They need to raise their wages, pay what it really costs for labor.
And as a bonus, the increased costs will provide an incentive for future automation.
Even if you multiply the cost by 5 to cover markup as it goes through the chain (of distribution), you have... $2.50 going to $2.75, or ten percent more at retail. Not shocking.
I think everyone would prefer that.. but this is a problem the farmers created themselves. They've been using migrants for so long, that they've created a substantial difference in pay between themselves and the rest of the labor market. And with a sudden change in the supply of migrants, they're now trying to figure out what that difference is--what the true cost of labor is for their industry.
If they never relied on migrants, they would already know the answer to this question.
How do you explain why its so much cheaper to buy quality food in European countries?
When I am in France or Austria, quality butter, eggs, fresh egg pasta, salami, and milk are all very inexpensive. Quality cultured butter in the US is especially expensive. (Mache in the US is also extremely expensive compared to France but that's a demand thing afaik. I don't remember the price diff of spinach.) Even Switzerland had better prices than the US when I was there for quality animal products.
(It has probably been a few years, but the point stands: the cost of labor is a small portion of the cost of food.)
Some of smaller organic farms don't hire external workers for labor. They are more expensive, but not that much more expensive.
That being said, due to the currency leveraging, many central American economies, cultures, and peoples have suffered from the illegal immigration as well.
In addition, higher prices might make us less wasteful. What is it, 30% of food ends up in the rubbish bin?
Slow rises are fine, the economy will adjust, fast rises, say from eliminating a large portion of the workforce at once, will cause much more disturbances in the economy.
It's also hard to recruit workers to a gig that's temporary and seasonal. That can maybe be made up for in wages though.
I'm also curious about where the labor is required. Corn/wheat is mostly a machine based harvest, I assume there are few migrant workers there but I don't know. Is there analysis on where migrants end up on the value chain of farm products?
Also, while there's some talk of undocumented immigrants, I think there's also a legal seasonal-labor system in the US. Trump famously uses it to staff Mar-a-lago. How many migrant farm workers are under that system?
If you consider the existence of human labor undesirable then automation is always good.
If you consider jobs the end-goal of human existence then automation is always bad.
In all likelihood you're somewhere in between those, and whether automation is good or not depends on external factors. GP seems to lean more towards the "human labor is bad" side.
It's an inconvenient truth of the scaled up agriculture that produces food for us city folk.
Many European countries have formal guest-worker programs. A big consequence of the EU is easier guest-worker access and better working conditions.
The reason the USA immigration hassle never gets solved by congresscritters is this: it's convenient economically to have an underclass of workers with few rights and no recourse for mistreatment. Congresscritters have to say they're TRYING to solve the problem or they appear to be amoral. But they can't actually solve the problem without antagonizing the 1% who pay their re-election campaign bills. So the issue is a perennial theme of chin music. Both major US parties do this.
https://www.cbsnews.com/news/despite-economy-americans-dont-...
Most americans are unwilling to work on farms, even at the heights of the recent recession.
No sane person with any other options would take that trade
at the wages offered by farm owners!!! This is very similar to arguments trotted out in support of shitty H1B jobs. You want workers for your jobs? Increase the wages. Increased wages will make you raise the prices for your customers? Do so, or find the efficiencies in your business. Increased wages might drive consumers to produce grown in foreign countries? Have appropriate trade agreements protecting vital industries like agriculture, similar to what we have for defense (and after all, trade agreements are not a suicide pact (TM)).
The US administration seems to believe that our economic growth was cash constrained, hence the massive corporate tax cut. But for many industries growth is labor constrained.
[1] Colloquial phrase for Central American human traffickers.
I'm not going to point fingers at anyone, but corporate cash levels were already hitting records before the tax cuts passed and money was already available at record-low interest rates. Anyone who thought our companies were cash-constrained was intentionally not paying attention.
>Alabama’s Failed Anti-Immigration Law The state's experiment in "self-deportation" reveals what might happen if the US sent 11 million undocumented workers home.
