Google

Saturday, February 9, 2013

Are Dairy Farm Workers Well Paid?

I often hear dairy farmers say "farm workers work hard, but they are paid well too"

Well are they?

I thought I would look at three scenarios and compare them to a few jobs in town. 

They are:


Entry level dairy farm worker 


18 years old
1 years dairy experience
No tertiary qualifications 
Is likely to break things/crash things/stuff things and generally do stupid things at any time with no reasonable explanation.


Herd manager/experienced dairy farm worker


25 years old
3-4 years dairy experience
No tertiary qualifications
Good understanding of pasture management
Competent operating all farm machinery
Can run farm unsupervised for a week if given good instructions


Farm Manager

25 Years old+
Competent at all aspects of running a dairy farm
Can manage staff
Can plan all aspects of farm management such as wintering, mating etc
Capable of financial budgeting

The three aspects of a dairy job that are important are, the total wage, the hours worked and the value of the accommodation provided.


Accommodation


Housing is provided on a dairy job, simply because most farms are a long way from towns or villages where rental houses may be present.

What constitutes accommodation varies wildly from, a one bedroom prefab placed in the middle of the tanker track. To a typical New Zealand style 3 bedroom home.

Laing Homes have been selling a lot of these 3 bedroom houses as farm worker accommodation.

They are 84 square metres which is small by NZ standards for a 3 bedroom house, but they are ok. They are warm and keep the rain out.

They cost about $120,000 installed. Which includes everything such as services, drive way & council documentation.

I'll assume one of these houses is used for our calculations.

So what is this accommodation worth?

Whats the rental of a three bedroom house 30 minutes drive from the closest town worth?

We could say that it costs the farm owner $120,000 to build, interest at 7% equals $8,400/year.

Or we could assume the farm owner is like a land lord and should get a return for the investment.

A 10% yield from a total investment of $120,000 equals $12,000/year.

I'll take a figure halfway between the two and say that the 3 bedroom home is worth $10,200/year or $196/week.

If we look at townships surrounding Christchurch the rental rates for a similar home would be about $300/week. Which is in post earthquake conditions where rental properties are in hot demand.

The Total Wage

I'll assume the following yearly salaries. I think they are about right. Please leave a comment if you think they are wrong.

Entry level dairy farm worker
$35,000/year

Herd manager/experienced farm worker
$45,000/year

Farm Manager
$80,000/year

Total Hours Worked

I visited a friend from my university days over the Christmas holidays. He is a farm worker on a 800 cow dairy farm near Oamaru.

He arrives at the cowshed at 3:30 am. One worker get the cows in and the other washes the vat and gets the shed ready for milking. He has 1 hour for breakfast and 1 hour for lunch and finishes at 5:30 most days.

Thats a 12 hour day when you take off 1 hour for breakfast and 1 hour lunch.

While these hours are not uncommon, I'll assume that a 12 hour day is the top end of the hours worked range.

At the mid point of the range I'll work on a 5:00 am start and a finish time of 5:00 pm, with 1 hour for breakfast and 1 hour for lunch.

Thats a 10 hour day

The bottom of the range I'll work on a 5:00 am start and a 5:00 pm finish but assume a 2 hour lunch.

Which is a 9 hour day.


I'll assume a roster of 11 days on and 3 days off.


I'll compare the farm workers wages to those of the building industry. This is because they are both outdoor practical type jobs and people could slot into either industry quite easily.

I would love to compare other sectors but I'm short on time.  

The building wages have been sourced from the Hayes 2012 Salary Guide.


Wage Comparison- Entry Level Dairy Farm Worker








At 55 hours per week the dairy worker is $0.50 cents above the minimum wage, which I would classify as a low paid job.

If this person is working a 66 hour week the hourly rate is $11.68. If they work a 60 hour week then the hourly rate is $12.85. Both rates are below the minimum wage. Which is illegal. 

At 50 hours per week this person would be earning $15.42/hour which I would classify as an ok pay rate for the skill level.

I am yet to find a dairy farm worker working less than a 50 hour week, if they exist then let me know. I won't be holding my breath though.

I have included a hourly rate before and after rent costs as this allows us to compare with a dairy worker more accurately.

I have assumed that the building cadet and the McDonalds staff are renting a three bedroom house and split the rent with 3 flatmates.

The McDonalds wages are based on a standard crew members rate, which is achieved after about 6 months of service.

Clearly McDonalds is a low paid job!

The building cadet and farm workers total package after rent is very similar with the farm worker receiving $63/week more than the building cadet. But the farm worker is working 10 hours per week more than the builder.

So on an hourly comparison the builder is paid $1.71/hour more than the farm worker.


Wage Comparison-Herd Manager




I have assumed that the builder and the herd manager have a house to themselves. This means the builder has to pay full market rental of $300/week.

Here we see that the herd manager is earning about $200 more per week than the builder of a similar experience. 

When we look at it from a hourly basis, we see that a herd manager working a 55 hour week is doing much better than the builder who works a 45 hour week. 

But if they worked 66 & 60 hours/week, then I'd call that average pay. At 50 & 55 hours/week, I'd consider that to be well paid in my books.

