By Sarah Gonzalez, Director of Communications and Digital Media
A new report from CoBank says manual laborers are chasing higher wages offered in industries like transportation, construction, hospitality and mining, forcing agricultural employers to increase wages at a faster rate to compete.
“Ultimately, the risk to the agriculture sector or any domestic industry is that wages will increase to the point where it becomes more cost effective for the U.S. to import commodities rather than import the labor to produce them domestically,” said Ben Laine, a senior economist with CoBank, in the report.
The CoBank study, “Help Wanted,” is broken into two sections, “Wage Inflation and Worker Scarcity,” and “U.S. Agribusiness Experience Hiring Headaches.”
Several factors, including immigration controls like tighter borders and increased immigration enforcement, falling birthrates in Mexico, and populations moving toward urban areas, are creating a shrinking workforce from Mexico, the report notes. Further, consolidation in both the American and Mexican agricultural industries is making farm labor more expensive.
“Labor accounts for a significant share of overall operational costs for many types of farms, particularly specialty crops and dairies,” Laine said. “In 2016, labor costs on all farms made up about 10 percent of gross income while in the specialty crop sector, that share was closer to 27 percent.”
The study explains how inflated wages result from scarce labor conditions and features accounts from a poultry processer in North Carolina, a pork producer from Minnesota, a feedyard owner in Texas, custom harvesting operations in Florida and California, and dairy producers in New York and Washington.
Brad Johnston, a representative of Peri & Sons Farms in Nevada highlighted in the report, concludes: “There are only two choices: You either import your ag labor or you import your food.”
CoBank notes that the United Nations projects the world population to reach 9.8 billion by 2050, and global food demand is expected to increase anywhere between 59 to 98 percent by then.
“Machines may, in time, reduce the number of hands needed to grow and harvest food, but they aren’t likely to completely replace them,” CoBank concluded. “Meanwhile, foreign-born workers are ready to fill the nation’s farm labor gap, if complicated visa programs and slow-changing immigration reform don’t prevent farmers from legally getting the help they desperately need.”