[https://www.vice.com/en_us/article/8gk7nx/what-alabamas-fail...]
Come on. Vice documentaries are entertainment at best. I've enjoyed a couple of them myself but I would never use them to prop up my political arguments.
”For a typical household, a 40 percent increase in farm labor costs translates into a 3.6 percent increase in retail prices. If farm wages rose 40 percent, and this wage increase were passed on to consumers, average spending on fresh fruits and vegetables would rise about $15 a year, the cost of two movie tickets. However, for a typical seasonal farm worker, a 40 percent wage increase could raise earnings from $10,000 for 1,000 hours of work to $14,000 — lifting the wage above the federal poverty line.”
https://www.nytimes.com/roomfordebate/2011/08/17/could-farms...
Hey I am not going to feel bad, that McDonald does not have a Dollar Menu any more. May be the market forces are the right medicine for the "obesity" problems America is facing.
(I come from a family of farmers... going up my family tree there are been nothing but farmers)
Since the job doesn't require any specialization (which could take years to master and thus might cause a shortage), it should be easy to fill such positions from the large unemployment pool if employers started paying more to compensate for the missing Mexicans.
But it's only a shortage of people willing to do the work at shitty prices.
I'm not so sure there is any great shortage of willing workers at the moment but it may be a problem in the future once free-movement comes to an end?
As has been mentioned about the US above, there is this myth, propagated by the media, that natives aren't interested, are too lazy and so on...
Truth is that farmers have gotten away with exploiting cheap labour and they don't want it to end. You try getting a job today, as a UK native, picking vegetables and you'll likely face a brick wall.
We didn't have any problems before when people could do casual seasonal work for a fair days pay. When the source of cheap labour dries up we'll likely go back to not having problems. Just a few fat farmers will be slightly miffed about it.
So it seems very much to be an issue pre-Brexit.
Somehow the hn title manages to put the blame with the Mexicans.
Possibly, but it may also depend on how much the current political climate could have been foreseen. The reality is that it's been the status quo for decades, and there's been clemency for illegal immigrants that grants citizenship in the past.
Ultimately while it ended up being a bad decision, it might have been one that was considered an extremely safe one until everything changed. Sort of like buying a car with the assumption you'll still have a job next year. If you needed a car then it might have been good decision until all of a sudden it really wasn't.
This is an area for regulation (no one raised an eye when they got cheap labor) and economic incentives (NAFTA f'd over Central American economies, commodities market manipulation causes prices to skyrocket in developing markets - both causing mass migrations).
Heres a link: https://www.npr.org/sections/thetwo-way/2011/05/27/136718112...
In Kathy Lohr's report, she spoke to R.T. Stanley Jr., a farmer who says he can't hire locals to do the job:
Stanley says experienced workers can earn as much as $200 a day. He says he's tried to hire locals to do the job — working in the fields eight hours or more clipping, bending and lifting in the oppressive Georgia heat.
"They just don't want to do this hard work. And they'll tell you right quick," he says. "I have 'em to come out and work for two hours and they said, 'I'm not doing this. It's too hard.' "
For Stanley, finding workers is already tough enough and he says the new restrictions are likely to make it worse.
"I got my livelihood on the line," he says. "If I don't harvest these onions, I'll lose my farm."
So first of all let's be honest about that $200 a day figure, they're being paid by how much they harvest. $200 a day is basically never going to happen, it's a dream figure, no onion farmer in america is paying $200/day to pick onions.
In fact at Stanley's Farm you're going to be making a whole lot less than that, from 2013:
The plaintiffs say Stanley Farms paid them less than minimum wage over the last three years and illegally cut their wages. The plaintiffs said they also worked alongside pickers who had work permits and who were paid more money than what American workers received
“We see this repeatedly,” said plaintiff’s attorney Dawson Morton. “Farms complain that no local workers are available. But when they do hire local workers, they don’t pay them fairly and don’t offer them the same pay as their foreign workers. It’s illegal and discourages American workers from continuing in agriculture.”
