Cost of living: How a lift in minimum wage could affect ag

The new PM has announced his first move to increase the national minimum wage, which could push horti producers closer to the edge.

In a tweet published on Friday, Prime Minister Anthony Albanese announced his first move towards raising the national minimum wage. What could this mean for primary producers, already feeling the squeeze of increased input costs? PICTURE: David Gray

A move by the Federal Government to raise the minimum wage could push some horticultural producers to the edge, as the industry continues to grapple with increased input costs.

Today Prime Minister Anthony Albanese announced he would write to the Fair Work Commission to make a submission on the minimum wage case.

But industry leaders fear a rise in the national minimum wage could further drive input costs for primary producers.

“People who are on the minimum wage can’t afford to go backwards,” Mr Albanese said in a tweet this morning, stating wages have stagnated in the past 10 years while “the cost of everything has gone up”.

In the lead-up to the election, newly elected Prime Minister Anthony Albanese said he would support a 5.1 per cent increase to the minimum wage, to match inflation.

But AusVeg national public affairs manager Tyson Cattle said a lift in minimum wage could create a knock-on effect throughout the supply chain.

“The challenge with that is, there are a whole bunch of employees along the supply chain, which increases that cost,” Mr Cattle said.

If wages of pickers, packers, transport operators and retail staff all increased by 5 per cent, it would result in more than a 5 per cent increase in the cost of food to consumers, he said.

“You’re increasing the cost of the supply chain, and you are increasing pressure on people being able to buy fresh produce at a reasonable cost,” he said.

Mr Cattle said producers were bearing the increased cost to grow a crop, with fresh vegetable prices rising only about 7 per cent.

“Our estimate is that most businesses have seen a 35 to 45 per cent increase in production,” Mr Cattle said.

What would a 5.1 per cent rise in the national minimum wage mean for growers of fresh fruit and vegetables?

University of NSW School of Banking and Finance associate professor Mark Humphrey-Jenner said the minimum wage situation was “complex”, and any increases to wages could trigger more inflation.

“A wage-price spiral can occur when wage increases trigger inflation. And, then this inflation further triggers wage-price increases,” Mr Humphrey-Jenner said.

“And this happens in a (hypothetically) never-ending cycle.

“The only way around this is a price ceiling.”