It’s not just output/demand that matters In addition to the strength of demand, a range of other factors also influence investment decisions. In particular, investment depends on whether the expected return to new capital outweighs the cost of installing it. In other words, a firm should invest whenever the market value of its existing capital is greater than its book value.
The broader point here is that, if wages are rising at current rates, for whatever reason, they will exert strong pressure on the prices of all agricultural commodities for which wage costs are a dominant component of the cost structure. I must point out that, from a larger development perspective, rising wage costs are actually a good thing.