How Much Should We Be Willing to Pay for Homegrown Produce?

I’m a fan of Stephen Bronars, a senior economist at Welch Consulting who often writes on the state of the U.S. labor market. And I noticed that he is the author of a new report from the Partnership for a New American Economy, an immigration advocacy group funded by former New York Mayor Michael Bloomberg, on how labor shortages have contributed to growing U.S. reliance on imported produce. The following passage is drawn from the report:

Fresh fruits and vegetables are the ideal crops through which to look at the impact of recent U.S. farm labor shortages. For many fresh fruits and vegetables, mechanized harvesting is not feasible, meaning growers are dependent upon less-skilled and semi-skilled workers to pick the crop by hand. This is far different from commodity crops like corn, soybeans, and wheat that can often be harvested by as few as one or two employees using machines, and it means that labor availability—or worries about its availability— play a much greater role in decisions fresh produce growers make about how many acres to plant the following year. Many migrants who begin their careers as farm laborers move on to other sectors of the economy or less-demanding positions after several years, meaning farmers growing particularly labor-intensive crops are often the first to feel trends like decreased border crossings or migrant labor shortages. “Our industry sometimes feels like the canary in the coal mine,” explains Alan Schreiber, executive director of the Washington Asparagus Commission, a group representing a crop that is particularly physically taxing to harvest.

It is worth noting, however, that we continue to see technological advances in mechanized harvesting. What is not feasible today may well be feasible tomorrow. Lettuce was long considered a challenge for mechanized harvesting. Yet a new “lettuce bot“ can thin a field of lettuce in the time that it would take twenty workers to accomplish the same task. 

Moreover, Bronars’ reference to the fact that many migrants begin their careers as farm laborers before moving on to other sectors of the economy raises an important question: where do less-skilled and semi-skilled farm laborers find work after they can no longer work in the fields, and do these jobs pay market wages high enough to afford these workers a reasonable degree of comfort? The fact that farm labor is extremely physically taxing suggests that many of these workers will develop physical maladies that might prove expensive to treat; assuming that these workers are earning relatively low wages, one has to assume that taxpayers will have to bear at least some of the burden of providing them with medical care. And if the market wages these workers command fall below the median, one assumes that federal, state, and local governments will have to provide them with a suite of other transfers to help them, and their children, lead decent lives. This is a price that U.S. taxpayers should be willing to pay for people firmly rooted in U.S. society. But as we decide whether or not to increase the influx of less-skilled workers, we ought to weigh these costs with the benefits that would flow from reducing U.S. reliance on imported produce, and by extension the benefits that would accrue to the growers of produce and workers in allied industries.

Bronars continues:

USDA data provide perspective on how particularly important labor issues are for fresh fruit and vegetable growers. According to the USDA’s Agricultural Resource Management Survey, labor costs account for 48 percent of the variable production costs for fresh fruits and 35 percent of the variable costs for fresh vegetables. In contrast, such figures are in the single digits for corn, soybeans, and wheat. The situation is most acute for delicate berries and easily bruised produce, which often are not only harvested by hand, but processed that way as well. For example, the harvesting costs for strawberries, blackberries and cherries account for about 60% to 66% of total production costs—with labor costs being the primary harvest expense.

Farmers in this space also often have particular difficulty finding U.S.-born or unemployed local workers willing to fill available farm labor jobs. Many of the U.S. workers, otherwise available for employment, may not possess the necessary stamina to perform physically taxing farm work or the specialized skills that develop from years of working in the fields. The seasonal and temporary nature of farm labor positions also makes them unappealing to U.S.-born workers. In 2010, when unemployment remained high, California farmers posted ads for more than 1,160 farm worker positions. Despite that, 233 legal permanent residents or U.S. citizens responded, and few lasted the season. Such recruitment problems are not inherently a wage issue either: The average wage paid to farm workers was $11.10 in 2013, well above the federal minimum wage of $7.25. This report explores how American fresh produce growers have struggled in recent years to hold onto their share of the domestic fresh produce market. It’s important to note that the issue preventing American growers from keeping pace with rising consumer demand is not a lack of natural resources or an inability to expand production on U.S. soil. USDA statistics show that in between the two periods examined in the study, as much as 670,000 acres of land that once supported fresh fruits and vegetables were taken out of production, a 12.8 percent decline in the number of acres used to grow such crops. That land is already known to be able to support fresh fruit and vegetable production, and could, in most cases, be used to grow those products once again. [Emphasis added]

At a bare minimum, it would be interesting to know if physically taxing farm work has lasting health consequences for those who undertake it. Debates over reforming the Social Security program often raise the question of whether it is appropriate to raise the Social Security retirement age when a non-trivial, albeit small and shrinking, number of Americans engage in physically taxing work. If farm workers tend to retire earlier than other workers, or if they are more likely to become disabled at some point before they reach retirement age, their lifetime net tax rate will be somewhat lower than it would be if they retired later than other workers, or if they were less likely to become disabled. It could be that the unwillingness of U.S.-born workers to take on this work is telling us something useful, interesting, and important. 

And in the appendix to the report, Bronars notes the following:

The fact that the average weekly wages of unskilled and semi-skilled farm workers has grown relative to the wages of high school and college graduates is clear evidence of a farm labor shortage instead of a shift to mechanization. A shift to mechanization would have reduced the demand for farm workers and reduced the weekly wages of farm workers relative to other workers in the U.S.

One interpretation of increases in the weekly wages of unskilled and semi-skilled farm workers relative to the wages of high school and college graduates is that we ought to increase farm labor migration to depress wages in this sector. Another interpretation is that unskilled and semi-skilled farm workers are not very well-placed to find remunerative work in other sectors, and so these wage increases can be understood as a positive development.

In 2008, Jack Hedin, a farmer, published an op-ed in the New York Times – ”My Forbidden Fruits (and Vegetables)” — which complained that the federal government, influenced by growers in California and Florida, had hampered his ability to grow fruits and vegetables on his Minnesota farm:

The commodity farm program effectively forbids farmers who usually grow corn or the other four federally subsidized commodity crops (soybeans, rice, wheat and cotton) from trying fruit and vegetables. Because my watermelons and tomatoes had been planted on “corn base” acres, the Farm Service said, my landlords were out of compliance with the commodity program.

I’ve discovered that typically, a farmer who grows the forbidden fruits and vegetables on corn acreage not only has to give up his subsidy for the year on that acreage, he is also penalized the market value of the illicit crop, and runs the risk that those acres will be permanently ineligible for any subsidies in the future. (The penalties apply only to fruits and vegetables — if the farmer decides to grow another commodity crop, or even nothing at all, there’s no problem.)

I’d be curious to know from NR readers in the farm business if Hedin’s complaint has been addressed. If it has, I’d be delighted. If it has not, however, I wonder if a good first step for addressing the (alleged) crisis of rising fruit and vegetable imports would be to make it easier for farmers across the country to grow fruits and vegetables. 

Reihan Salam — Reihan Salam is executive editor of National Review and a National Review Institute policy fellow.

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