra hours because this is the time that they’re making wages. Our company is accustomed to paying overtime if that’s what it requires,” said Van Groningen, “and the majority of our workers are already satisfied with the existing compensation structure.”

But Van Groningen noted the problem lies in what is considered overtime. With a shorter workday, overtime compensation rates will kick in much earlier than in the past, which will end up being a tremendous cost to the employer. “That’s going to cause our farm to mechanize a little bit more to try to get through the harvest more bit quickly because [the cost] is going to become too big of a burden,” he said.

Growers want to help their employees as best they can, but Van Groningen predicts reduced hours may become a necessity. “It’s just smart business. We don’t want to cut hours, but if we’re forced to because our bottom line is starting to become an issue, that’s what we’ll have to seriously consider,” he said.

Anthony Raimondo
Anthony Raimondo

Anthony Raimondo

Anthony Raimondo foresaw the effects of AB 1066 could put California at a disadvantage in the global marketplace. “At the very least,” Raimondo said, “employers will be forced to evaluate where they can cut production costs.”

“The increased overtime in some industries is going to drive automation,” said Raimondo. “So you are going to lose jobs because now it’s worth it for people to do the research and development to have more automation, more machine-harvested crops and less labor.”

Raimondo also expects some employers to add more H-2A temporary agricultural guest workers to make sure hours stay low enough to prevent their costs from increasing. “In the end, this is really going to cost farmworkers in terms of their real wages and it creates a massive economic disadvantage for California’s agricultural industry,” he said.

Policies like AB 1066 become increasingly problematic as the global agricultural industry continues to become more competitive. “Increasingly, agriculture has become a global marketplace in which we compete against countries that do not maintain the same labor standards nor the same environmental standards that we maintain, so our agricultural industry continues to remain at an economic disadvantage with the rest of the world,” noted Raimondo.


Featured photo: Norm Groot, Monterey County Farm Bureau executive director

Governor Signs AB 1066 Overtime Bill for Farmworkers

Governor Signs AB 1066 With Good Intentions

By Patrick Cavanaugh, Farm News Director and Laurie Greene, Editor

 

TODAY, Governor Jerry Brown signed AB 1066, the overtime bill for farmworkers, despite pushback from agricultural groups and farmworkers in the state. Ian LeMay, director of member relations & communications of the Fresno-based California Fresh Fruit Association, anticipates that not only will farmers in the state lose, but farmworkers, exports, and possibly consumers will lose as well. 

For years, California farm employees accrued overtime pay only after working a 10-hour day, instead of an 8-hour day, like most other employees in California. AB 1066 changes the overtime rules for farmworkers by gradually lowering overtime thresholds in steps over the next four years so farmworkers will eventually earn overtime after an 8-hour day.

The California farm industry has appreciated the prior overtime policy, according to LeMay, because agriculture is not a typical 52-week type of job. The workload of farming ebbs and flows with the seasons, weather, cultural practices and tasks.Farmworkers

For instance, harvesting of crops such as strawberries, citrus and table grapes, normally occurs during short 2- to 3-week periods in the state and is accompanied by an increase in demand for labor. As one might expect, the need for labor declines during non-harvest and non-planting phases, to the extent that farmworkers may endure periods of no work, and hence, no pay. So farmworkers have appreciated the opportunity to work extra hours and earn overtime during busier phases.

Labor costs for California growers of all fresh fruit, avocados and many vegetable crops will be most affected by this change. “This is going to have a very, very big impact on crops that require a high degree of labor like our stone fruit, table grapes and the rest,” said LeMay, “It’s definitely going to change the way our members have to approach doing business,” he said.

“When you compare it to the other states in the union that we are going to have to compete with,” LeMay elaborated, “when you take into account recent changes in minimum wage, piece-rate compensation, increasing farm regulations and now overtime, it’s going to be very difficult to compete not only in a domestic market, but also internationally. That’s the disappointing part about this.”

LeMay also explained that over the last 40 years, the California legislature has crafted labor law to create the highest worker standards in the U.S. “California was the only state in the union that had a daily threshold for overtime of [only] 10 hours per day, and we were one of four in the union that had a weekly threshold for overtime of [only] 60 hours. So in terms of ag overtime, California was already the gold standard.”

And, although lawmakers intended AB 1066 to help farmworkers, LeMay noted, “ultimately, the measure will impact farmworkers the most because farmers in the number one Ag state will find a way to keep its bottom line from eroding any further.

“California farmers will need to solve the puzzle of how to achieve the same amount of work in fewer hours per day,” said LeMay. “They will consider hiring double crews, increasing mechanization in packing facilities, orchards and vineyards, and reducing farm acreage to match their workforce. Or, for those commodities that require increased labor, you could see a transition to commodities like nut crops that use less labor.”

LeMay explained that during down periods on the farm, farmworkers generally collect unemployment, which is based on gross annual income. Now, by giving the farmer an incentive to reduce worker hours, farmworkers’ unemployment compensation may decrease as well.

Furthermore, for the consumer who desires fresh local food from small farms, the phase-in schedule AB 1066 provides to smaller companies is actually a competitive disadvantage. “While AB 1066 allows small farmers—those with fewer than 25 employeesmore time to phase in changes,” LeMay asked, “why would a farmworker stay at small farm under the prolonged 60-hour per week overtime threshold rule, when he or she could work at a larger farm under the phased-in 40-hour per week threshold?”

ab-1066-provisions

 

Are consumers willing to pay for increased labor costs on the farm? “As the saying goes,” LeMay quipped, “generally farmers aren’t price makers, they are price takers. Consumers are usually unwilling to pay extra for their produce, so farmers usually have to absorb increased costs.”

“Economically,” LeMay summarized, “the legislature has taken us from high labor standards to economically disadvantaging farmers and farmworkers. Lawmakers are not paying enough attention to keeping California companies viable, sustainable and successful.”