Projects Funded for 2018-2019

The Minimum Wage and Productivity: A Case Study of California Strawberry Pickers

  • Tim Beatty

Economics of Groundwater Quality in California Agriculture

  • Ellen Bruno

The Impacts of a Declining Farm Labor Supply on Farming in California

  • Diane Charlton
  • Zachariah Rutledge
  • J. Edward Taylor

Abstract

Specific Objectives of the Project: Objective
1: To estimate recent and future trends in California farm wages.
2: To analyze the farm labor supply response to changes in farm wages.
3: To explore how increases in California farm wages affect the adoption of labor-saving technologies, the mix of labor-intensive crop production, and the employment of H-2A visa workers.

Project Report/Summary of Results
The funds provided through this grant enabled us to develop and implement an online survey of California farmers to study how they are adapting to the reduced availability of farmworkers. This survey was developed with the cooperation of the California Farm Bureau Federation (Sara Neagu-Reed and Bryan Little), who helped develop the survey and sent it to their members and affiliated grower groups on our behalf. The survey was tailored to elicit information related to (i) the extent to which farmers have had to increase wages to retain an adequate workforce, (ii) the use of farm labor contractors and the H-2A visa program, (iii) changes in acreage resulting from higher wages or reduced access to farmworkers, (iv) the adoption of labor-saving technologies, and (v) changes in cultivation practices resulting from labor scarcity. Over 1000 farmers responded to the survey. Some key findings from the survey include evidence that (i) the rate at which farmers have to pay higher wages to retain a sufficient workforce is increasing, (ii) the use of farm labor contractors and the H-2A visa program is expanding, (iii) some farmers are reducing acreage dedicated to labor-intensive crops and are switching into less labor-intensive crops like nuts and grain/row crops, (iv) many farmers (about 1/3 in our survey) have started using labor-saving technologies for the first time during the past few years, and (v) farmers are increasingly having to change cultivation practices as a result of reduced access to workers, including reducing or delaying pruning, weeding, and harvesting. Additional work will quantify the effects of labor shortages and higher wages on these various outcomes, but the survey format was tailored to facilitate these types of analyses and provide the data to conduct them.

We also engaged in a collaborative effort to co-author two Choices Magazine articles, one of which has been accepted for publication (the other is currently under review). The first article conveys the economic theory behind a farmer’s decision to adopt a labor-saving technology in the face of higher wages and includes a discussion about agricultural technologies that have been used and are being developed to help farmers produce with a smaller workforce. The second article discusses trends in farmworker employment and wages and draws upon previous research supported by the Giannini Foundation to provide estimates of how high farm wages will need to increase in order to keep the farm workforce stable.
Taylor and Charlton’s new book, The Farm Labor Problem: A Global Perspective, was published by Elsevier Academic Press in December 2018, with acknowledgement to support from the Giannini Foundation of Agricultural Economics. We created a website to feature the book and other farm labor research; see https://farmlabor.ucdavis.edu/.

There is substantial interest in this area of research, as can be seen by recent invitations for us to present work related to this topic at conferences, including the UC Davis Agriculture and Natural Resource Annual Vegetable Crops meeting, the World Bank’s Future of Work in Agriculture conference, the Department of Labor’s NAWS at 30 conference, and the Gifford Center for Population Studies’ Farm Labor 2019 conference.

Sustainable Economic and Environmental Considerations of Recycled Municipal Wastewater Reuse in Irrigated Agriculture: An Empirical Regional Framework with Application to Escondido, California

  • Ariel Dinar

Abstract

Specific Objectives of the Project
(1) The overall objective of this proposed research is to examine the feasibility of a long-term arrangement between the City of Escondido and the avocado growers in the region, regarding the sale of treated wastewater by the city to the growers. Such agreement would maximize long-term benefits for the region. The stability of such agreement will be investigated empirically, accounting for costs and benefits of both the city and the farming sector, from this agreement. Necessary constraints will be imposed to ensure proper considerations of the impacts on the environment resulting from use of treated wastewater for irrigation.
Specific objectives include:
(2) Apply a regional model that was developed in a recent research project. The model includes optimization of benefits to irrigated agriculture (the consumer of the wastewater) and to a city (the source of the wastewater), subject to regulation of externalities from use of treated wastewater in the form of GW pollution. The model will be calibrated to the region of Escondido in San Diego County, California, using empirical data on treatment cost functions, agricultural production functions and aquifer water pollution, which was collected in the Escondido site during a controlled field experiment in the past 6 years.
(2.1) The empirical model will allow avocado growers in the region to plan their production for the future, with uncertain freshwater availability and unknown quality.
(2.2) The Empirical model will allow the City of Escondido to plan its future treatment facility expansion with population growth and likely revised state wastewater disposal regulations.
(3) Extend the empirical model to several additional regions with similar conditions along the coast of California, where wastewater is being treated and disposed of to the ocean.

Project Report/Summary of Results
Wastewater has become a valuable resource in many regions of the world that face increased level of freshwater scarcity. Reuse of treated wastewater is associated with high economic benefit, but it can also lead to pollution of the environment and water bodies. As such, explicit conditions must be defined to determine the optimality of wastewater reuse for society. In this project, we developed a regional multi-sectoral model of water quantity-quality interaction among the urban, agricultural, and environmental sectors.

