The U.S. Produce Industry and Labor: Facing the Future in a Global Economy
by Linda Calvin
and Philip Martin
Economic Research Report No. (ERR-106) 57 pp, November 2010
The U.S. fruit and vegetable industry is labor intensive, faces
higher labor rates than many other countries, and operates in a
global economy with relatively free trade. Currently, labor makes
up almost half of the variable production expenses for U.S. fruit
and vegetable farms, although labor's share varies significantly by
commodity. As a result, efforts to reduce labor costs are an
ongoing challenge for U.S. producers. Over half of the hired
workers employed in U.S. crop agriculture are believed to be
unauthorized immigrants, and most hired workers stay in the
seasonal farm workforce a decade or less. As a result, agricultural
employers are constantly seeking new workers.
What Is the Issue?
Growers are concerned that immigration reform (or stricter
enforcement of current immigration or labor laws) could reduce the
flow of unauthorized workers into the United States. Fewer workers
could affect the cost and availability of farm labor for U.S.
producers and reduce their ability to compete as suppliers in a
global marketplace in which many competing countries have much
lower wages. If wages increase, growers could respond in several
ways. Grower response would vary across different fruit and
vegetable commodities and across growers of particular commodities.
In this report, the authors examine labor use for production of
selected fruit and vegetables and assess likely adjustments if
labor costs increase significantly.
What Did the Study Find?
Commodities differ in their vulnerability to increases in labor
costs. The authors of this report look at the likely adjustment
scenarios for Washington State's fresh-market apples; Florida's
processing oranges; California's fresh-market oranges and
strawberries; raisins; fresh-market asparagus; and lettuce.
Analysis of the case studies reveals three major adjustments to
rising labor costs:
• Three commodities have partially adopted mechanical
harvesters. As labor costs rise, more growers will likely turn to
mechanization, which may result in fewer and larger producers of
these commodities. The raisin industry is mechanizing; between 2000
and 2007 the estimated share of the raisin crop harvested
mechanically increased from 1 percent to 45 percent. Mechanization
of the processing orange harvest is currently stalled, awaiting the
U.S. environmental Protection Agency's approval of a chemical
compound that would loosen the ripe fruit and make it easier for
machines to remove them. Approximately 70-80 percent of the baby
leaf lettuce crop is harvested mechanically; the rest would likely
follow if wages increased.
Rising wages could prompt the development and adoption of labor
aids and mechanical harvesters. Mechanization is a complicated
process and usually requires an integrated approach that includes
changes in crop varieties, cultural practices, and harvesting
methods. The progress of mechanization research is difficult to
predict; some mechanization efforts quickly produce a solution
while others fail to make progress due to complex technical
challenges. Individual growers, grower organizations, machinery
manufacturers, and the Government have all invested in
mechanization research at one time or another. Interest in
mechanization depends on current and future wages; when wages are
low, interest in investing in mechanization research declines.
• Producers of unmechanized commodities that face substantial
import competition, such as asparagus producers, are likely to lose
market share to imports as labor costs rise unless there is a
breakthrough in labor-saving mechanization. Similarly, growers of
commodities that face substantial competition in export markets,
such as apple and orange producers, may lose export share if labor
costs rise and growers are unable to keep their total costs per
unit of output from rising.
• Producers of fresh-market strawberries and lettuce (other than
baby leaf lettuce), with little import competition, are likely to
cope with rising labor costs by providing labor aids to their
workers to raise labor productivity or by mechanizing, if a
harvester can be developed. These producers may be able to pass
some additional costs along to consumers.
Even when a mechanical harvester is available, not all growers
will adopt the new technology. Hand-harvested produce is usually of
better quality, since it is hard to replicate the skill and care of
hand harvesters. Until the technology has proved itself, farmers
may be unwilling to risk investing in it. Mechanical harvesters
often represent large fixed costs, and mechanization is more
economical for large farmers who can spread such costs over more
acres. For some crops, mechanical harvesters may be available in a
range of configurations appropriate for farms of different sizes.
Rising wages could also result in increased imports. Labor wages
and costs in foreign countries are often low, but total production
costs of fruit and vegetables delivered to the United States are
often comparable with costs of U.S.- produced goods during the same
season. Increased U.S. imports are sometimes due to lower costs
abroad, but more often result from year-round demand for fruit and
vegetables that cannot be grown profitably in most of the United
States during the winter.
How Was the Study Conducted?
The case studies are based on literature reviews, commodity
statistics, and indepth conversations with industry experts to
understand the economic conditions and ability to adjust to
potentially higher labor costs. A small number of
commodities-either hand-harvested or only partially mechanically
harvested-were selected for assessment and represent a broad
spectrum of produce items, including fresh, fresh-cut (bagged
salads), and processed items (storable raisins and orange