The suit claims the workers were paid 40 cents for each 5-gallon bucket of onions picked, while foreign workers received more than $9 a hour. Workers also had to purchase work tools from the company, the suit says.
http://www.ajc.com/business/vidalia-onion-workers-sue-georgi...
$0.40 for a 5-gallon bucket, so to get to that $200 figure you only need to pick... 2,500 lbs of onions! Every day! Easy!
And then later in 2014:
A judge on Monday approved the agreement. The Atlanta Journal-Constitution states that Stanley Farms agreed to pay $92,500, with $82,500 going to back wages and damages and $10,000 going to attorney’s fees and costs. The company also agreed to follow specific hiring and employment practices that were outlined in the agreement.
“We’re pleased with the resolution reached, and we’re pleased that the farm is agreeing to pay U.S. and foreign workers the same amount, which we don’t believe they were doing,” said Dawson Morton, a lawyer for the workers. “That should reduce the exclusion of U.S. workers from Vidalia onion work and we hope assure equal treatment and equal pay.”
The American workers and their former co-workers filed a lawsuit last year that claimed that American farmworkers were paid less than the minimum wage of $7.25 an hour while foreign guest workers were paid between $9.11 and $9.38 an hour.
https://www.andnowuknow.com/shop-talk/stanley-farms-pay-over...
That same articles states that they now follow certain guidelines like making sure there are enough seats for workers on transportation, that the transportation is properly inspected and insured, that workers can't go into fields until at least 24 hours after application of certain chemicals and that they'll provide tools.
So what kind of farm was Stanley actually running when that article was written? Well it's obvious he was paying less than minimum wage to americans and more to illegal immigrants so that he could have an all immigrant workforce so that he could skimp on labor protections. And after doing this for years and years he settles for less than $100,000. This is the problem with american farming. If Mr. Staley had ever actually tried paying americans $200/day and had provided a safe work environment I'm sure workers would have been lined up. It's a pervasive lie that americans won't do farm work for good wages.
In 2014 the US was spending ~ 6.5% of household expenditure on food, on the lower end compared to the listed European nations (Germany, France, Italy, and Greece in particular).
There are many other links with a similar premise.
My own travels have taken me to Spain, Denmark, France, Germany, England, Australia, New Zealand, Vietnam, and Canada - other than Vietnam I've always found prices to be comparable or greater than in the US. Obviously the cost is influenced by what you are buying, what is in season, and where you are a shopping. YMMV though!
If you buy products that normal Americans do not wish to buy, they will of course be expensive. I think your definition of "quality" is something like "as sold in Europe" or possibly "organic".
Stores seek to offer both affordable products and aspirational products. If there is no legitimate way to offer a better product than the standard one, some nonsense will be created. You'll get a fancy wrapper, arbitrary restrictions on how the product is made, and so on.
For this reason, you can get specially marked non-GMO salt. It's salt. Of course it doesn't contain genetically modified organisms! You are still welcome to pay extra for it.
Well, clearly you can pay them better with an even smaller increase, it's just a question of how much better; without quantifying that, commenting about how much the cost increase would be to achieve it is meaningless.
Of course, in any case, farm workers aren't the whole cost of labor in the farm-to-shelf pipeline, either.
For full disclosure: I've worked about 15 years in hospitality industry and have quite a few work acquaintances in supply chain, as well as chefs and restauranteurs.
Most folks that are commenting here are living in la-la land with some of the absolutely absurd math and opinion that do not tie into reality.
Lets get some baselines going before I unpack the horse shit being said here.
1. Which agricultural concentration has the most migrant/day laborers? Citrus[0] and other labor intensive crops (sugar cane, corn, cotton, etc.) hire the majority of migrant labor. Majority (78%)[1] of seasonal agricultural jobs are performed by folks who are not from the Unite States.