Interested in the feasibility of reuse, rather than the stability of the regional arrangements, we apply a social planner’s approach to the regional problem. We formally derived sufficient conditions that support the superiority of infrastructure development and conveyance of treated wastewater for irrigation, when measured against other common disposal alternatives (such as ocean disposal, or disposal to nearby dry riverbed). Using a numerical illustrative example, which relies on data and results from existing literature, we were able to replicate our theoretical findings, as well as to examine their robustness, when several supporting assumptions are relaxed.

We then turned to the region of Escondido in Southern California, where such issues are the forefront of discussions between the city of Escondido and a group of avocado farmers. We collected data from a group of representative growers that are part of the IGAP farmer association to estimate the cost of production of avocado in this region. We obtained soil and climate parameters, as well as groundwater aquifer characteristics in the region. Based on the soil data, climate data, and prices of inputs and the output, we were able to calibrate a production function for the avocado crop in the Escondido region. Using data and information on wastewater treatment cost from the literature and from the website of the Escondido City Wastewater Treatment Facility we estimated a treatment cost function for Escondido. This function is included in our regional model for the purpose of identifying the cost of unit of treated wastewater under various scenarios that will be part of the analysis we will conduct.

A final component in our analysis is the prediction of population in the city of Escondido in the future, which will affect the amount and cost of treatment of wastewater. We use population estimates for various future years and include it in the model.
We are now in the process of (1) calibrating our model to observed parameters such as water availability, avocado prices, cost of wastewater), (2) defining institutional arrangements for a possible agreement between the city of Escondido and the avocado growers for different constraints imposed for protecting the aquifer water quality and quantity.

We already presented our analytical framework in an international conference, and have a paper with that framework in a revise and resubmit to a technical journal. We also had a workshop with the city of Escondido and the EGAP farmers, where we presented preliminary results of our analysis and got feedback for the remaining future analysis.

The Cost of Gluten Avoidance: Evidence from US Scanner Data

  • Thibault Fally

The Effect of Immigration Enforcement on Agricultural Workers Movement

  • Meredith Fowlie

The Potential for Adaptation to Climate Change in Field Crop Production

  • Matthew Gammans
  • Pierre Mérel

Abstract

Specific Objectives of the Project
The objectives of this research are to (1) quantify past adaptation to climate change in United States field crop production, (2) estimate the long-run consequences of climate change on this type of agriculture, and (3) assess the potential of one specific adaptation, double-cropping, to attenuate the potential losses resulting from climate change.

Project Report/Summary of Results
We have developed a theoretical framework whereby agricultural production is related to both contemporaneous weather and long-run climate through simple quadratic functions. The framework implies a long-run response function to climate that is the outer envelope of short-run responses to weather conditional on climate. Applying this framework to a 66-year panel of yields and weather, we simultaneously estimate short- and long-run responses to climate for the United States (US) corn sector. We find evidence of significant climatic adaptation. In the case of temperature exposure (captured through growing degree days), traditional “myopic” panel methods that do not explicitly model climate adaptation nonetheless deliver estimates similar to those of our estimated long-run response. We formally show that this is due to the large cross-sectional variation in climate temperature relative to locational weather fluctuations. In contrast, for precipitation, which exhibits larger year-to-year variation relative to cross-sectional variation, models that do not account for climatic adaptation deliver estimates that are biased, but can be viewed as an average of the long- and short-run responses.

In complementary work, we focus on one specific adaptive action: double cropping. Although prior agronomic research suggests that climate change may expand the area suitable for double cropping in the US, there is relatively little empirical evidence of the relationship between climate and farmers’ decisions to double crop. We link high-resolution land cover data with detailed soil and climate data to explain farmers' propensity to double-crop soybeans with winter wheat in the Eastern United States. We find small and slightly negative effects of warming on double-cropped acreage. A fixed-effects panel model of county yields further indicates that yields of double-cropped soybeans are about 9.9% lower than those of single-cropped soybeans. Accounting for both of these effects, we conclude that double cropping is unlikely to offset negative impacts of climate change on US crop production.

Consumer Demand and Marketing Strategies for Locally Produced Foods

  • Kristin Kiesel

Guest Workers in California Agriculture

  • Philip Martin

Abstract

Specific Objectives of the Project
The average employment of hired workers in California agriculture was 425,000 in 2016, almost three times the 152,000 average employment in the state’s food manufacturing industry. Almost a million unique workers filled these full-time equivalent jobs, a ratio of 2.2 workers per FTE job. Both average employment and workers per job have been rising.

This project focused on three issues. First was immigration, asking how stepped-up enforcement of laws prohibiting the employment of unauthorized workers affects the supply of labor to California agriculture. Second was the effect of fewer unauthorized newcomers and less follow-the-crop migrancy that reduced the flexibility of the farm workforce and prompted farm employers to respond with 4-S strategies, viz, satisfy, stretch, substitute, and supplement current workforces. Third was analysis of the likely effects of the state’s increasing minimum wage, which will reach to $15 an hour in 2022, and the effects of buyer-imposed programs that, for a fee, monitor wages and working conditions on fruit and vegetable farms.