If you were my friend in Oamaru working an average 66 hour week then he would be better off as a builder, because he could earn the same money, but work a whopping 21 hours less.

Of course we haven't included the option of the builder working a 55 hour week. Which would increase his pay.

Wage Comparison- Farm manager




Its quite possible the managers house is likely to be the old farm owners house and would be a much better house than the Laing home used above. So the house value may be more than I have used.

Anybody managing a 800 + cow herd will not be working less than 60 hours per week and depending on staff numbers and the ability of the employees, it is quite possible that they regularly work 70 hours or more a week. (I know because I have done it!)

So, is $28.91/hour based on a 60 hour week, considered well paid?

This manager will be running a business with an asset value of over $10 million dollars and will be responsible for managing farm working expenses of over $1.5 million dollars and they will be managing a team of 4-5 staff.

Compared to the building foreman, the managers package looks more attractive, but again it depends on the hours worked. Even at a work week of 65 hours the farm manager is doing better on an hourly rate than the builder.


But I wonder if a farm manager of 800+ cows is better to be compared to a site manager as opposed to a foreman.


Conclusion 

To clarify, I'm talking about wage & salary employees. Not contract milkers or share milkers. Share farmers are self employed and can work what ever hours they like. An employee only has their wages to show for their time They don't benefit from capital gain of stock or a rise in the milk price. For this reason I think the hours worked is important.

Another point is, there are many varied employment conditions on farms and building sites. I think the examples above represent typical conditions. 

So, are dairy farm employees well paid?

I would say that based on a normal work week of 50 hours they would be well paid, but unfortunately a 50 hour week in the dairy industry is as rear as hens teeth.

At the entry level I would say farm staff are low paid and it is common place for these employees to be receiving less than the minimum wage. These are the positions that are being filled by imported staff such as the Filipino workers.

These workers would be better off working as a labourer in the building industry.

Herd managers are about even with a builder of a comparable experience.

Farm managers are about the same or slightly better off than their counterparts in the building industry.

I would disagree with the statement that "dairy farm workers work hard, but they are well paid". 

I think they work hard and get average pay.

But as you can see its not that hard to get the wages into the well paid zone. If farmers could knock 2 hours off each work day, then their employees would be in the well paid zone.


Almost all other professions have some sort of hourly rate and hours worked are monitored. The dairy industry is based on working until the job is done. The result is a culture of excessive hours.


A few final points

Just a quick note, I had a bbq last night and there was a guy who was a private in the army. He left the army a year ago and got a job in forestry. He is paid $22/hour up to 55 hours, everything over 55 hours is paid at an overtime rate. 

Another friend is a labourer for a construction company in Christchurch. They are looking for more labourers who will be starting on $20/hour.

I was also talking to a friend who has an agricultural contracting background. He said junior staff will start on $18/hour and the operators of the bigger equipment will be earning $30/hour.

It's clear to me that dairy farm staff have options, often paying better than the dairy industry or providing better hours of work and sometimes both. 

Dairy farmers have to compete for good staff and the fact that the industry rely so heavily on international staff is an indication that their jobs are not as attractive as other jobs. 

As the Christchurch rebuild begins to take off, I can see an exodus of farming staff flocking to the city to take these unskilled positions. 




14 comments:

  1. Dairy farm workers are not well paid.
    Look no further that the overseas folk being brought in to work. If the industry paid well, there would be no need to import such labour. FACT.

    Dairy farm work, works if the plan is to move thru and go sharemilking.

    That path is busted cause of all the farms owned by syndicates and otherwise absentee landlords.

    Look at Dairy Holdings, the company executives are sharemilkers, how does that work?

    How come Synlait is mired in debt.

    Somehow the cost structure in dairy has got out of wack. From your last post, people like Jason need to get out more. Jason is lucky - FACT. EG if things were so go, why are there cash buyers for his whole farm at just WIWO at 60% of the value he thinks its worth.

    How many businesses is the break up value more than the value of the whole set of assets as a going concern... its not a sign or wellness.

    ReplyDelete
  2. It certainly looks good when you add the house value to the dairy farm workers package but then subtract the rent costs from the other worker. Thats statistics for you

    ReplyDelete
  3. Dairy farmer wage is much more pathetic in reality especially what they pay for overseas workers. I completed a graduate diploma in agribusiness from university of Waikato( Tuition fees $23,000), didn't find any other job, started to work as dairy farm assistant. work starts at 4.15 finishes around 5-5.30(11 hours/day). 18 DAYS ON 3 DAYS OFF. AVERAGE 60 HOURS/ WEEK. PAY- $ 560/ week. Accommodation- a single room office converted unit attached to the workshop. The guy values $40 for that. Total package 600/week. So hourly rate???... $10 !!!