2. What is the average profit margin, per acre, for agricultural farms (that sells for human consumption)? It's shit [2] - like most freaking farms are barely making it...Farms that have a GCFI (Gross Cash Farm Income) of 5,000,000+ should be doing well, however, about 25% of them are in the critical zone of going out of business. Farms with a GCFI less then 500,000. But hey, maybe that government agency has their head up their ass and don't know shit. Lets take a look at studies by Purdue University and Department of Agriculture and Consumer Economics University of Illinois[4]. To make life easier, heres a summary: according to Purdue estimates, on average, farmland has $114 to $227 return per acre. University of Illinois project returns from $200 to $100 per acre.
3. What is the general wage for Migrant Worker? From [5] this study on an orange farm,workeers can expect $16.92/hr that operate machinery and $13.75/hr for general purpose.
4. What percent of overhead is labor? [5] Page 9. Labor accounts for 41% of overhead for an orange farm. This is a industry standard for all labor intensive agriculture production [6], which are listed as: fruits, vegetables, and nursery products.
Great, now that we have some baselines. Lets dig into some math.
According to a previously mentioned study [5], an orange farm that has been established for 10+ years can expect 550 packed cartons of oranges, that weight 37.5 pounds. This represents 80% of the annual crop. The rest of the crop is used for juices and fillers. That 20% accounts for an astronomic $0 return. In most cases, breaking even is considered a win.
Focusing on the 80% of the crop that does bring in money, what are the economics? (this is taken from Ref Doc #5, page 22) It's shit! How shit? well, if the average cost of a carton of oranges is $12 and you gather 700 cartons per acre, your NET RETURN PER ACRO ABOVE TOTAL COST is -1,156...huh? Wait, you just lost money...
How about if we take that number up a notch and sell our beautiful oranges at $15/carton? Well, on 700 cartons gathered per acre you have now achieved profitability of 944 per acre.
But how does this affect the consumer? Well, my curious conversant, a 5lb bag of Navel Oranges is currently selling for $6.48 at Walmart[7]. For comparison, a store in Illinois is selling 4lb bags of oranges for $3/per[8].
So a carton of oranges is being sold, at the highest range of the study [5] is $15/carton. A carton is 37.5 pounds, which means I can get a bit more then 9 bags of 4lb orange bags, that I will sell for $3/per. Which means I will generate a gross of $27/carton.
After reading this, please, do tell me again, how raising wages to $20/hr is going to cause lettuce to go from 2.50 to 2.75?
[0] https://www.reuters.com/article/us-usa-immigration-farms/agr...
[1] http://nfwm.org/education-center/farm-worker-issues/farm-wor...
[2] https://www.ers.usda.gov/amber-waves/2015/januaryfebruary/pr...
[3] http://agribusiness.purdue.edu/blog/understanding-the-margin...
[4] http://www.farmdoc.illinois.edu/manage/2015_crop_budgets.pdf
[5] https://coststudyfiles.ucdavis.edu/uploads/cs_public/19/d4/1...
[6] https://www.ers.usda.gov/topics/farm-economy/farm-labor/
[7] https://www.walmart.com/ip/Navel-Oranges-5-lbs-Bag/44391069
[8] http://waynesmarket.net/shop/247-4-lb-bag-navel-oranges.html
Variables: original cost of labor $8/hour, new cost $20/hour.
As well, trucking is a big industry and I haven't considered paying the truckers more, either.
Look at this video: https://www.youtube.com/watch?v=oxbJVqfIK1U and time the total handling time of 1 head of iceberg lettuce (the round head kind).
Worst case scenario: each head is handled total for about 15 seconds, from cutting or pulling it off its stalk on the ground, quickly removing loose leaves, placing in bag, then sealing the bag and putting into boxes placed on skids.
Thus we have (rounding up, allowing for breaks, turns etc.) 20 seconds per head, 3 per minute, 180 per hour.