The project supports several major activities, including research articles, shorter papers in ARE Update and Rural Migration News (http://migration.ucdavis.edu), and a major conference, which was held April 5, 2019 at the UCD Law School and attracted 120 participants to discuss how other countries obtain seasonal farm workers, the H-2A program, and immigration issues. The results of the project are disseminated widely, including in the new edition of Giannini’s California Agriculture book and to the more than 1,000 subscribers to Rural Migration News. The project had numerous interactions with federal and state analysts, journalists, and others.

Project Report/Summary of Results
Farm employment has been rising as more expensive land and water is switched to labor-intensive fruits and vegetables. Average farm employment has been increasing by 10,000 a year, and the number of unique workers employed in agriculture has been expanding by over 20,000 a year, so that in 2016 almost a million unique workers filled an average 425,000 farm jobs.
The hired workers on crop farms are aging (average 40 and approaching the average 42 of all US workers) and settling in one place with their families. Follow-the-crop migration has almost disappeared, and there are fewer unauthorized newcomers, making the current farm workforce less flexible. Farm employers are responding with 4-S strategies. Employers try to satisfy current workers to retain them longer and stretch them with mechanical aids that increase productivity and make farm work easier. The third strategy is substitution, replacing workers with machines, or switching crops, and the fourth is to supplement with H-2A guest workers, who have become the flexible newcomers to the farm workforce.

In the medium term, the two dominant strategies are likely to be substitution and supplement, a race between labor-saving technologies and guest worker admissions. Responses vary by commodity, and are influenced by policy decisions. For example, the raisin industry is likely to shrink faster as labor costs rise and some farmers mechanize while others switch to almonds. Strawberries are more likely to supplement with guest workers and use conveyor belts to stretch workers until there is a mechanization breakthrough. Imports are the wild card in responses, and may play an important role in supplying some commodities to US consumers.

The project monitored the impacts of farm labor developments on the competitiveness of California agriculture, conducted research that was published in a variety of outlets, and made presentations to a dozen groups ranging from the CA Association of Winegrape Growers to the National Milk Producers Federation, plus talks in classes at UCD and elsewhere.

Health and the Provision of Health Care of Agricultural Workers

  • Jeffrey Perloff

Abstract

Specific Objectives of the Project
We investigated whether hired, seasonal agricultural workers have health care insurance and use it conditional on the workers’ legal status, the type of their employer, Medicaid Expansion, and the Affordable Care Act.

Project Report/Summary of Results
Farmworkers, regardless of their legal status, are more likely to have health insurance after the Affordable Care Act (ACA) went into effect in 2014. However, only farmworkers newly eligible for Medicaid increased their use of healthcare services. Farmworkers eligible for the ACA subsidy did not change their use of healthcare services.

After the ACA went into effect, farmworkers covered by Medicaid and those eligible for the ACA subsidy (except immigrant farmers with green cards) were less likely to visit the Emergency room and more likely to use healthcare providers such as private doctors/clinics, hospitals, community centers, dentists, and other healthcare providers.

In addition, after the ACA went into effect, employers are less likely to cover the healthcare expenses of farmworkers who are covered by Medicaid or eligible for the ACA subsidy. The healthcare expenses of these farmworkers are more likely to be covered by Medicaid, public clinics, out-of-pocket and other financial sources.

Consumer Valuation and Economic Impacts of Certified Transitional and Organic Products

  • Richard Sexton
  • Ashley Spalding

Abstract

Specific Objectives of the Project
We proposed to analyze an innovative approach—transitional organic labeling—as a way to generate price premiums for farmers in transition, and to lower economic barriers to organic conversion. In order to assess the impact of the new label, we proposed to develop a conceptual model of how this label influences the product-characteristic space and price premiums, and conduct market-level experiments to better understand consumer preferences for organic foods and willingness to pay for an organic-transition label.

Project Report/Summary of Results
A vertical differentiation model of consumer choice has been constructed to analyze consumer decision making for a product category with organic and conventional products vs. expanding the category to include organic, transitional, and conventional products, where the transitional product is viewed as having intermediate overall quality relative to the organic (high quality) and conventional (low quality) product. Analysis of the model shows that transitional organic products command a premium relative to conventional products and that the competition introduced from transitional organic products reduces slightly the premium afforded to organic products.

The model is also used to study farmers’ decisions regarding producing conventional product or undergoing conversion to organic. Results show that introduction of a transitional organic premium relative to the conventional price causes more acreage to convert to organic than in a world without transitional organic. In long-run equilibrium organic premiums are reduced due to the expanded organic supplies incentivized by the transitional organic premiums. A bottom-line conclusion is that a transitional organic certification can be a useful tool to incentivize organic conversion and help to improve the U.S. organic trade imbalance.

The Incidence of an Agricultural Boom

  • Aaron Smith

Methyl Bromide: still around after all these years - A Case Study of Structural Changes in Agriculture

  • David Zilberman