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.
Adapting to rising wages
Labor is just one input in a complex production process, and growers have several options if wages rise. For example, growers may use less labor if the wage rate increases. Asparagus is typically harvested continuously over several months. If the price of asparagus is too low relative to labor costs, growers may stop harvesting a field, trading off the loss of income from reduced yields against the savings on labor costs.
Growers also may combat rising labor costs by using more labor aids to improve labor efficiency, such as replacing ladders with mobile platforms in apple orchards when pruning and thinning trees. Experts are developing platforms that are stable enough to support workers and apples during harvesting activities. If these efforts are successful, platforms could replace ladders and lead to improvements in productivity. Studies show that workers spend only 30 percent of their time picking apples; the rest is spent positioning and climbing ladders and unloading bags of fruit.
Growers may mechanize to replace costly labor if an economical mechanical alternative is available. However, mechanization often presents complex technical challenges. A machine cannot easily mimic the judgment and dexterity of experienced farmworkers, particularly when crops do not mature evenly, and workers must determine what can be harvested during multiple passes through fields and orchards. Research and development (R&D) can be both expensive and time consuming, with success of mechanization difficult to predict. Developing a viable mechanized harvest system often depends on breakthroughs in three areas: machinery, varieties, and agricultural practices. Results from all three lines of research may not emerge at the same time.
The mechanical harvesting of processing oranges, for example, appears to have stalled while growers wait for the development of a complete mechanization system and not just a mechanical harvester. The mechanical harvester works well in the early part of the Florida processing orange season. But it cannot be used on late-season Valencia oranges, which account for 25-30 percent of Florida’s total processing orange harvest. At harvest time, late-season Valencia orange trees contain both mature and immature fruit for the following season; mechanical harvesting removes too much of the following year’s production. Researchers have developed an abscission compound that may complete the mechanization system for processing oranges and promote adoption of the mechanical harvester. The compound can be sprayed on trees to loosen the bond between the stem and the fruit on mature oranges, allowing mechanical harvesters to shake the canopy with less force and dislodge the mature fruit without harming the immature fruit. Before the compound can be used, however, the industry needs to obtain an experimental use permit from the U.S. Environmental Protection Agency.
The fresh produce industry is generally concentrated—the largest growers supply the majority of production. Depending on the type of machinery available, mechanization may accelerate the trend toward fewer and larger producers. For example, the mechanical harvester for processing oranges (a pair of machines powerful enough to shake the fruit off a tree) costs over a million dollars. Larger processing orange growers are the most likely to invest in expensive machines because a large, fixed investment can be spread over more acreage, making it more economical. An alternative to buying specialized machinery is custom harvesting, in which a third party buys machinery and harvests crops for multiple growers; a custom harvesting industry has developed for processing oranges. In other cases, harvesters may be available in a range of configurations appropriate for farmers of different sizes. For the baby leaf lettuce industry, large machines cost about $240,000 and cut 13,000-15,000 pounds an hour. At the other extreme, small mechanical harvesters pushed by workers cost about $10,000 and cut 300 pounds an hour. Regardless of the scale of machinery, once growers invest in specialized machinery for a particular crop, they may reduce the number of commodities produced on their farms.
Even if growers cannot reduce labor costs, other improvements can offset higher wages. Improved irrigation techniques, better pest control, higher yields, and the availability of new varieties can help increase profits. For example, between 1990-92 and 2005-07, U.S. strawberry yields increased 63 percent. Yields also increased for apples, asparagus, and lettuce.
In some cases, total production costs rise with labor wage rates. If there is no trade, rising costs generally lead to a lower quantity demanded, as production declines and prices increase. In today’s relatively open international marketplace, it is hard for growers to pass on higher production costs if the same commodity can be imported for less during the same season. Some growers may shift production from labor-intensive crops to mechanized crops as labor costs rise. In some areas, selling farmland for housing is an attractive alternative. Many California growers, forced out of the asparagus business due to increased imports, have used both options.
Some production of labor-intensive crops may shift to countries with lower labor costs, but so far imports have seldom replaced U.S. production of fresh-market commodities during the season they are produced in the United States. There are more examples of processed fruit and vegetable production moving abroad. While labor rates may be less in other countries, total production costs are not necessarily lower. Imports are not always the result of lower labor or total production costs abroad. For example, the United States now imports small quantities of lettuce from Mexico. Total lettuce production costs in Arizona and central Mexico are similar; wages are lower in Mexico than in the United States, but so are yields. Changes in the U.S. lettuce market have created incentives to import lettuce. Bagged salads are frequently sold under annual or mult-iyear contracts that specify weekly quantities to be delivered. Some U.S. firms grow lettuce in Mexico to enable them to fulfill bagged-salad contracts in the event that bad weather or some other issue restricts the availability of U.S. lettuce, particularly during the winter months.
Growers invest in mechanization to boost competitiveness
Most of the fresh-market fruit and vegetable industry is competitive with foreign suppliers despite relatively high wage rates. However, the potential for immigration reform or changes in enforcement that might make labor availability more unpredictable or increase wages remains a concern. R&D is critical for developing new labor aids and mechanical harvesters that could help maintain economic competitiveness in a world economy. Individual growers, grower organizations, machinery manufacturers, universities, and the Government have all invested in these new technologies. Interest in R&D varies over time, particularly with respect to current and expected labor supply. Unfortunately, the success of mechanization R&D is unpredictable. The harvest of some commodities was mechanized much sooner than many observers expected. And, despite predictions, other industries still are not mechanized. Growers of some commodities need mechanization alternatives more urgently than others.