What is in this article?:
- Labor-intensive U.S. fruit, vegetable industry â€¨competes in global market
- Adapting to rising wages
- The U.S. fruit and vegetable industry is labor intensive, pays higher wages than are paid in many other countries, and increasingly operates in a global economy.
- U.S. fruit and vegetable farms rely on seasonal workers who are likely to be unauthorized immigrants; any future immigration reform could reduce the supply of labor or raise wages.
- Fruit and vegetable growers may respond to any potential wage increases by reducing the number of seasonal workers employed, adopting mechanized harvesters or other labor-saving technologies in the field, or reducing production.
U.S. fruit and vegetable producers have reason to be concerned about the cost and availability of labor to harvest their crops. For most crops, a harvest delayed by lack of labor means less profit for growers because even a short delay can reduce quality and price. Longer delays may mean that the entire crop is lost if the quality deteriorates to the point that it cannot be marketed. Growers’ competitiveness is affected by wage rates. In 2010, the Federal minimum wage is $7.25 per hour ($8.00 per hour in California), while the minimum wage in Mexico ranges from $4.17 to $4.40 per day, depending on the region.
Any potential immigration reform could have significant impacts on the U.S. fruit and vegetable industry. Over half of hired workers employed in U.S. crop agriculture are believed to be unauthorized immigrants, and experience has shown that most will move on to nonagricultural employment within a decade of beginning to work in the fields. Relatively low wages compared with other U.S. jobs, hard physical labor, frequent harsh weather conditions, and seasonal employment patterns make working on crop farms unappealing to most U.S. citizens and authorized immigrants.
The supply of farmworkers for the U.S. produce industry depends on a constant influx of new, foreign-born labor attracted by wages above those in the workers’ countries of origin, primarily Mexico. Immigration policy helps to determine whether the produce industry’s labor force will be authorized or unauthorized. Any debate about more stringent enforcement of current immigration and labor laws or immigration reform that could reduce the supply of workers or make agricultural labor more expensive is of interest to growers.
Growers’ vulnerability to potential wage increases varies
The most recent data from ERS indicate that labor accounted for 42 percent of the variable production expenses for U.S. fruit and vegetable farms, although labor’s share varied significantly depending on the characteristics of the commodity and whether the harvest was mechanized. Factors that affect grower profitability, including higher wages, will put pressure on growers to reduce labor costs, their single largest variable production expense. The response of fruit and vegetable growers to wage increases will vary depending on the commodity, import and export competition, domestic demand, availability of mechanical harvesters, and other factors.
ERS examined seven fruit and vegetable industries to look at how growers deal with labor, with a particular focus on the potential for harvest mechanization: Washington State fresh-market apples, Florida processing oranges, California fresh-market oranges and strawberries, raisins, fresh-market asparagus, and lettuce. These commodities include fresh, fresh-cut (bagged salads), and processed items (raisins and orange juice). Harvesting of all seven commodities is either exclusively done by hand or only partially mechanized. These industries vary in size. The fresh asparagus industry had an average annual farmgate value of $91 million in 2005-07. The lettuce industry is quite large, with an average annual farmgate value of $2 billion in 2005-07.
Washington State apples dominate the U.S. fresh apple market. Growers in Washington generally produce for the fresh market, and processing serves as a secondary market; any apples that do not meet the demands of the fresh market can be diverted to processing. There is limited import competition in the fresh market, but growers face competition from China in the processing market. With declining per capita fresh apple consumption, the U.S. apple industry is increasingly reliant on export markets, with 24 percent of fresh production exported in 2005-07, up 31 percent since 1990-92. While China, the world’s largest apple producer, cannot export fresh apples to the United States due to phytosanitary issues, U.S. growers must compete with China in some export markets. The Washington apple industry is under considerable pressure to reduce costs, but there is no commercial mechanical harvester for apples yet.
Florida oranges are mostly processed into juice, and California oranges are mostly sold to the fresh market. The Florida industry has been been buffeted by hurricanes, disease, and imports from Brazil, so reducing production costs is critical. There is a mechanical harvester available for Florida growers, which shakes the tree canopy to dislodge the fruit, but less than 7 percent of the processing orange crop is harvested this way. Work is underway to make the harvester more profitable for growers to adopt. California orange growers cannot employ the mechanical harvester used in Florida because it damages the skin of the fruit, rendering it unacceptable for the fresh market. The California orange industry does not face serious import competition during the season for navel oranges, the dominant variety. U.S. fresh orange consumption has declined, which makes the industry more reliant on export markets where China could be a major competitor. This situation could encourage growers to take a closer look at mechanical harvest options.
Raisin production and domestic consumption have declined. The U.S. industry exports almost half of the raisins it produces and faces export competition from Turkey, a low-cost supplier. U.S. raisin growers began adopting mechanical harvesters in large numbers in 2001, following a 56-percent drop in raisin prices in 2000, a tighter labor supply, and the introduction of an improved mechanical harvester. Adoption of new machinery and associated changes in how raisin grapes are produced can be expensive, making it likely that younger and larger growers may mechanize first. The raisin industry has many small producers nearing retirement age. Adopting expensive new harvest technology may not be economically viable for this group.
Strawberries are produced year round in California. Average annual production increased 81 percent from 1990-92 to 2005-07, and per capita consumption rose 75 percent over the same period. California strawberry growers produce for the fresh market and use the processing market for berries that cannot be sold fresh.
With no significant import or export competition in the fresh market, strawberry growers are in a better position than other fruit and vegetable growers to pass some increases in labor costs along to consumers. But growers are facing import competition in the processing market, which creates pressure to reduce costs.
Strawberries may be one of the most difficult crops to mechanize; there is no commercial mechanical harvester available currently. Some growers are using a labor aid to boost labor productivity in the fields—a conveyor belt that moves slowly down the field just ahead of the workers to provide a platform where workers can place their full flats of berries instead of carrying the flats to trucks at the edge of the field.
Asparagus growers face intense import competition. Fresh asparagus imports accounted for 76 percent of average annual domestic fresh consumption in 2005-07, and this share is likely to continue increasing. With increasing imports, U.S. average annual production (fresh and processed) decreased 46 percent between 1990-92 and 2005-07. A prototype mechanical harvester is being tested but, in the meantime, growers may further reduce plantings.
Lettuce production is concentrated in California during the spring to fall seasons, with both California and Arizona supplying lettuce during the winter season. U.S. imports of lettuce are small, and export competition is not a concern. Baby leaf lettuce is mostly mechanically harvested, and it is unlikely the industry could have grown so rapidly without mechanization. The rest of the lettuce industry still uses hand harvesting. If wages rose, lettuce growers could probably pass on some increases in labor costs to consumers. Many firms are currently engaged in research on mechanical lettuce harvesters.