    ReplyDelete
    Replies
    1. Hi, thanks for your comment. Where are you. ased? 18 days on 3 days off seems a bit off. Its normally 9-11 days on then 3 days off.
      You will have trouble finding a better job, especially if you are experienced.
      Feel free to email me glen.herud at gmail dot com

      Cheers
      Glen

      Delete
  4. Worked in Canterbury as assistant Herd Manager salary $45K on the same farm the manager left ended up doing the job of a 2IC but on the same pay. The hours were long round 12 hours days. Moved overseas where the money is much better and on a 50 hour week roster being 5/2 salary $52K. NZ pays low rates and if you work over a 40 hour week where is the time and half (38 hour week incurrs overtime oversea). Some farmers even try to get out of paying public holidays, this people you have to watch for, payslips also are important to receive as they show hours incurred for holidays sick leave kiwisaver etc.

    ReplyDelete
    Replies
    1. Thanks for your comment, The conditions on dairy farms are a bit rough, in my opinion. The concept of overtime is totally foreign to the dairy industry too.

      I know many farm workers who are earning less than minimum wage when to take into account the actual hours they work.

      Good luck and I hope we see you back in NZ sometime.

      Cheers
      Glen

      Delete
  5. Could be worse. My cousin from Hungary was offered "work" and accommodation. When we stepped in to find out what she would be paid, it turned out she would be receiving "training" ie no pay for about 50 hours a week! Oh, and she is an AgScience graduate with years of experience on the family farm. Luckily we found an alterative farm where she is happily working and saving up a nest egg.

    ReplyDelete
    Replies
    1. Hi
      Thanks for your comment. Unfortunately there are a few rat bag employers in every industry. I hope she does well.
      Cheers
      Glen

      Delete
  6. Hello Glen, I got a friend who just started as a dairy farm assistant last month and I was surprised when he told me that he is only getting 1weekend days off per month and he also need to pay $50/wk for accommodation. Is it legal?

    ReplyDelete
    Replies
    1. Hi

      That sounds a bit rough. But what sometimes happens is during calving time, which is the busiest time of year. The farmer may reduce time off to just one weekend a month. This would probably only last for 1 month. I don't agree with that approach though. But that could be what is happening.

      But they should not be getting just 1 weekend a month off.

      Common rosters are 9 days on a 3 days off or 11 days on 3 days off. Sometimes you also get 6 days on 2 days off.

      As far as paying rent for the accommodation, that is quite common because the farmer does not want to pay fringe benefit tax. Usually it is just part of the overall package though.

      Feel free to ask any more questions.

      Cheers
      Glen

      Delete
  7. hi glen
    I think that you have taken quite a conservative look at dairy farm hours, those hours are the "easy time" hours, but during calving and mating it far more common to be work 14 to 15 hours a day.My husband is a manager and is required to work even more hours after that, so sometimes starting at 3.30am and working till 8pm only taking 1/2 hour breakfast and lunch or skipping breakfast totally. He is often accused of lack of commitment when he comes home at 6.30. Also only having 1 weekend off is exceptionally common in the North Island, lots of farms run on a 19 and 2 roster through out the year. It is also usually expected that managers take no time off through calving and mating, so that's week and weeks of long hours and no time off. also your wage scale should include the rent, not add on top, as on our last 4 farms our wages have matched your estimate but rent was then deducted making our earning +-$5000 less. We obviously have farming friends who have it "better" but we also have quite a few who have it far worse, and there seems to be more "bad apples" than any one industry should allow. so why stay farming???? well we have invested heeps of time and money in study to gain the education and experience to be in our position believing that when we got here it would be worth it.....hmmmm wish we had gone building instead!

    ReplyDelete
  8. Hi
    Yes this post was on the conservative side. I agree with you on working hours. My last farm job was on a 800 cow farm, I would easily work a 12 hour day and that was after calving too. I know that what you say is common in the dairy industry because I have experienced it too.

    I have done some more posts on dairy staffing, not sure if you have seen them?

    http://milkingonthemoove.blogspot.co.nz/2013/05/why-only-small-number-of-people-will.html
    http://milkingonthemoove.blogspot.co.nz/2013/05/dairy-farm-staff-and-shocking-rate-of.html
    http://milkingonthemoove.blogspot.co.nz/2013/06/staff-part-3.html

    Basically I feel if farmers spent more money on employing more staff and reducing the hours worked, then they could attract better people and employees would do a better job. The extra money spent on staff would more than covered by extra output.

    But I received a lot of heat from dairy farmers about those posts. They do not agree with me. Oh well, doesn't look like anything is going to change.

    Good luck for the future, your hard work will pay off.

    Cheers
    Glen

    ReplyDelete
  9. Thanks for your great information, the contents are quiet interesting.I will be waiting for your next post.
    safety equipment townsville

    ReplyDelete
  10. Hi Glen,
    June to December is very busy on most Dairy farm's in NZ, Then December to June there is really nothing or not much to do. The time off is greater during the day from December to June on most farm's and very relaxed.
    I'm on my way back to NZ soon. I find the biggest problem with NZ is the new employer rely's to much on the past employment for a reference. Should be two week's to see if you like the job. Then 3 month's to prove your self, like other country's. Dairy farm owner's seem to pack a sad once you say your leaving. Some even say to your face, I will give you a good reference then don't.
    Rang a few for people in the past. I think it's pretty sad state and a lot of worker's are leaving the industry because of it.
    If you like Animal's, its not about the wages at times.

    ReplyDelete