$8 / 180 = 4.4 cents of labor per head. $20 / 180 = 11.11
OK, I am off in what I remember ... about 7 extra cents per head of lettuce vs. my remembered 5 cents.
A ten percent increase across an entire grocery bill might be more noticeable though. Likewise with the cost of eating at a restaurant if all workers are paid more (i.e. the $15/hour movement).
Personally I am not opposed to paying the actual costs instead using immigration and government subsidies of crops like soybeans and corn to lower the costs for some farmers.
Having zero abusable second-class workers would be more destructive. 150 years of dragging ass on modernizing their farming operations will come back and bite them all at once. But they probably won't learn their lesson and just use robots. They will beg and squeal for prisoner labor first. And then the cops will be ginning up bogus traffic offenses right before harvest time, so the people who can't pay the fines will have to pick vegetables instead.
Actually no. But farmers have created a special problem for themselves:
In a normal industry, wages increase and over a period of time, technology and techniques are developed to reduce the use of labor.. increasing labor productivity and controlling costs. This increased productivity is what allows firms to pay high wages.
In the farm industry, this hasn't occurred. Instead of increasing wages (and stimulating demand for new technology in their industry), they would simply hire more migrants to do the work instead. And so farmworkers are now almost entirely migrants. They've been doing this so long, that they've lost decades of small increases in labor productivity that would have normally occurred (and has occurred in virtually every other industry.. which they are competing with for labor).
So while part of the answer is to increase wages to attract US workers... increasing labor productivity is also required. I think farms would find it quite difficult to compete in the US labor market, while depending on practices that have not been modernized.
We know farm productivity can be increased.. where there's a real cost (the farmers themselves), plenty of tools have been created. But in the specific area of picking, migrants have been used instead.
They can try to soak up the shrinking pool of human laborers as new entrants avoid entering the field, because they don't want to compete with robots.
Or they can start building the robots.
If they don't seek productivity gains, a well-capitalized startup can eat their lunch by shoving productivity gains from other industries down the throats of agribusinesses. We already have robots that can differentiate between weeds and crops in a flat in the lab and kill the weeds by pounding them into the dirt.
It's going to start with rail-bound robots tending to niche specialty vegetables and pharmaceutical feedstock plants in hydroponic containers. It's going to end with cereal crop farmers committing suicide as the capital requirements for operating a competitive farm rise beyond their means.
Do you think cereal crop farmers are paying migrant workers with scythe's to harvest their grain?
"Or they can start building the robots."
What do you think a combine is?
"well-capitalized startup "
Is an angel investor going to compete with government subsidies?
A combine is already well beyond the ability of an individual grain farmer to replicate. The best they can do is buy commoditized combines. And those are only commoditized now because of the vast area devoted to cereal crops. The robots required for more specialized crops will be more expensive at first, until some patents expire, and even then the number of potential competitors will be limited by area under cultivation.
You cannot start a new cereal-crop farm without a hefty investment in capital. You just can't. At best, you would be renting other people's robots, and that might be costly enough to prevent you from ever buying your own.
An onion farmer may yet be able to build a better onion robot. If they do not, someone could invent one, and either eat up existing farmers' margins with rental fees, or simply start a new farm and undercut those existing farmers from lower labor costs. But that startup would need to have the robots.
A trunk-shaker harvester robot might be cheaper than human pickers, but they can damage trees and may cause damage to the harvested fruit. A robot equipped with a camera and a vacuum-assisted hand might outperform it for apples, but be useless for olives. The olive farmer might need a robot with flailing rods. It is still possible for an individual farmer to innovate their own robots specialized to a particular niche crop.
We're already seeing farmers in India committing suicide because they can't keep pace with the gene-edited seeds and robotic combines from industrialized farms. It seems inevitable to me that companies like Monsanto and John Deere will be able to squeeze individual farmers on a technology-yield treadmill such that if they ever miss a step, they fall off. And once they fall off, they can never find a way to get back on. Because they are not the people building the robots. They get left behind just as fast as everyone else not building newer technology.